In recent years, presidents have attempted to impose minimum wage requirements on federal contractors without the need to go through Congress. These requirements have been in addition to the wage floors set by individual states or statutory federal regimes like the Service Contract Act or Davis-Bacon Act.
In 2014, for example, President Obama issued Executive Order 13658, establishing a $10.10 federal minimum wage (to be increased from time to time) under covered contracts. In 2021, President Biden issued Executive Order 14026, superseding the Obama order and requiring contractors to pay covered employees a $15.00 hourly minimum wage, indexed for inflation.
After years of litigation challenging the legality of these orders, President Trump has revoked Executive Order 14026 (among a host of other Biden executive orders). At least going forward, new contracts will not be subject to the Biden-era minimum wage.
The revocation order does not, however, address what happens under existing contracts that include FAR 52.222-55 (JAN 2022). This clause contractually obliges covered contractors to comply with the Biden minimum wage. It is unclear whether the government’s intent is for companies to be free to disregard this part of their contracts, now that the executive order driving that clause has been revoked. The revocation order also does not address (or purport to revoke) President Obama’s earlier order, or those contracts that still contain a minimum wage clause from the Obama era. From a contractual perspective, the safest course of action is for contractors with the Obama or Biden versions of these clauses in existing contracts to continue compliance—at least until the contracting officer issues a modification to remove the clause or a government official with authority states that the government will no longer enforce the clause.
We expect procuring agencies and the FAR Council will sort this all out and (at the very least) stop adding the clause to new contracts and stop issuing the yearly minimum wage increases.
Note that the new revocation does not change two things: (1) federal contractors remain bound to comply with state minimum wage laws; and (2) contractors still must comply with wage determinations under statutory regimes like the Service Contract Act or Davis-Bacon Act.
[View source.]
