The Labor Department has set the Executive Order 13658 minimum wage at $14.05 an hour from January 6, 2027, up from $13.65. The notice covers a shrinking pool of older federal contracts, so the rate follows the contract date and not the job title.
What the notice sets
The Wage and Hour Division notice, dated October 2, 2026 and published in the Federal Register on October 8, raises the hourly rate for covered contract work from $13.65 to $14.05. The minimum cash wage for tipped employees goes from $9.55 to $9.85. The current rates took effect on May 11, 2026, after DOL announced them on February 9. The new rates take effect 90 days after publication, which lands on January 6, 2027.
The 40-cent change works out to about 2.9 percent on the base rate. Andrew B. Rogers, the division’s Administrator, signed the notice. For scale, the order started at $10.10 an hour in 2015, so the current figure is about 39 percent higher than the first one.
How DOL got to $14.05
Executive Order 13658 ties each year’s rate to inflation. DOL averaged the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from July 2025 through June 2026 and got 320.866. The same average for July 2024 through June 2025 was 311.293. The ratio is an annual increase of 3.075 percent.
Applied to $13.65, that gives $14.070. The order requires rounding to the nearest $0.05, so the rate becomes $14.05. The tipped cash wage follows a separate rule: 70 percent of the full rate, which is $9.83 and rounds to $9.85.
One input carries a footnote worth knowing. Because of the 2025 lapse in federal appropriations, the Bureau of Labor Statistics did not collect CPI data from October 1 through November 12, 2025. The appendix to the notice shows a blank for October 2025, and the July 2025 to June 2026 average of 320.866 is built from the 11 monthly readings that exist. Anyone rebuilding the calculation in a spreadsheet needs to know the series has a hole in it.
Why the rate depends on the contract
The rate in this notice does not apply to all federal contract work. It applies to contracts subject to the Davis-Bacon Act and the Service Contract Act that were entered into between January 1, 2015 and January 29, 2022 and were not renewed or extended on or after January 30, 2022.
The history explains the split. President Obama signed Executive Order 13658 on February 12, 2014, with a $10.10 starting rate. President Biden’s Executive Order 14026 set a $15.00 rate for newer and renewed contracts from January 30, 2022. President Trump revoked that order on March 14, 2025 through Executive Order 14236. DOL says the older order “remains in effect” for the contracts it still reaches, and it describes that group as one that “continues to dwindle.”
So the $14.05 figure sits below the $15.00 that applied to newer contracts before the revocation, and it reaches only older work that was never renewed. A service contract signed in 2019 and never extended carries this floor. A contract awarded later does not carry it, so two employees doing similar work can have different Executive Order wage floors depending on which contract their hours are billed to.
What it means for the HR leader
This section is our read, not DOL’s. A rate that depends on when a contract was signed or last renewed is a data problem before it is a pay problem. Most HRIS and payroll systems key pay rules to location, job code or union agreement. A floor that follows the contract needs a contract identifier on the time record or the assignment, and someone has to own that field.
The people who know contract dates sit in contracts and program management. The people who run the pay rules sit in payroll. The January 6 effective date gives both teams a quarter to agree on who keeps the list of covered contracts current, because the covered pool shrinks when a contract is renewed, extended or ends, and a renewal moves the work out of this notice’s scope.
Tipped roles deserve their own check. The $9.85 cash wage assumes tips make up the difference to the full rate. If tips fall short, the contractor has to raise the cash wage, per the order’s tip-credit rule. Payroll teams running a tip credit on covered work should confirm the system tops up the cash wage when tips come in low.
Our earlier coverage of how federal contractors kept the liability when the paperwork requirements shifted made a similar point about OFCCP: obligations that change at the policy level still need an owner inside the company. DOL’s decision to drop the disability hiring goal for contractors is another case where the rule changed and the internal process had to follow.
What to do before January 6
- List every active federal contract and mark which ones were entered into between January 1, 2015 and January 29, 2022 and never renewed or extended.
- Check that the payroll system can hold a rate of $14.05 and a tipped cash wage of $9.85 for those assignments and keep the $13.65 and $9.55 rates running until the effective date.
- Name one owner for the contract list and a trigger for updating it when a contract is renewed.
- Pull the poster DOL says it will publish on the Wage and Hour Division website and replace the posted rate.
The covered pool is shrinking each year, so the rate matters to fewer employers every cycle. The employers it still reaches have the same compliance exposure as before, and the notice gives them a fixed date to work toward.
Source: U.S. Department of Labor, Wage and Hour Division, Federal Register notice 2026-20646
