Federal Contractor Minimum Wage Order Rescinded

On March 14, 2025, President Donald Trump issued an executive order that revoked several previous executive orders issued by former President Joe Biden, including Executive Order 14026 on minimum wage for federal contractors. 

Issued in 2021, Executive Order 14026 directed federal agencies to include a clause in federal contracts requiring contractors to pay employees $15 per hour as a minimum wage and, subsequently, increasing the minimum wage annually to account for inflation. After notice and comment, the U.S. Department of Labor (DOL) issued regulations implementing the order. In 2025, the federal contractor minimum wage most recently increased to $17.75 per hour.

As previously reported, Executive Order 14026 faced numerous legal challenges. Most recently, in November 2024, the Ninth Circuit Court of Appeals concluded that the order exceeded the authority granted to the President and the DOL. The Ninth Circuit reversed the federal district court’s order granting the government’s motion to dismiss as well as the court order denying a preliminary injunction and remanded the case for further proceedings.

The Ninth Circuit’s decision, however, conflicted with both the Fifth and Tenth Circuit’s conclusion that the order was valid. The split between the federal circuit courts raised the possibility of the U.S. Supreme Court taking up the issue to resolve the split but, in January 2025, it declined to do so.

Amidst the tension between federal court decisions, and with litigation still pending, President Trump’s rescinding Executive Order 14026 altogether creates additional uncertainty over these cases’ status. President Trump’s executive order suggests the DOL — which had been defending the order and related DOL regulations up to this point — may change course and stop defending these cases. Indeed, with this executive order rescinded, the legal authority for the DOL’s regulations no longer exists, which means the DOL regulations will likely be rescinded as well.

Executive Order 14026 impacted contracts made, renewed or extended on or after January 30, 2022. However, President Trump’s latest executive order does not impact Executive Order 13658, a prior federal contractor minimum wage order issued by former President Barrack Obama, which set minimum wage requirements for contracts made, renewed or extended between January 1, 2015, through January 29, 2022.

Federal contractors should continue to monitor these developments and consult with their legal counsel to ensure they are paying the appropriate wages. CalChamber will continue to provide updates as they develop.

James W. Ward, J.D., Employment Law Subject Matter Expert/Legal Writer and Editor, CalChamber

CalChamber members can read more about Wage and Hour Requirements for Specific Industries in the HR Library. Not a member? See how CalChamber can help you.