FAR 52.222-55—Minimum Wages for Contractor Workers Under Executive Order 14026.
Plain-English Summary
FAR 52.222-55 implements Executive Order 14026’s contractor minimum wage requirement for covered federal contracts. This clause addresses the definition of covered workers, the geographic scope of the rule, the initial $15.00 hourly minimum wage, annual wage updates published by the Department of Labor, contractor and subcontractor price adjustment rights and limits, the contractor’s warranty about pricing contingencies, pay period and timely payment rules, the requirement to pay wages unconditionally and limit deductions, the prohibition on using fringe benefits to satisfy the minimum wage obligation, the relationship to higher federal, state, local, or contract wage requirements, the rule that the E.O. wage controls over lower collective bargaining agreement rates, and the procedures for handling workers engaged in an occupation with special wage treatment under the implementing regulations. In practice, the clause ensures that workers performing on or in connection with covered contracts in the United States receive at least the applicable E.O. minimum wage, while also setting out how contractors may seek limited price relief when the wage increases. It matters because it affects labor pricing, payroll compliance, subcontract management, and contract administration across service, construction, and FLSA-covered work. Contractors must track annual updates and pay the higher rate when required, and contracting officers must apply the clause’s narrow price-adjustment rules without duplicating relief already available under other labor clauses. The clause also reinforces that compliance with other wage laws is still required, so contractors cannot treat the E.O. minimum as a ceiling or a substitute for prevailing wage obligations.
Key Rules
Covered workers and scope
The clause applies to workers performing on or in connection with a covered contract in the United States. It defines "worker" broadly, including certain FLSA-covered employees, SCA and DBA workers, some apprentices and trainees, and workers paid under special certificates, while excluding bona fide executive, administrative, and professional employees.
Initial and annual wage rate
Contractors must pay at least $15.00 per hour beginning January 30, 2022, and must increase pay as needed each January 1 thereafter to match the annual E.O. minimum wage published by the Department of Labor. The published rate is incorporated into the contract by reference.
Limited price adjustments
A contractor may request a price adjustment only after the new annual wage rate takes effect, and only for increased labor costs and associated labor costs directly caused by the wage increase. The clause excludes G&A, overhead, and profit from the adjustment and bars duplicate recovery under SCA or DBA wage clauses.
Subcontractor flowdown and consideration
Subcontractors may also be entitled to an adjustment tied to the new minimum wage, and prime contractors must consider subcontractor requests for relief. This makes subcontract pricing and change management an important part of compliance.
No contingency pricing
The contractor warrants that contract prices do not include a contingency for wage increases covered by this clause. This prevents contractors from building in a separate cushion and then seeking the same cost again through a price adjustment.
Pay frequency and timing
Pay periods may not be longer than semi-monthly, though shorter periods are allowed if required by law or contract. Wages must be paid no later than one pay period after the end of the regular pay period in which they were earned or accrued.
Unconditional payment and deductions
Wages must be paid free and clear, without kickbacks or rebates. Deductions that reduce pay below the E.O. minimum are allowed only if they comply with the applicable DOL deduction rule in 29 CFR 23.230.
No fringe benefit offset
The contractor cannot satisfy the minimum wage obligation by furnishing fringe benefits or, for SCA workers, the cash equivalent of fringe benefits. The minimum wage must be paid as wages, not substituted with benefits.
Higher wage laws still apply
The clause does not override higher federal, state, local, municipal, or contract minimum wage requirements. If another law or contract requires a higher wage, the contractor must pay that higher amount, but those increases are not eligible for price adjustment under this subpart.
Collective bargaining agreement rule
If a collective bargaining agreement sets a wage rate below the E.O. minimum, the contractor must still pay the E.O. minimum wage. The executive order wage acts as a floor whenever it is higher.
Special occupation procedures
The clause directs contractors to follow DOL procedures for workers in occupations subject to special treatment under the implementing regulations, ensuring those workers are handled according to the specific regulatory framework.
Responsibilities
Contracting Officer
Include the clause when prescribed, administer contract price adjustments only within the clause’s limits, avoid duplicate adjustments under other labor clauses, and evaluate contractor requests for relief based on increased labor and associated labor costs caused by the annual wage update.
Contractor
Pay all covered workers at least the applicable E.O. minimum wage, update payroll when annual rates change, ensure timely and unconditional payment, limit deductions to those permitted by regulation, avoid using fringe benefits as a wage offset, flow the requirement to subcontractors as needed, and request price adjustments only after the new rate becomes effective.
Subcontractor
Comply with the applicable minimum wage for covered workers, coordinate any wage-related price adjustment requests through the prime contractor as applicable, and maintain payroll practices consistent with the clause and implementing regulations.
Department of Labor / Wage and Hour Division
Publish annual minimum wage determinations in the Federal Register and on SAM.gov, provide general notice on wage determinations, and administer the implementing regulations governing deductions, special worker categories, and related compliance procedures.
Agency / Government
Apply the clause to covered contracts as required, recognize that higher wage laws remain applicable, and ensure contract administration does not authorize price relief beyond the clause’s narrow reimbursement rules.
Practical Implications
Contractors need a reliable process to track annual DOL wage updates and push new rates into payroll systems before the effective date.
The biggest pricing pitfall is assuming all wage-related increases are recoverable; the clause allows only limited labor-cost and associated-cost adjustments, not overhead, G&A, or profit.
Prime contractors should coordinate closely with subcontractors because subcontract wage increases may affect both compliance and any allowable price adjustment request.
Payroll practices matter: late payment, improper deductions, or treating fringe benefits as wage substitutes can create compliance violations even if the hourly rate is correct.
If another law, ordinance, or contract requires a higher wage, the contractor must pay the higher amount even though that increase is not separately price-adjustable under this clause.
Official Regulatory Text
As prescribed in 22.1906 , insert the following clause: Minimum Wages for Contractor Workers Under Executive Order 14026 (Jan 2022) (a) Definitions. As used in this clause— United States means the 50 states, the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, Guam, the U.S. Virgin Islands, Johnston Island, Wake Island, and the outer Continental Shelf as defined in the Outer Continental Shelf Lands Act ( 43 U.S.C. 1331 , et seq. ). Worker – (1) (i) Means any person engaged in performing work on, or in connection with, a contract covered by Executive Order 14026, and– (A) Whose wages under such contract are governed by the Fair Labor Standards Act ( 29 U.S.C. chapter 8 ), the Service Contract Labor Standards statute (41 U.S.C. chapter 67), or the Wage Rate Requirements (Construction) statute ( 40 U.S.C. chapter 31 , subchapter IV); (B) Other than individuals employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in 29 CFR part 541 ; and (C) Regardless of the contractual relationship alleged to exist between the individual and the employer. (ii) Includes workers performing on, or in connection with, the contract whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(c) . (iii) Also includes any person working on, or in connection with, the contract and individually registered in a bona fide apprenticeship or training program registered with the Department of Labor’s Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship. (2) (i) A worker performs on a contract if the worker directly performs the specific services called for by the contract; and (ii) A worker performs in connection with a contract if the worker's work activities are necessary to the performance of a contract but are not the specific services called for by the contract. (b) Executive Order Minimum wage rate. (1) The Contractor shall pay to workers, while performing in the United States, and performing on, or in connection with, this contract, a minimum hourly wage rate of $15.00 per hour beginning January 30, 2022. (2) The Contractor shall adjust the minimum wage paid, if necessary, beginning January 1, 2023, and annually thereafter, to meet the applicable annual E.O. minimum wage. The Administrator of the Department of Labor’s Wage and Hour Division (the Administrator) will publish annual determinations in the Federal Register no later than 90 days before the effective date of the new E.O. minimum wage rate. The Administrator will also publish the applicable E.O. minimum wage on https://www.sam.gov (or any successor website), and a general notice on all wage determinations issued under the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute, that will provide information on the E.O. minimum wage and how to obtain annual updates. The applicable published E.O. minimum wage is incorporated by reference into this contract. (3) (i) The Contractor may request a price adjustment only after the effective date of the new annual E.O. minimum wage determination. Prices will be adjusted only for increased labor costs (including subcontractor labor costs) as a result of an increase in the annual E.O. minimum wage, and for associated labor costs (including those for subcontractors). Associated labor costs shall include increases or decreases that result from changes in social security and unemployment taxes and workers’ compensation insurance, but will not otherwise include any amount for general and administrative costs, overhead, or profit. (ii) Subcontractors may be entitled to adjustments due to the new minimum wage, pursuant to paragraph (b)(2). Contractors shall consider any subcontractor requests for such price adjustment. (iii) The Contracting Officer will not adjust the contract price under this clause for any costs other than those identified in paragraph (b)(3)(i) of this clause, and will not provide duplicate price adjustments with any price adjustment under clauses implementing the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute. (4) The Contractor warrants that the prices in this contract do not include allowance for any contingency to cover increased costs for which adjustment is provided under this clause. (5) A pay period under this clause may not be longer than semi-monthly, but may be shorter to comply with any applicable law or other requirement under this contract establishing a shorter pay period. Workers shall be paid no later than one pay period following the end of the regular pay period in which such wages were earned or accrued. (6) The Contractor shall pay, unconditionally to each worker, all wages due free and clear without subsequent rebate or kickback. The Contractor may make deductions that reduce a worker’s wages below the E.O. minimum wage rate only if done in accordance with 29 CFR 23.230, Deductions. (7) The Contractor shall not discharge any part of its minimum wage obligation under this clause by furnishing fringe benefits or, with respect to workers whose wages are governed by the Service Contract Labor Standards statute, the cash equivalent thereof. (8) Nothing in this clause shall excuse the Contractor from compliance 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. 14026 minimum wage. However, wage increases under such other laws or municipal ordinances are not subject to price adjustment under this subpart. (9) The Contractor shall pay the E.O. minimum wage rate whenever it is higher than any applicable collective bargaining agreement(s) wage rate. (10) The Contractor shall follow the policies and procedures in 29 CFR 23.240(b) and 23.280 for treatment of workers engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips. (c) (1) This clause applies to workers as defined in paragraph (a). As provided in that definition– (i) Workers are covered regardless of the contractual relationship alleged to exist between the contractor or subcontractor and the worker; (ii) Workers with disabilities whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(c) are covered; and (iii) Workers who are registered in a bona fide apprenticeship program or training program registered with the Department of Labor’s Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship, are covered. (2) This clause does not apply to– (i) Fair Labor Standards Act (FLSA)-covered individuals performing in connection with contracts covered by the E.O., i.e. those individuals who perform duties necessary to the performance of the contract, but who are not directly engaged in performing the specific work called for by the contract, and who spend less than 20 percent of their hours worked in a particular workweek performing in connection with such contracts; (ii) Individuals exempted from the minimum wage requirements of the FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise covered by the Service Contract Labor Standards statute, or the Wage Rate Requirements (Construction) statute. These individuals include but are not limited to- (A) Learners, apprentices, or messengers whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(a) ; (B) Students whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(b) ; and (C) Those employed in a bona fide executive, administrative, or professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541). (d) Notice. The Contractor shall notify all workers performing work on, or in connection with, this contract of the applicable E.O. minimum wage rate under this clause. With respect to workers covered by the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute, the Contractor may meet this requirement by posting, in a prominent and accessible place at the worksite, the applicable wage determination under those statutes. With respect to workers whose wages are governed by the FLSA, the Contractor shall post notice, utilizing the poster provided by the Administrator, which can be obtained at www.dol.gov/agencies/whd/government-contracts , in a prominent and accessible place at the worksite. Contractors that customarily post notices to workers electronically may post the notice electronically provided the electronic posting is displayed prominently on any Web site that is maintained by the contractor, whether external or internal, and customarily used for notices to workers about terms and conditions of employment. (e) Payroll Records. (1) The Contractor shall make and maintain records, for three years after completion of the work, containing the following information for each worker: (i) Name, address, and social security number; (ii) The worker’s occupation(s) or classification(s); (iii) The rate or rates of wages paid; (iv) The number of daily and weekly hours worked by each worker; (v) Any deductions made; and (vi) Total wages paid. (2) The Contractor shall make records pursuant to paragraph (e)(1) of this clause available for inspection and transcription by authorized representatives of the Administrator. The Contractor shall also make such records available upon request of the Contracting Officer. (3) The Contractor shall make a copy of the contract available, as applicable, for inspection or transcription by authorized representatives of the Administrator. (4) Failure to comply with this paragraph (e) shall be a violation of 29 CFR 23.260 and this contract. Upon direction of the Administrator or upon the Contracting Officer's own action, payment shall be withheld until such time as the noncompliance is corrected. (5) Nothing in this clause limits or otherwise modifies the Contractor’s payroll and recordkeeping obligations, if any, under the Service Contract Labor Standards statute, the Wage Rate Requirements (Construction) statute, the Fair Labor Standards Act, or any other applicable law. (f) Access. The Contractor shall permit authorized representatives of the Administrator to conduct investigations, including interviewing workers at the worksite during normal working hours. (g) Withholding. The Contracting Officer, upon his or her own action or upon written request of the Administrator, will withhold funds or cause funds to be withheld, from the Contractor under this or any other Federal contract with the same Contractor, sufficient to pay workers the full amount of wages required by this clause. (h) Disputes. Department of Labor has set forth in 29 CFR 23.510, Disputes concerning contractor compliance, the procedures for resolving disputes concerning a contractor’s compliance with Department of Labor regulations at 29 CFR part 23. Such disputes shall be resolved in accordance with those procedures and not the Disputes clause of this contract. These disputes include disputes between the Contractor (or any of its subcontractors) and the contracting agency, the Department of Labor, or the workers or their representatives. (i) Antiretaliation. The Contractor shall not discharge or in any other manner discriminate against any worker because such worker has filed any complaint or instituted or caused to be instituted any proceeding under or related to compliance with the E.O. or this clause, or has testified or is about to testify in any such proceeding. (j) Subcontractor compliance. The Contractor is responsible for subcontractor compliance with the requirements of this clause and may be held liable for unpaid wages due subcontractor workers. (k) Subcontracts. The Contractor shall include the substance of this clause, including this paragraph (k) in all subcontracts, regardless of dollar value, that are subject to the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute, and are to be performed in whole or in part in the United States. (End of clause)