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President Biden released an executive order that will increase the minimum wage for federal contractors and subcontractors. Accordingly, executive departments and agencies, including independent establishments subject to the Federal Property and Administrative Services Act, 40 U.S.C. 102(4)(A), (5) (agencies), shall, to the extent permitted by law, ensure that contracts and contract-like instruments include a clause that the contractor and any covered subcontractors shall incorporate into lower-tier subcontracts.

Beginning January 30, 2022, all agencies must incorporate the $15 minimum wage into covered contract solicitations. The federal minimum wage currently is $10.95 per hour for all workers on federal construction and service contracts, based on President Obama’s 2014 Executive Order 13658 that provided for inflation adjustment.

Considerations: Contractors should review their contracts and subcontracts to identify if they have the clauses for recovery, such as the FAR 52.222.43-Fair Labor Standards Act and Service Labor Standards – Price Adjustment (Multiple Year and Option Contracts) and the FAR 52.222.44-Fair Labor Standards Act and Service Contract Labor Standards – Price Adjustment.

Read the full executive order.