Federal contractor employers are no longer required to comply with special minimum wage rates for work performed on certain federal contracts, following a decision by President Trump to revoke Executive Order 14026.

On March 14, 2025, President Trump issued an executive order titled “Additional Rescissions of Harmful Executive Orders and Actions,” which rescinded 18 orders, including EO 14026, “Increasing the Minimum Wage for Federal Contractors.” This follows his earlier action in rescinding 78 Biden-era orders under Executive Order 14148. The new order, however, does not directly repeal the regulations implementing EO 14026, but with the underlying authority revoked, the regulations are unlikely to be enforced, providing federal contractors with relief from the mandate.

“Whether and to what extent the Department of Labor will ‘clean-up’ and rescind the regulations implementing EO 14026 remains to be seen,” said one industry observer. However, the lack of enforcement authority likely means that contractors will no longer face the burden of compliance.

EO 14026 had built upon a previous Obama-era order, EO 13658, which established a minimum wage for contractors. While the revocation of EO 14026 impacts the higher wage rates established by the order, EO 13658 still stands, with its lower wage rate of $13.30 per hour. It’s unclear whether Trump’s administration will eventually repeal EO 13658.

The federal contractor minimum wage orders were often seen as complicated, applying to a variety of contracts, including those under the Service Contract Act and the Davis-Bacon Act. “The minimum wage only applied to work performed ‘on or in connection with’ a covered contract,” one analyst explained. This often made tracking eligible work a challenge for employers, leading many to raise wages across the board, which was likely the intended result of the mandate.

Now, with the revocation of EO 14026, contractors face the choice of whether to keep wages at the higher rate or revert to the original wage determination rate. It is important to note that the increase to $13.30 per hour, which went into effect on January 1, 2025, will be the last wage increase under this mandate.

“Once wages are raised, employers generally find it very difficult to lower them again,” said another industry expert. This could result in significant employee morale issues and hinder performance, outweighing any cost savings from lowering wages. Despite the potential for savings, the shift in policy raises significant questions about the future of federal contractor wages and the broader impact on contractor pricing strategies.

In conclusion, the revocation of EO 14026 means that federal contractors are no longer bound by the higher minimum wage rates, but the full consequences of the policy change will unfold as contractors reassess their wage strategies and contracts.

Originally reported by JDSUPRA.