Minimum Hourly Wage under Federal Contracts Increasing to $10.35, $7.25 for Tipped Workers

September 18, 2017

The U.S. Department of Labor’s Wage and Hour Division issued a notice announcing that the applicable minimum wage rate to be paid to workers performing work on or in connection with federal contracts is $10.35 per hour beginning January 1, 2018. On that same date, the required minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts will increase to $7.25 per hour.

Executive Order 13658. Signed in February 2014, Executive Order 13658, "Establishing a Minimum Wage for Contractors," raised the hourly minimum wage paid by contractors to workers performing work on covered federal contracts to: $10.10 per hour beginning January 1, 2015; and, beginning January 1, 2016, and annually thereafter, an amount determined by the Secretary of Labor in accordance with a specified methodology. The Secretary’s determination of the minimum wage rate also affects the minimum hourly cash wage that must be paid to tipped employees performing work on or in connection with covered contracts. The Secretary is required to provide public notice of the new minimum wage rate at least 90 days before the new rate is to take effect.

Updated wage rate. The applicable minimum wage under Executive Order 13658 is currently $10.20 per hour, and the applicable minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts is currently $6.80 per hour, both of which rates have been in effect since January 1, 2017. Pursuant to the executive order and its implementing regulations, the Wage and Hour Division is giving notice that beginning January 1, 2018, the minimum wage rate that generally must be paid to workers performing work on or in connection with covered contracts will increase to $10.35 per hour; the required minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts will increase to $7.25 per hour.