President Trump Ends $15-Per-Hour Contractor Minimum Wage Rate After Filing a Brief Defending Power to Set the Minimum Wage

Quick Hits

• On March 14, 2025, President Trump issued EO 14236, “Additional Rescissions of Harmful Executive Orders and Actions,” revoking EO 14026, which had set a $15-per-hour minimum wage rate for federal contractors.
• The EO 13658 minimum wage rate (currently $13.30 per hour) is still in effect for certain covered contracts.
• EO 14026 and its implementing regulations are still subject to ongoing litigation.
• Federal contractors and subcontractors must continue to follow other federally mandated compensation requirements, including minimum wage rates and applicable wage determinations.

The $15-Per-Hour Minimum Wage Rate for Federal Contractors

EO 14026 generally required minimum wages for workers performing work on or in connection with contracts covered under the McNamara-O’Hara Service Contract Act; contracts covered under the Davis-Bacon Act; contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public; and concession contracts. Because of yearly adjustments, in 2025, the applicable wage rate under EO 14026 was $17.75 per hour.

Since its issuance on April 27, 2021, EO 14026 has been under legal attack, primarily concerning whether its promulgation was within presidential authority under the Federal Property and Administrative Services Act (also known as the Procurement Act). The Fifth Circuit (within presidential authority), Ninth Circuit (not within presidential authority), and Tenth Circuit (within presidential authority) have split over whether the order was within President Biden’s procurement authority.

In January 2025, the Supreme Court of the United States declined to address the split. In February 2025, in the Fifth Circuit case, Republican attorneys general in Louisiana, Mississippi, and Texas called on the full Fifth Circuit Court of Appeals to reconsider the three-judge panel’s unanimous decision. On March 13, 2025, the U.S. Department of Labor (DOL) opposed rehearing on the basis that EO 14026 fell, as the panel of judges held, “directly within the President’s purview.” On March 17, 2025, the Texas Office of the Attorney General notified the Fifth Circuit of the revocation of EO 14026 and asked the Fifth Circuit to withhold issuance of the panel’s mandate and vacate the panel’s opinion.

EO 14236 of March 14, 2025, does not purport to address the existing regulatory or procurement basis for EO 14026. Specifically, to implement EO 14026, the DOL’s Wage and Hour Division (WHD) published regulations on November 24, 2021, entitled, “Increasing the Minimum Wage for Federal Contractors.” In addition, the Federal Acquisition Regulatory Council (FAR Council) amended Federal Acquisition Regulation 52.222-55, a provision that remains in many federal contracts.

Consequently, we expect further action from the WHD, procuring agencies, and/or the FAR Council to address this existing regulatory framework. We also expect that, even if EO 14236 ends the Fifth Circuit appeal, litigation over the scope of a president’s authority to issue executive orders related to procurement will continue unabated.

Other Minimum Wage and Compensation Obligations for Federal Contractors

Importantly, EO 14026 was not the first EO specifying a general minimum wage for federal contractors. Former president Barack Obama issued EO 13658 on February 12, 2014 (“Establishing a Minimum Wage for Contractors”). EO 14026 superseded EO 13658 as of January 30, 2022, to the extent inconsistent with EO 14026. Thus, the EO 13658 minimum wage ($13.30 per hour as of January 1, 2025) has remained applicable only to covered contracts that were entered into on or between January 1, 2015, and January 29, 2022, and which were not renewed or extended on or after January 30, 2022.

In addition, the Davis-Bacon Act and the McNamara-O’Hara Service Contract Act, for example, continue to require prevailing wages by certain federal contractors and subcontractors that perform services or construction work. However, 2023 changes—which, in particular, expanded the scope of Davis-Bacon coverage and changed the development of wage rates and their incorporation into contracts—to the Davis-Bacon regulations are also subject to pending legal challenges.

Key Takeaways

Federal contractors and grant recipients may want to consider taking the following steps:

• Identifying any contracts subject to federally specified minimum wages and watching for notices from the FAR Council or the contracting agency implementing the revocation of EO 14026
• Monitoring Davis-Bacon-related litigation if performing under Davis-Bacon-covered contracts
• Monitoring executive order challenges to presidential authority under the Procurement Act

Ogletree Deakins’ Government Contracting and Reporting Practice Group and Wage and Hour Practice Group will continue to monitor developments and will provide updates on the Employment Law, Government Contracting and Reporting, and Wage and Hour blogs as additional information becomes available.

This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ New Administration Resource Hub.

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