Federal Contractors and Executive Order 14026
Under Executive Order (EO) 14026, federal contractors are required to pay a minimum wage for employees working on, or in connection with, certain federal contracts. EO 14026 applies to contracts, subcontracts or contract-like instruments if the agreement is:
- A procurement for services or construction;
- For services covered by the Service Contract Act (SCA);
- For concessions, including any concessions excluded by the Department of Labor Regulations at 29 C.F.R. § 4.133(b); or
- Entered into with the Federal Government in connection with federal property or lands and related to offering services for federal employees, their dependents and the general public.
EO 14026 applies to all workers covered by the Fair Labor Standards Act (FLSA) and performing work in connection with a covered contract for at least 20% of their workweek. It also generally applies to subcontractors that meet specified requirements.
For calendar year 2023, the federal contract minimum wage is $16.20/hour; effective January 1, 2024, it is increasing to $17.20/hour.
The Office of Sponsored Programs designates a federal contract when it is it initially created in Workday. It is important to identify employees who are working on a federal contract as early as possible to ensure compliance with the minimum wage requirement.
To assist with this, beginning October 30, a validation message will be displayed on the costing allocation data entry page when the selected worktags include a federal contract. The message states “The costing allocation that has been entered is considered a federal contract. Under Executive Order 14026, employees who are working on a federal contract are subject to a federal minimum wage rate. Please work with the respective HR representative to ensure that this employee’s pay is appropriate. Thank you.”