You may have heard that the new mandatory minimum wage for employees who work on government contracts has increased to $15.00, but when is your GSA Contract subject to this new regulation? If the GSA Contract is awarded on or after January 30, 2022, or if the GSA Contract is renewed or extended (e.g., an option is exercised) on or after January 30, 2022, then Executive Order 14026 generally applies to the contract. Therefore, the contractor must pay all covered workers at least $15.00 per hour for all hours spent performing work under that contract in 2022.
However, If the GSA Contract was awarded on or between January 1, 2015 and January 29, 2022 and the contract is not renewed or extended on or after January 30, 2022, then the previous, Obama-era Executive Order 13658 applies to the contract. Therefore, the contractor must pay all covered workers at least $11.25 per hour for all hours spent performing on that contract in 2022.
Also note, that both of these Executive Orders include a method for escalation, so new mandatory minimums will go into effect on January 1, 2023. The 2023 minimum wage will be published by the Department of Labor 90 days before the wage goes into effect and the increase will be based upon the annual percentage increase in the Consumer Price Index, which means that considering the recent inflation in the cost of goods and services, there could be a substantial increase in the mandatory wage in 2023.
For Questions contact The Gormley Group (TGG) or your TGG Consultant directly.