The U.S. Department of Labor Announces Final Rule to Increase Minimum Wage for Certain Federal Contractors

On November 22, 2021, the U.S. Department of Labor (DOL) finalized a rule to increase the hourly minimum wage for employees of certain federal contractors beginning January 30, 2022. The final rule implements Executive Order 14026, which President Joe Biden signed earlier this year.

The final rule requires certain federal contractors to pay workers on government contracts at least $15 per hour beginning January 30, 2022. After 2022, the minimum wage will be adjusted annually for inflation at a rate set by the Secretary of Labor.

The increased minimum wage requirement applies to new contracts that will be entered into on or after January 30, 2022. The increased minimum wage requirement also applies to existing contracts where the relevant contract will be extended or renewed, or an option on the contract will be exercised, on or after January 30, 2022. Contracts subject to the increased minimum wage requirement must include a clause mandating that contractors and covered subcontractors flow down the minimum wage requirement into lower-tier subcontracts.

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