Federal Contractor Minimum Wage 2027: New $14.05 Rate Explained
Quick answer
The federal contractor minimum wage for 2027 is $14.05 an hour, up from $13.65, and the cash wage for tipped workers rises to $9.85 from $9.55. The Labor Department rates apply only to contracts still covered by Executive Order 13658 and take effect 90 days after the October 8, 2026, Federal Register notice.
Key takeaways
The Department of Labor set the Executive Order 13658 minimum wage at $14.05 an hour, a 40-cent increase from the current $13.65.
Tipped workers on covered contracts must receive a cash wage of at least $9.85 an hour, up from $9.55, with employers topping up any tip shortfall.
The new rates take effect 90 days after the notice is published in the Federal Register on October 8, 2026, which works out to early January 2027.
Only contracts awarded between January 1, 2015, and January 29, 2022, that were not renewed or extended on or after January 30, 2022, are covered.
The higher $15 contractor minimum created by Executive Order 14026 no longer applies after it was revoked on March 14, 2025.
The federal contractor minimum wage 2027 rate is set: $14.05 an hour. The U.S. Department of Labor's Wage and Hour Division (WHD) announced the increase in a notice scheduled for publication in the Federal Register on October 8, 2026. Tipped workers on the same contracts will receive a minimum cash wage of $9.85 an hour.
The raise is modest and the group it covers is narrow. It applies only to workers on older federal contracts that still fall under Executive Order 13658, signed in 2014. Here is who qualifies, when the new pay starts, how the number was worked out, and what to check on your paycheck.
What is the new federal contractor minimum wage for 2027?
The new rate is $14.05 per hour for workers performing on or in connection with contracts covered by Executive Order 13658 (EO 13658). That is 40 cents more than the current rate of $13.65.
Standard minimum wage: $13.65 now, rising to $14.05 an hour
Minimum cash wage for tipped employees: $9.55 now, rising to $9.85 an hour
Notice signed: October 2, 2026, by WHD Administrator Andrew B. Rogers
Federal Register publication: October 8, 2026 (document 2026-20646)
The current $13.65 and $9.55 rates are fairly recent. The department announced them on February 9, 2026, and they took effect on May 11, 2026.
When does the federal contractor minimum wage 2027 increase start?
The new rates take effect 90 days after the notice appears in the Federal Register. With publication on October 8, 2026, the 90th day falls on January 6, 2027.
The 90-day gap is built into the rules. EO 13658 and its regulations require the Labor Department to tell the public about each new rate at least 90 days before it takes effect. The department also posts the rate on wage determinations issued under the Davis-Bacon Act and the Service Contract Act, which are now published on SAM.gov, and says an updated workplace poster will appear on the WHD website.
Which federal contracts and workers are covered?
Coverage is limited to certain contracts awarded between January 1, 2015, and January 29, 2022, that were not renewed or extended, whether through an exercised option or otherwise, on or after January 30, 2022. The department admits this pool "continues to dwindle," but expects some contracts to remain.
According to the department's notice and its EO 13658 fact sheet, the order generally reaches these types of agreements:
Construction contracts covered by the Davis-Bacon Act.
Service contracts covered by the Service Contract Act.
Concessions contracts, including some excluded from the Service Contract Act.
Contracts linked to federal property or lands that offer services to federal employees, their dependents or the general public.
Covered workers include employees owed the Fair Labor Standards Act (FLSA) minimum wage, service employees owed Service Contract Act prevailing wages, laborers and mechanics owed Davis-Bacon wages, and workers with disabilities paid under FLSA section 14(c) certificates.
Some people fall outside the order. The fact sheet excludes, among others, FLSA-exempt executive, administrative and professional staff, contracts to supply materials or equipment, construction contracts under $2,000, and workers who spend less than 20% of their weekly hours on work "in connection with" a covered contract.
What happened to the $15 contractor minimum wage?
The $15 rate no longer applies. It came from Executive Order 14026, signed by President Biden on April 27, 2021, which set a $15 floor from January 30, 2022, for new, renewed or extended contracts, with yearly inflation updates.
President Trump revoked EO 14026 on March 14, 2025, through Executive Order 14236. As a result, the Labor Department's notice states that EO 13658 "remains in effect" for the older contracts it covers. That leaves the new $14.05 rate below the $15 floor EO 14026 had set back in 2022.
How did the Labor Department calculate $14.05?
The department raised the current rate by the yearly change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), then rounded to the nearest 5 cents. Those steps are written into EO 13658 itself.
It averaged CPI-W data from July 2025 through June 2026, giving an index level of 320.866.
It compared that with the average for July 2024 through June 2025, which was 311.293.
The difference produced an annual increase of 3.075%.
Applying 3.075% to $13.65 gave $14.07, which rounds to $14.05.
One wrinkle: because of the 2025 lapse in federal funding, the Bureau of Labor Statistics (BLS) did not collect CPI data from October 1 to November 12, 2025, so one monthly reading is missing from the data the department used.
How does the 2027 tipped wage work on federal contracts?
Tipped workers on covered contracts must get at least $9.85 an hour in cash wages, and their tips must bring total pay up to at least $14.05 an hour. If tips fall short, the contractor has to raise the cash wage to close the gap.
The tipped cash wage is fixed at 70% of the full EO 13658 minimum. Seventy percent of $14.05 is $9.83, which the order rounds to $9.85.
What this means for you
If you work on a qualifying federal contract, your hourly pay should be at least $14.05 from January 6, 2027, or at least $9.85 in cash wages plus enough tips to reach $14.05 if you are tipped.
Workers: check your first paycheck after the start date and look for the wage determination or the WHD poster at your worksite, which contractors must display.
Contractors: confirm which of your contracts are still covered by EO 13658, update payroll before the start date, and notify covered workers of the new rate.
Questions or underpayment: the WHD helpline is 1-866-487-9243 (1-866-4USWAGE), available from 8 a.m. to 5 p.m. in your time zone.
Last updated: October 7, 2026
Frequently asked questions
What is the federal contractor minimum wage for 2027?
It is $14.05 an hour for workers on contracts covered by Executive Order 13658. The Department of Labor announced the figure in a notice scheduled for Federal Register publication on October 8, 2026.
When does the $14.05 federal contractor rate take effect?
The rate starts 90 days after the notice is published in the Federal Register on October 8, 2026. By that count, the new minimum applies from early January 2027, with January 6, 2027, being the 90th day.
What is the 2027 tipped wage for federal contract workers?
Tipped employees on covered contracts must be paid a cash wage of at least $9.85 an hour. If tips do not bring total pay up to $14.05 an hour, the contractor must raise the cash wage to make up the difference.
Does the $14.05 rate apply to every federal contract?
No. It applies to certain contracts awarded between January 1, 2015, and January 29, 2022, that were not renewed or extended on or after January 30, 2022. The Labor Department says the number of these contracts has fallen sharply and keeps shrinking.
What happened to the $15 federal contractor minimum wage?
The $15 rate came from Executive Order 14026, which took effect on January 30, 2022. President Trump revoked that order on March 14, 2025, and the Labor Department now says Executive Order 13658 remains the order in effect.
How was the 2027 federal contractor minimum wage calculated?
The Labor Department raised the current $13.65 rate by the 3.075% annual increase in the CPI-W inflation index, which gave $14.07, then rounded to the nearest 5 cents as the order requires. That produced $14.05.
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Sources
This article was compiled by the Jobsiz newsroom from the sources listed above, with AI-assisted writing and automated fact-checking. It is general information, not legal advice; check your contract and wage determination for the rate that applies to you.