The federal contractor minimum wage for 2027 is $14.05 per hour, effective January 6, 2027, with a $9.85 cash wage for tipped employees. The increase applies only to contracts still covered by Executive Order 13658, generally those entered between January 1, 2015, and January 29, 2022, that haven’t been renewed or extended. (Executive Order 14026, which set a higher rate for newer contracts, was revoked in 2025.) Federal contractors should confirm which contracts and workers are affected, update payroll and keep required federal contractor postings current.
The U.S. Department of Labor (DOL) has announced the 2027 minimum wage for workers on certain federal contracts. Starting January 6, 2027, the rate under Executive Order 13658 increases to $14.05 per hour, up from $13.65. The minimum cash wage for tipped employees rises to $9.85 per hour, up from $9.55.
The new rate itself is simple, but who it applies to is not. The increase covers only the shrinking group of contracts still governed by Executive Order 13658, not every business with a federal contract. Here’s what’s changing, how the rules unfolded and what federal contractors should do next.
What’s Changing in 2027
The new rate applies to workers performing work on or in connection with contracts covered by Executive Order 13658. These generally include:
- Construction contracts covered by the Davis-Bacon Act
- Service contracts covered by the Service Contract Act
- Concessions contracts
- Contracts involving federal property or lands that offer services to federal employees, their dependents or the public
Contract timing determines coverage. The 2027 rate applies to covered contracts entered between January 1, 2015, and January 29, 2022, that have not been renewed or extended on or after January 30, 2022.
Covered workers generally include employees entitled to the federal minimum wage, as well as laborers, mechanics and service employees protected under the Davis-Bacon Act and Service Contract Act. Exempt executive, administrative and professional employees are excluded. So are workers who spend less than 20% of their hours in each workweek on activity related to a covered contract.
Many Davis-Bacon and Service Contract Act workers already earn prevailing wages above $14.05. As a result, the increase may have its biggest practical effect on concessions contracts and agreements involving federal property or lands.
How the Federal Contractor Minimum Wage Has Changed
As administrations have changed, so has the minimum wage for federal contractors:
- 2014. President Obama issued Executive Order 13658, setting a minimum wage for work on or in connection with certain federal contracts that was higher than the federal minimum wage under the Fair Labor Standards Act (FLSA). The rate adjusts each year for inflation.
- 2021. President Biden issued Executive Order 14026, setting a higher minimum wage, starting at $15 per hour, for certain contracts entered, renewed or extended on or after January 30, 2022.
- 2025. On March 14, 2025, President Trump issued an executive order revoking Executive Order 14026. The DOL has stated that it is no longer enforcing Executive Order 14026 or its implementing rule.
Executive Order 14026 had replaced Executive Order 13658 for newer and renewed contracts, so the number of contracts still under Executive Order 13658 keeps shrinking. Whether yours qualifies depends on when it was awarded and whether it has been renewed or extended since early 2022.
Don’t Overlook Required Workplace Posters
Paying the new rate is only part of compliance. Federal contractors often have posting requirements beyond those for every employer. The ones you need depend on your contract type and the laws that apply.
Covered contractors must notify workers of the applicable Executive Order 13658 minimum wage — and the DOL is releasing an updated poster with the 2027 rate. You may need other federal contractor notices, in addition to the standard federal, state and local postings. Before January 6, confirm that all required postings are current and displayed where workers can easily see them.
The 2027 increase applies only to contracts still covered by Executive Order 13658. Check each contract’s award date and renewal history before adjusting pay.
What Employers Should Do Now
- Review payroll and compensation practices. Confirm that covered workers will earn at least $14.05 per hour, or a $9.85 cash wage for tipped employees, by January 6, 2027.
- Determine which contracts and employees are affected. Check each contract’s award date and any renewals or extensions, and identify every worker performing on or in connection with a covered contract.
- Update internal systems and communications. Adjust payroll systems, internal policies and employee communications as needed, and make sure affected workers are notified of the new rate.
- Watch for other wage requirements. Many state and local minimum wages already exceed $14.05. Review federal, state and local requirements together so each worker receives the highest applicable rate.
Make Federal Contractor Compliance Easier
Federal contractor requirements can change whenever a new executive order is issued or a rate is adjusted. Poster Guard® Poster Compliance Service for Federal Contractors keeps you current from day one. You receive a full set of required federal contractor postings right away, plus a year of automatic replacements whenever a mandatory change occurs, at no additional charge. Our in-house legal team monitors posting law changes and sends email alerts, and your posters are backed by our 100% compliance guarantee. If they’re not compliant, we’ll pay the fine, no matter how big.
Want broader coverage? Poster Guard® Poster Compliance Service handles the federal, state and local postings required for every employer. Minimum Wage Monitor™ Premium Service gives you a real-time view of state and local minimum wage rates, including future changes already written into law. And the Employment Law Alert Service keeps you informed of new employment laws that affect your business.
