On Tuesday, April 27, President Biden signed an executive order requiring federal contractors to pay their employees a minimum of $15 an hour starting on March 30, 2022. After that, the order will continue to index the minimum wage for federal contractors to an inflation measure.
This raise in the pay floor – which was previously increased by President Obama – represents a hike of about $4. This new minimum wage must be reflected in all new contract solicitations by January 2022, and built into actual contracts by March 2022. This will apply, not just to new or renewed federal contracts, but also to existing federal contracts when the parties exercise their option to extend such contracts, which often occurs annually.
The White House stated that this action “will improve the economic security of families and make progress toward reversing decades of income inequality,” and estimated the action would impact “hundreds of thousands,” of workers. However, many businesses oppose the measure, arguing that raising the minimum wage will only further hurt the U.S. economy as it continues to struggle to recover from the COVID-19 pandemic.
Employers should stay tuned, as this executive order may be an indication of what is to come. President Biden campaigned on the promise that he would use his executive authority to make changes in workplace and labor conditions where Congress has failed or refused to enact comprehensive changes to federal labor law. This executive order comes on the heels of an order establishing the Worker Organizing and Empowerment Task Force, which addresses the Administration’s perceived need to mobilize the federal government’s policies, programs, and practices to help empower workers to organize and collectively bargain with their employers. These orders may be the first of many.