FAR 22.1902—Policy.
Plain-English Summary
FAR 22.1902 states the core policy for the Executive Order 14026 minimum wage requirement on covered federal contracts and subcontracts. It explains the federal minimum hourly wage floor for workers performing on, or in connection with, covered contract work, including the initial $15.00 rate and the annual adjustment process beginning January 1, 2023, with public notice issued by the Department of Labor’s Wage and Hour Division. It also addresses how this E.O. minimum wage interacts with other wage requirements, including Federal and State prevailing wage laws, local ordinances, private contracts that set a higher minimum wage, and collective bargaining agreement wage rates. Finally, it identifies special treatment for tipped workers by pointing readers to the Department of Labor regulations that govern how the E.O. minimum wage applies in tipped occupations. In practice, this section tells contractors, subcontractors, and contracting officers that the E.O. wage is a floor, not a ceiling, and that compliance must be checked against other applicable wage obligations and labor arrangements.
Key Rules
E.O. minimum wage floor
Covered workers must be paid at least $15.00 per hour beginning January 30, 2022. After January 1, 2023, the minimum wage is adjusted annually by the Secretary of Labor, and the new rate is announced at least 90 days before it takes effect.
Annual wage updates
The minimum wage is not static; it changes each year based on the Secretary of Labor’s determination. Contractors must track the published rate and apply it when it becomes effective, rather than relying on the prior year’s amount.
Other laws still apply
This subpart does not override any applicable Federal or State prevailing wage law, local ordinance, or contract that requires a higher minimum wage. Contractors must comply with whichever wage requirement is higher, but increases required by those other laws or ordinances are not price-adjustable under this subpart.
Higher CBA wage controls
If an applicable collective bargaining agreement sets a wage rate below the E.O. minimum wage, the E.O. minimum wage applies whenever it is higher. The federal minimum wage requirement therefore supersedes lower CBA wage rates for covered work.
Tipped worker rules
For workers in occupations where tips are customarily and regularly received, the relationship between the E.O. minimum wage and tipped wages is governed by Department of Labor regulations at 29 CFR 23.240(b) and 23.280.
Responsibilities
Contracting Officer
Ensure the solicitation and contract reflect the applicable E.O. minimum wage requirements and monitor whether the contract is subject to this subpart. The contracting officer must also recognize that wage increases required by other laws or ordinances are not automatically price-adjustable under this subpart.
Contractor
Pay covered workers at least the applicable E.O. minimum wage and keep track of annual updates, higher prevailing wage requirements, local wage ordinances, and any higher contractual wage commitments. The contractor must also apply the correct rules for tipped workers and flow the requirement down to covered subcontractors.
Subcontractor
Pay covered workers the applicable minimum wage on covered subcontract work and comply with any higher wage requirement that applies to the work. Subcontractors must also follow the tipped-worker rules where relevant and stay aligned with the prime contractor’s flowdown obligations.
Department of Labor / Wage and Hour Division
Determine and publish the annual E.O. minimum wage rate and provide public notice at least 90 days before the new rate takes effect. DOL also issues the regulations that govern tipped-worker treatment under this policy.
Agency / Federal Government
Administer covered contracts in a way that enforces the wage floor and recognizes the interaction with other wage laws and agreements. Agencies must understand that this policy establishes a minimum federal wage requirement but does not eliminate other independent wage obligations.
Practical Implications
Contractors must build wage compliance around the highest applicable rate, not just the E.O. minimum wage, because prevailing wage laws, local ordinances, and contract terms can require more.
The annual adjustment creates a recurring compliance task: companies need a process to monitor DOL announcements and update payroll systems before the effective date.
A common mistake is assuming that a higher wage required by a state or city law can be recovered through the E.O. wage price-adjustment mechanism; FAR 22.1902 says those increases are not price-adjustable under this subpart.
Another frequent pitfall is overlooking collective bargaining agreements or tipped-worker rules, which can change how the minimum wage must be applied on a covered contract.
Contracting officers and contractors should verify coverage early, because the wage rule applies to workers performing on or in connection with covered contracts and subcontracts, not just to direct on-site labor.
Official Regulatory Text
(a) Pursuant to Executive Order 14026, the minimum hourly wage rate required to be paid to workers performing on, or in connection with, contracts and subcontracts subject to this subpart is— (1) At least $15.00 per hour beginning January 30, 2022; and (2) Beginning January 1, 2023, and annually thereafter, an amount determined by the Secretary of Labor. The Administrator of the Wage and Hour Division (the Administrator) will notify the public of the new E.O. minimum wage rate at least 90 days before it is to take effect. (See 22.1904 .) (b) Relationship with other wage rates. (1) Nothing in this subpart shall excuse noncompliance with any applicable Federal or State prevailing wage law or any applicable law or municipal ordinance or any applicable contract establishing a minimum wage higher than the E.O. minimum wage. However, wage increases under such other laws or municipal ordinances are not subject to price adjustment under this subpart. (2) The E.O. minimum wage rate applies whenever it is higher than any applicable collective bargaining agreement(s) wage rate. (c) Application to tipped workers. Policies and procedures in DOL regulations at 29 CFR 23.240(b) and 23.280 address the relationship between the E.O. minimum wage and wages of workers engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips.