A federal contractor minimum wage update takes effect on May 11, 2026, but this one comes with an important distinction: it applies only to certain covered federal contracts, not all contractors.
For contracts covered under Executive Order 13658, the minimum wage increases to:
👉 Official Department of Labor source:
https://www.dol.gov/agencies/whd/government-contracts/minimum-wage
👉 Federal Register notice:
https://www.federalregister.gov/documents/2026/02/09/2026-02466/minimum-wage-for-federal-contracts-covered-by-executive-order-13658-notice-of-rate-change-in-effect
Beginning May 11, 2026:
This increase is required under Executive Order 13658, which mandates annual inflation-based adjustments tied to CPI-W.
👉 CPI-W explanation (Bureau of Labor Statistics):
https://www.bls.gov/cpi/
The $13.65 rate applies to workers performing work on or in connection with federal contracts covered by Executive Order 13658.
These are generally contracts:
👉 Service Contract Act:
https://www.dol.gov/agencies/whd/government-contracts/service-contracts
👉 Davis-Bacon Act:
https://www.dol.gov/agencies/whd/government-contracts/construction
This means the increase applies to a specific group of legacy federal contracts, not every federal contractor.
Employers are dealing with overlapping executive orders:
Executive Order 14026 has since been rescinded, and the Department of Labor is no longer enforcing it.
👉 DOL update:
https://www.dol.gov/agencies/whd/government-contracts/eo14026
As a result, many contracts now fall back under EO 13658 rules.
Employers with federal contracts should take a closer look now to avoid compliance issues later.
1. Identify Covered Contracts
Confirm whether contracts fall under EO 13658.
2. Review Contract Dates
Pay close attention to contract timing and any renewals or extensions.
3. Update Payroll Rates
Ensure covered employees are paid at least $13.65/hour starting May 11, 2026.
4. Review Tipped Employee Rules
If applicable, confirm compliance with the $9.55/hour minimum cash wage and tip credit requirements.
👉 FLSA tipped employee rules:
https://www.dol.gov/agencies/whd/flsa/tips
5. Update Required Posters
Ensure required federal contractor notices are current.
👉 Poster access:
https://www.dol.gov/agencies/whd/posters
6. Apply the Highest Wage Requirement
Employers must comply with whichever rate is highest, including:
This is not just a rate update. The real risk is misapplying the rule entirely.
Managing wage requirements across federal contracts, state laws and internal policies takes more than just updating a number in payroll. It requires alignment across systems, documentation and ongoing compliance monitoring.
👉 Learn more about how CTR supports employers across payroll and workforce management.
Keeping up with federal contract requirements, wage laws and compliance expectations is complex, especially for organizations operating across multiple states or contract types.
CTR Payroll | HR helps employers:
👉 Explore HR and compliance support:
https://ctrhcm.com/hrservices
What is the federal contractor minimum wage in 2026?
Beginning May 11, 2026, the minimum wage for workers on certain covered federal contracts under EO 13658 is $13.65/hour.
Does this apply to all federal contractors?
No. It applies only to contracts covered by Executive Order 13658.
What is the tipped employee rate for federal contractors in 2026?
The minimum cash wage for tipped employees under covered contracts is $9.55/hour.
Why did the federal contractor minimum wage change?
The rate is adjusted annually based on inflation using CPI-W data.
--
Keeping up with wage requirements across federal contracts, state laws and compliance rules is only getting more complex.
If you’re unsure what applies to your workforce or contracts, it’s worth taking a closer look now before it becomes a compliance issue.
👉 Start here:
https://ctrhcm.com/hrservices
Disclaimer: This blog is for general informational purposes and is not legal advice.
---
Since 1964, CTR has been a trusted partner. As a Payroll & HR Partner, we offer a complete Human Capital Management (HCM) solution to help businesses manage employees from hire to retire. We provide award-winning software and expert, personalized service to automate and simplify every aspect of the employee life cycle: Payroll, HR, Benefits, Workforce Management, Talent Acquisition, Talent Management, Tax, Compliance, and more.
What sets us apart? Our Dedicated Support Rep Model-your dedicated rep will know you, your business, and provide fast, expert service. Our team includes Subject Matter Experts with over 20 years of experience, ensuring you receive guidance through even the most complex situations. 📍 Based in Pittsburgh, PA, CTR is a third-generation, family-owned company with over 60 years in the business. Our core values focus on being “All In,” relentless problem-solving, and exercising the basics better than anyone-principles that have fueled our success.
If you can’t say you LOVE your Payroll & HR provider, it’s time to Contact CTR! 🌐 https://ctrhcm.com/contact 📞 Reach us: (800) 468-2794 📧 Email: sales@ctrhcm.com
View our recent HR management & compliance webinars here: https://ctrhcm.com/resources/