⚡ Bottom Line Up Front: If you still hold a federal contract covered by Executive Order 13658, the minimum wage for workers on that contract rises to $14.05 per hour on January 6, 2027. The required cash wage for tipped employees on those contracts rises to $9.85 per hour the same day. These rates come from a Department of Labor notice published in the Federal Register on October 8, 2026. They apply only to a shrinking set of older contracts, so the first question is whether any of your work is covered at all.
What Changes on January 6, 2027?
The Wage and Hour Division of the U.S. Department of Labor announced the 2027 update to the Executive Order 13658 minimum wage. Beginning January 6, 2027, the rate that generally must be paid to workers performing work on or in connection with covered contracts increases to $14.05 per hour. The current rate is $13.65 per hour, which the Department announced on February 9, 2026 and which took effect on May 11, 2026.
The cash wage for tipped employees on covered contracts also goes up, from $9.55 to $9.85 per hour on January 6, 2027. More on the tipped rate below.
Which Contracts Does Executive Order 13658 Cover?
This is the part worth reading twice. According to the DOL notice, the 2027 rate applies to certain federal contracts entered into between January 1, 2015 and January 29, 2022 that were not renewed or extended, by an exercised option or otherwise, on or after January 30, 2022.
The order generally applies to contracts subject to the Davis-Bacon Act (DBA) and the Service Contract Act (SCA) that were awarded in that window and not renewed or extended on or after January 30, 2022.
You may be wondering why this isn't the $15.00 figure you remember. Executive Order 14026 set a $15.00 minimum for federal contractors starting January 30, 2022, for contracts entered, renewed, or extended on or after that date. On March 14, 2025, Executive Order 14026 was revoked. As a result, the notice explains, Executive Order 13658 remains in effect for the older contracts described above. DOL says the number of contracts still subject to it has decreased significantly and continues to dwindle, but some remain.
If you're not sure whether a specific contract is covered, don't guess. Confirm with your contracting officer. Coverage turns on the exact dates and whether the contract was renewed or extended.
Two exclusions matter for edge cases. DOL's EO 13658 page states that, consistent with Executive Orders 13838 and 14236, contracts for seasonal recreational services are not subject to EO 13658. That exemption covers seasonal recreational services or seasonal recreational equipment rental for the general public on federal lands, and it does not apply to lodging and food services associated with those activities. Separately, under 29 CFR 10.4(f), the order does not apply to FLSA-covered workers who perform work in connection with a covered contract (support duties, not the contract's specific work) for less than 20 percent of their hours in a given workweek. That 20 percent exclusion does not apply to workers performing on the covered contract. See also 29 CFR 10.22.
What Is the Cash Wage for Tipped Employees?
For tipped employees on covered contracts, the required minimum cash wage is $9.85 per hour beginning January 6, 2027. A contractor may use a tip credit to meet part of the wage obligation. When it does, the tips the employee receives must equal at least the difference between the cash wage paid and the $14.05 minimum wage.
If the employee doesn't receive enough tips to reach $14.05 per hour when combined with the cash wage, the contractor must increase the cash wage so that cash wage plus tips equals the minimum wage. The cash wage is set at 70 percent of the full Executive Order 13658 minimum wage, rounded to the nearest $0.05.
How Did DOL Calculate the New Rate?
The order ties the annual adjustment to inflation using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as published by the Bureau of Labor Statistics.
For 2027, DOL averaged the CPI-W for July 2025 through June 2026 (320.866) and compared it to the average for July 2024 through June 2025 (311.293). That works out to an annual increase of 3.075 percent. Applying 3.075 percent to $13.65 gives $14.070, and the order requires rounding to the nearest $0.05, which lands at $14.05. For the tipped rate, 70 percent of $14.05 is $9.83, rounded to $9.85.
Where Will the New Rate Be Published?
The Wage and Hour Division provides notice of the Executive Order 13658 rate on all wage determinations issued under the DBA and the SCA. Those determinations are on SAM.gov, which DOL describes as the authoritative site for DBA and SCA wage determinations. A poster reflecting the new rate will also be available on the Wage and Hour Division website.
What Should Payroll Do Before January 6, 2027?
Here's a short checklist you can run through now.
- List your federal contracts with the date each was entered and whether any was renewed or extended on or after January 30, 2022.
- Flag the DBA and SCA contracts that fall in the January 1, 2015 to January 29, 2022 window and weren't renewed or extended on or after January 30, 2022.
- Confirm coverage with your contracting officer for any contract where the answer isn't clear.
- Check the wage determination on SAM.gov for each covered contract.
- Update base pay to at least $14.05 for covered workers beginning January 6, 2027.
- Review tipped pay. Set the cash wage to at least $9.85 and confirm cash wage plus tips reaches $14.05. Where tips fall short, raise the cash wage to close the gap.
- Hang the updated poster once it's available from the Wage and Hour Division.
This is the kind of quiet deadline that's easy to miss. BlueWave's payroll is powered by iSolved People Cloud, and our team takes the paperwork off your plate so the right rate is in place for January. For the bigger picture, see our Davis-Bacon prevailing wage guide and the complete certified payroll reporting guide.
FAQ
My contract pays $15.00. Does this notice change that?
This notice only updates the Executive Order 13658 rate for the older contracts it covers. The $15.00 figure came from Executive Order 14026, which was revoked on March 14, 2025. Check which order applies to your specific contract, and confirm with your contracting officer if it's unclear.
How do I know if one of my contracts is covered by Executive Order 13658?
Coverage generally applies to DBA and SCA contracts entered between January 1, 2015 and January 29, 2022 that were not renewed or extended on or after January 30, 2022. Because the answer depends on exact dates and any renewals or extensions, confirm with your contracting officer.
When do the new rates take effect?
The new Executive Order 13658 rates of $14.05 per hour and $9.85 per hour for tipped employees take effect on January 6, 2027.
Where is the official rate for my contract listed?
On the wage determination for your contract. Check the DBA or SCA determination on SAM.gov, which is where DOL now publishes those rates.
Working Federal Contracts? Let's Get the Rates Right.
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