Employment / 1 min read
President Trump's Executive Order No. 14236, issued March 14th, revoked 18 previous executive actions, most notably Executive Order No. 14026. This 2021 order had implemented a $15 per hour minimum wage for federal contractors that had since risen to $17.75 per hour through inflation-based adjustments.
This rescission provides relief to contractors who rely on lower-wage labor forces while also resolving a circuit split regarding the order's legality – specifically, the Ninth Circuit had invalidated the contractor minimum wage while the Fifth and Tenth Circuits upheld it.
Remaining Wage Requirements
Trump's action preserves Executive Order No. 13658, issued by President Obama in 2014, which established a minimum wage for federal contractors that currently stands at $11.25 per hour. This wage exceeds minimum wages in 26 states but remains significantly lower than rates in historically blue-leaning states.
Contractual Ambiguities
Substantial uncertainty exists regarding how existing contracts will be handled. The Federal Acquisition Regulation clause for Executive Order No. 14026 (FAR 52.222-55) remains in many contracts, and the government has not yet clarified whether Executive Order No. 13658's provisions will automatically apply to post-2022 contracts or whether contract modifications will be required.
Federal contractors must navigate the implications of the "Christian doctrine" (established in G. L. Christian and Associates v. United States), which automatically incorporates key procurement policies into contracts even when not explicitly stated. Furthermore, uncertainty persists regarding how subcontractor flow-down requirements previously mandated by Executive Order No. 14026 should now be handled.
Enforcement Outlook
Despite the contractual ambiguities, the current administration's rescission signals that enforcement of the $17.75 minimum wage is unlikely, providing practical if not legal certainty for many contractors.
Practical Considerations
Contractors seeking to adjust wages following this rescission must:
- Review applicable terms in federal contracts
- Consider collective bargaining agreement constraints
- Ensure compliance with state wage laws
- Monitor forthcoming guidance from the Department of Labor and FAR Council
While Executive Order No. 14026 has been rescinded, the broader questions about presidential authority remain unresolved, with implications for future executive actions regarding federal contractors.