Executive Order 14026 Explained

As an employer working with federal contracts, staying current with minimum wage requirements is crucial for maintaining compliance and avoiding costly penalties. Recent significant changes to federal contractor minimum wage regulations have created a complex landscape that employers must navigate carefully.

What Federal Contractor Minimum Wage Changes Affect Employers in 2025?

On March 14, 2025, President Trump issued an Executive Order titled “Additional Rescissions of Harmful Executive Orders and Actions,” which revoked Executive Order 14026, “Increasing the Minimum Wage for Federal Contractors” (86 FR 22835). This marks a significant shift in federal contractor wage requirements that employers must understand.

The Department of Labor is no longer enforcing Executive Order 14026 or its implementing rule (29 CFR part 23) and will take steps to rescind these regulations. This change impacts federal contractors who had been preparing for or implementing the minimum wage increases previously scheduled under this order.

Prior Minimum Wage Requirements

Before its revocation, Executive Order 14026 had established that beginning January 1, 2025, the minimum wage rate for federal contractors would increase to $17.75 per hour. Additionally, as of January 1, 2024, contractors could no longer credit employee tips toward this minimum wage, meaning tipped employees covered by the Executive Order would be entitled to the full minimum wage rate.

Federal Contract Categories Previously Affected

The now-revoked minimum wage requirements generally applied to workers performing work on or in connection with federal contracts entered into, renewed, or extended on or after January 30, 2022, in four specific categories:

1. Procurement contracts for construction covered by the Davis-Bacon Act (DBA)
2. Service contracts covered by the Service Contract Act (SCA)
3. Concessions contracts, including those excluded from the SCA by Department regulations
4. Contracts connected with federal property or lands related to offering services for federal employees, their dependents, or the public

How Do Employers Navigate Current Federal Contractor Wage Requirements?

With the revocation of Executive Order 14026, employers must understand which wage requirements still apply to their federal contracts. Contracts entered into, extended, or renewed prior to January 30, 2022, may still be subject to the lower minimum wage established by Executive Order 13658, “Establishing a Minimum Wage for Contractors.”

Regional Enforcement Variations

Even before the March 2025 revocation, enforcement of Executive Order 14026 varied by region:

• The U.S. Court of Appeals for the Tenth Circuit had temporarily enjoined enforcement for certain recreational services contracts on federal lands, though this injunction was partially lifted in June 2024
• Based on an order from the U.S. District Court for the Southern District of Texas (September 26, 2023), the minimum wage requirements were not being enforced for contracts involving the states of Texas, Louisiana, or Mississippi

What Other Federal Contract Wage Laws Must Employers Follow?

Despite the revocation of Executive Order 14026, employers must remain compliant with numerous other federal wage regulations that continue to apply:

Davis-Bacon and Related Acts

These laws require payment of prevailing wages on federally funded or assisted construction projects. The Department of Labor recently updated these regulations, and employers must ensure compliance with the latest requirements.

McNamara-O’Hara Service Contract Act (SCA)

This act applies to contracts providing services to the federal government and requires contractors to pay service employees no less than the wage rates and fringe benefits found prevailing in the locality.

Walsh-Healey Public Contracts Act (PCA)

This act applies to federal contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment exceeding $15,000, establishing minimum wage, maximum hours, and safety standards.

Contract Work Hours and Safety Standards Act (CWHSSA)

This act requires overtime pay for laborers and mechanics, including watchmen and guards, on federal contracts involving the employment of laborers or mechanics.

Copeland “Anti-Kickback” Act

This prohibits contractors from requiring employees to give up any part of the compensation to which they are entitled under their contract of employment.

What Steps Should Employers Take Following These Federal Contract Changes?

Considering these significant changes, federal contractors should take several proactive steps:

Review of All Current Federal Contracts

Carefully review all existing federal contracts to determine which wage laws and regulations apply. The applicability will depend on when the contract was entered into, renewed, or extended, as well as the type of work being performed.

Consult With Legal Experts

Given the complex and changing nature of federal contractor wage requirements, consulting with legal experts specializing in government contracts is highly recommended to ensure full compliance.

Update Internal Payroll Systems

Ensure that your payroll systems and processes accurately reflect the applicable minimum wage rates for each federal contract and worker classification.

Monitor for Additional Updates

As the Department of Labor takes steps to formally rescind 29 CFR part 23, employers should closely monitor for additional guidance or regulatory changes that may affect their federal contract wage obligations.

How Can Tesseon Help Employers Manage Federal Contract Wage Compliance?

Managing the complexities of federal contractor wage requirements demands sophisticated payroll systems and compliance expertise. Tesseon’s specialized Payroll and Compliance Services are designed to help employers navigate these challenges while minimizing risk.

Our automated payroll system includes built-in compliance safeguards that can be updated as regulations change, helping prevent your business from inadvertently violating federal wage requirements. With Tesseon’s services, employee wages and related tax obligations are calculated and processed automatically, ensuring accuracy and eliminating opportunities for compliance errors.

Tesseon’s commitment to legal compliance includes staying current with changing federal contractor wage laws and regulations across all states. Our dedicated customer service team provides expert payroll assistance specifically tailored to the needs of federal contractors.

By partnering with Tesseon, you’ll gain access to customized payroll flexibility, comprehensive analytics, and seamless integrations—all while maintaining the highest standards of compliance with federal wage regulations.

For additional information on federal contractor wage requirements, employers can visit the Department of Labor’s Wage and Hour Division website.

Maintain Federal Contract Wage Compliance with Professional Payroll Support

Navigating the shifting landscape of federal contractor minimum wage requirements can be challenging, but employers can significantly reduce their risk exposure by implementing robust payroll processes and staying informed about current regulatory changes.