The Older Contractor Minimum Wage Rises to $14.05 on January 6, for Contracts Signed Before 2022

Bottom line

Federal contractors have had two minimum wage orders, and only one is still running. The Labor Department said on October 8 that the floor under Executive Order 13658 rises from $13.65 to $14.05 an hour on January 6, 2027, and the cash wage for tipped workers goes from $9.55 to $9.85 ^[1]. The higher floor under Executive Order 14026, $17.75 an hour in 2025, was revoked in March 2025 ^{[3, 6]}. The raise reaches only workers on contracts signed before 2022 that have not been renewed or extended since ^[1].

What happened

The notice. Andrew B. Rogers, administrator of the Wage and Hour Division, signed the notice on October 2; it was published October 8 ^[1]. The rate applies to work “on or in connection with” covered contracts entered into between January 1, 2015 and January 29, 2022 that were not renewed or extended, “pursuant to an exercised option or otherwise,” on or after January 30, 2022 ^[1]. In practice that means contracts under the Service Contract Act and the Davis-Bacon Act from that window ^[1].

The arithmetic. Executive Order 13658 ties each year’s rate to the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers, rounded to the nearest 5 cents ^{[1, 5]}. The department compared the average index for July 2025 through June 2026, 320.866, with the prior 12 months, 311.293, and got an increase of 3.075 percent ^[1]. Applied to $13.65, that yields $14.07, which rounds to $14.05 ^[1]. Tipped workers receive 70 percent of the full rate in cash, or $9.83, rounded to $9.85 ^[1].

One footnote carries last year’s shutdown into this year’s wage. Because of the 2025 lapse in appropriations, the Bureau of Labor Statistics collected no CPI data from October 1 through November 12, 2025 ^[1]. The department’s table shows no October 2025 figure, and the notice says it averaged “the available” data ^[1].

How we got here. President Obama signed Executive Order 13658 on February 12, 2014, setting $10.10 an hour from January 1, 2015 with annual adjustments ^{[1, 5]}. Its stated reasoning: “Raising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and its accompanying costs, and reduces supervisory costs” ^[5].

President Biden’s Executive Order 14026, signed April 27, 2021, set a higher $15 floor from January 30, 2022 for the same kinds of contracts, with its own inflation adjustments ^{[1, 4]}. It replaced the older order only “to the extent it is inconsistent” with the new one, which is why pre-2022 contracts stayed on the lower track ^[1]. The order argued that a $15 wage “generates higher-quality work by boosting workers’ health, morale, and effort” ^[4]. With adjustments, that rate reached $17.75 in 2025 ^{[6, 7]}.

On March 14, 2025, President Trump revoked Executive Order 14026 in section 2(d) of Executive Order 14236, one of 18 Biden-era actions listed ^[3]. The order said the rescissions were needed “to restore common sense to the Federal Government and unleash the potential of American citizens” ^[3]. It left Executive Order 13658 in place ^{[1, 3]}.

The legal fight underneath. The higher floor had been in court since it was issued. Ogletree Deakins, writing in The National Law Review, described a split: the Fifth and Tenth Circuits found the order within the President’s procurement authority, and the Ninth Circuit found it was not ^[6]. The Labor Department filed a brief on March 13, 2025 calling the order “directly within the President’s purview,” one day before the revocation ^[6]. Republican attorneys general from Louisiana, Mississippi and Texas had sought rehearing in the Fifth Circuit ^[6].

The schedule has slipped. The order calls for adjustments “beginning January 1, 2016, and annually thereafter,” published at least 90 days ahead ^[5]. The $13.30 rate took effect January 1, 2025, after a September 30, 2024 notice ^[2]. The next notice did not appear until February 9, 2026, and set May 11, 2026 as the effective date for $13.65 ^[2]. Neither that notice nor this one explains its timing ^{[1, 2]}.

What it means for you

Workers on older service and construction contracts. If your contract dates from 2015 through January 29, 2022 and has not been extended or had an option exercised since, your floor rises 40 cents an hour on January 6 ^[1]. Higher state or local minimums and prevailing wage rates still control where they are higher; the order says nothing in it “shall excuse noncompliance” with them ^[5].

Tipped workers on those contracts. The cash wage must be at least $9.85, and if tips fall short of $14.05, the employer must make up the difference ^[1].

Workers on contracts signed or extended since January 30, 2022. This notice does not reach you ^[1]. With Executive Order 14026 revoked, no executive order floor applies; your pay is governed by your contract’s Service Contract Act or Davis-Bacon wage determination and by federal, state and local wage laws ^{[6, 7, 8]}. J. J. Keller noted one exception: some procurement contracts entered into between January 30 and March 30, 2022 also remain under the older order ^[8].

Contractors and their HR offices. The department will post a new poster on its website, and wage determinations on SAM.gov are to carry the new rate ^[1]. Ogletree pointed out in 2025 that the revocation did not itself repeal the Labor Department’s 2021 regulations or the FAR clause at 52.222-55, which “remains in many federal contracts,” and expected further action from the department, agencies or the FAR Council ^[6]. Firms with that clause in a contract should ask the contracting officer how it is being treated.

Federal employees. None of this changes General Schedule or wage-grade pay. The order covers contractors only ^[5].

• How many contracts and workers are still covered. The department says only that the number “has significantly decreased over the past several years and continues to dwindle” ^[1].
• Why January 6. The order points to January 1; by this memo’s count, January 6 is exactly 90 days after publication ^{[1, 5]}.
• Whether the 2018 exemption for seasonal recreational services on federal lands, which Executive Order 14026 revoked, applies again now that 14026 is gone. The notice recounts that history without answering the question ^[1].

Questions you’re probably asking

What is the federal contractor minimum wage for 2027?

For contracts still covered by Executive Order 13658, it is $14.05 an hour starting January 6, 2027, up from $13.65 ^[1]. Tipped workers on those contracts must get a cash wage of at least $9.85, with tips making up the rest ^[1].

Does the $14.05 contractor minimum wage apply to my contract?

Only if it is a covered contract awarded between January 1, 2015 and January 29, 2022 and not renewed or extended, including by an exercised option, on or after January 30, 2022 ^[1]. Check the clauses and wage determination in your contract ^[1].

Is the $17.75 federal contractor minimum wage still in effect?

No. Executive Order 14236 revoked Executive Order 14026, the source of that rate, on March 14, 2025 ^{[3, 6]}. J. J. Keller wrote at the time that its regulations remained on the books but were unlikely to be enforced ^[8].

Why does the new contractor minimum wage start January 6 instead of January 1?

The notice sets January 6 without explaining the choice ^[1]. The order requires publication at least 90 days before a new rate takes effect, and the notice appeared October 8 ^{[1, 5]}.

What wage applies on federal contracts signed after January 2022?

No executive order floor applies after the revocation; Service Contract Act and Davis-Bacon wage determinations still do, along with federal, state and local minimum wage laws ^{[6, 7, 8]}.

What I’m watching

• January 6, 2027: the $14.05 rate and $9.85 tipped cash wage take effect ^[1].
• The next annual notice: whether the department returns to a January 1 start for 2028 and publishes it 90 days ahead, as the order requires ^[5].
• The 2021 regulations and FAR 52.222-55: any rule formally removing the higher floor’s machinery, which practitioners anticipated in March 2025 ^[6].