Key Details: On February 9, 2026, the U.S. DOL announced that the minimum wage for employees on eligible federal contracts will increase to $13.65 per hour, effective May 11, 2026. Tipped employees on covered contracts will see their base cash wage increase to $9.55 per hour. Federal contractors should review the article to determine if their contracts are covered and prepare to comply. Contractors should note that this only impacts covered contracts that were awarded between January 1, 2015, and January 29, 2022, that have not been renewed or extended on or after January 30, 2022.
Background on the Minimum Wage and EO 13658
In 2014, President Obama signed Executive Order 13658, establishing a minimum wage of $10.10 per hour for certain federal contract workers, effective January 1, 2015, with annual inflation adjustments. Each administration has updated these requirements:
- 2014: EO 13658 signed, and a base rate with inflationary adjustments was established.
- 2022: President Biden’s EO 14026 took effect and raised the federal contractor minimum wage to $15.00 per hour for new or renewed contracts from January 30, 2022, superseding EO 13658 for those contracts.
- 2025: President Trump rescinded EO 14026 and left EO 13658 in place.
- 2026: DOL Wage and Hour Division published a notice that, under EO 13658’s annual inflation adjustment, the contractor minimum wage will increase to $13.65.
After the Biden-era $ 15.00-per-hour minimum wage was revoked in 2025, EO 13658 became the guiding policy for certain contracts, adjusted annually for inflation. Different rules apply depending on when a contract is signed, so contractors must review documentation to comply.
Coverage Under DOL Notice
Under the DOL’s Notice of Rate Change, the minimum wage for federal contract workers will be $13.65 per hour as of May 11, 2026. All contractors and subcontractors with covered contractors must pay at least this rate (plus any higher applicable state or local minimum wage or prevailing wage) to workers performing on or in connection with those contracts.
Covered Contracts
EO 13658 generally applies to contracts subject to the Davis-Bacon Act and the Service Contract Act that were awarded between January 1, 2015, and January 29, 2022, and that have not been renewed or extended on or after January 30, 2022. It generally covers older legacy federal contracts subject to the Obama-era order. The rate increase will remain in effect until the next annual adjustment.
If a contract was entered into, renewed, or extended on or after January 30, 2022, it was originally subject to EO 14026, which has since been revoked. Therefore, the new $13.65 rate generally will not apply to these post-January 2022 contracts. For newer contracts, contractors must follow the wage terms set forth in their contract and comply with all other applicable labor laws, such as the Fair Labor Standards Act, state and local minimum wages, and prevailing wage requirements.
The number of contracts subject to EO 13658 has declined, but ongoing contracts may still require compliance. Contractors must identify covered contracts and prepare to adjust wages as needed.
Posting and Notification
Federal contractors subject to EO 13658 must post an updated notice with the new minimum wage, which will be available on the Wage and Hour Division website.
Conclusion and Action Plan
Federal contractors and subcontractors must plan for this wage increase, as it can impact budgets, payroll, and compliance. Contractors are encouraged to perform the following activities:
- Identify which contracts fall under EO 13658 or other regulations. Consult legal counsel for clarification.
- Create a contract matrix to track and identify all regulatory requirements.
- Reflect the wage increase in your budgets and contract prices.
- Update payroll systems to apply the new wage by May 11, 2026.
- Update payroll settings, employee notifications, and workplace posters.
- Train HR and payroll staff to apply the new rates correctly, so underpayment does not occur.
- Strengthen your long-term compliance strategy. Monitor for regulatory updates regularly.
Contractors and subcontractors should act promptly before the May 11, 2026, effective date and use this opportunity to shore up their wage-and-hour compliance processes.
For further information and expertise, contact Ryan & Wetmore today.
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About Peter Ryan
Partner, Co-founder, & CPA
Peter T. Ryan co-founded Ryan & Wetmore in 1988 with business partner Michael J. Wetmore. Peter provides clients with the best strategies for success. His expertise extends across various industries. Peter obtained a Master of Business Administration in Finance from the University of Baltimore and a Bachelor of Arts in Accounting from the Catholic University of America.
About Rosie Cheng
Senior Finance Consultant
Rosie Cheng is a Senior Finance Consultant at Ryan & Wetmore. She focuses on government contracting services and produces many of the firm’s government contracting newsletters. Rosie earned her Master of Science in Management from Georgetown University and a BBA from William and Mary.
