On March 14, 2025, President Trump rescinded a second batch of Biden-era executive orders (EOs), including EO 14026 (Increasing the Minimum Wage for Federal Contractors). Contractors can read about President Trump’s first round of rescindments here.

Issued in 2021, EO 14026 raised the federal contractor minimum wage to $15.00 per hour in 2021, and most recently to $17.75 in January 2025 through the EO’s required annual automatic adjustments for inflation. Although the rollback of EO 14026 may lend some clarity to a previously murky legal landscape, practical implementation issues and related state and local minimum wage issues may blunt the immediate impact of the rescindment of this EO.

Notably, the March 14, 2025, EO also rescinded a slew of other Biden-era EOs, including EO 14119 and EO 14126, which required the federal government to prioritize registered apprenticeship participants in contracting and grant decisions and required that the federal government favor companies that offer equitable compensation practices under certain federal assistance contracts. The latter EO was a part of the “Good Jobs Initiative,” whose stated purpose was to provide information to workers, employers, and governments to improve job quality and, pursuant to EO 14126, to provide incentives for federally assisted projects with high labor standards.

History and Legal Challenges to the Federal Contractor Minimum Wage

Federal contractor minimum wage requirements have been part of federal contracting for over 10 years. First established at a rate of $10.10/hour by President Barack Obama in February 2014, through the issuance of EO 13658 (Establishing a Minimum Wage for Contractors), EO 14026 significantly raised the minimum rate to $15.00/hour in late 2021. EO 14026 (and the subsequent rules issued by DOL and the FAR Council) has been the subject of numerous legal challenges since issuance. These legal challenges have resulted in a circuit split with the Ninth Circuit striking down the rule and the Fifth and Tenth Circuit upholding the president’s authority to issue the EO and subsequent rule. See State of Nebraska v. Su, 2024 U.S. App. LEXIS 28010 (9th Cir Nov. 5, 2024); State of Texas v. Trump, No. 23-40671 (5th Cir. 2025); Bradford v. U.S. Department of Labor, No. 22-1023 (10th Cir. 2024). Earlier this year in January, the U.S. Supreme Court declined a petition to resolve the circuit split and decide the legal question of whether President Biden had the requisite procurement authority to enact a $15.00 minimum wage. This left open the possibilities that federal contractors would subject to varying federal contractor minimum wage requirements based on the location of work performance.

Common Contractor Issues

Since enactment, federal contractors have faced a number of issues associated with the implementation of EO 14026. This includes resistance from contracting agencies to recover the wage compression effects of raising the federal contractor minimum wage as well as long delays in receipt of payment on equitable adjustment requests to recover annual rate increases. The differing results of the federal court litigation only added to the potential headaches contractors could face when analyzing the impacts of the federal contractor minimum wage.

Impacts of Rescindment

There is little doubt that the rescindment of EO 14026 should mean that agencies will no longer incorporate EO 14026 federal minimum wage requirements in new solicitations and contract awards. However, given that the Department of Labor and the FAR Council rules and regulations codifying the federal contractor minimum wage have yet to be repealed, federal contractors should be prepared to object to any inclusion (inadvertent or otherwise) of the federal contractor minimum wage requirements in future solicitations or awards. Even though we expect that the federal contractor minimum wage rules also will be rescinded in the coming months and that any enforcement actions by DOL of this rule will cease, we recommend contractors still carefully monitor these developments.

Practically speaking, however, contractor still may have to grapple with payment of the federal contractor minimum wage particularly for awarded contracts in situations where contractors have already priced labor while taking the federal minimum wage into account.  While technically possible, it seems unlikely that the agencies will direct wholesale repricing of contracts or that contractors will immediately reduce the pay of employees covered by the federal minimum wage rules. Furthermore, the required compliance with state and local minimum wage rates (which have also increased dramatically over the last few years but also include fewer mechanisms for recovery of wage increases) will also impact contractor decisions to decrease employee pay rates as will employee relations and retention issues.

So where does that leave contractors when it comes to what minimum wage, if any, will apply to federal service or construction work? The rescindment certainly should resolve (or at least begin to resolve) the varied application and enforcement issues that likely would have followed from the circuit split. And for contracts awarded prior to the effective date for EO 14026, that is January 20, 2022, federal contractors will be required to pay workers $13.30 pursuant to the Obama-era EO 13658. However, those with contracts that postdate January 30, 2022, should only be required to pay the federal minimum wage (currently $7.25 an hour) unless other labor standards and/or state or local rates require payment at higher rates.

Rescindment of Related Executive Orders

As mentioned above, the March 14, 2025, EO also rescinded EO 14119 and EO 14126.  

President Biden issued EO 14126 on September 6, 2024, (Investing in America and Investing in American Workers) with the goal of incentivizing federal agencies to prioritize infrastructure program grants like the Inflation Reduction Act (IRA) and Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act for contractors meeting certain labor-friendly requirements. Prior to its rescindment, this EO required prioritization of funding for companies with project labor agreements (PLAs), registered apprenticeship programs, and benefits such as childcare and paid leave as well as companies offering equitable compensation practices among other incentives. The EO assigned greater weight to applicants with above listed programs when being considered for funding. The rescission of this EO eliminates incentives for contractors to implement these labor-friendly requirements for considerations of federal grants awards and in line with similar agency actions over the past few months in this area.

President Biden issued EO 14119 on March 6, 2024, (Scaling and Expanding the Use of Registered Apprenticeships in Industries and the Federal Government and Promoting Labor-Management Forums). This Biden-era EO required federal agencies to prioritize awards and funding decisions to contractors participating in the registered apprenticeship programs. This EO linked directly with language found in the Bipartisan Infrastructure Act and other recent legislation requiring employment of apprentices under certain circumstances for covered projects. Once again, the rescindment of this EO aligns with other broader actions the Trump administration has taken to dismantle the labor policies of the prior administration.

Conclusion

This new batch of rescissions will almost inevitably roll back pay increases in the coming years for those federal contractor employees being paid at the federal contractor minimum rate. However, it is highly unlikely that contractors will immediately seek to decrease their wages on the existing contracts due to employee retention and relations issues and other contractual issues. 

President Trump’s rescindments are one more part of the ever-evolving landscape of changes in the government contracts labor regulations happening at an incredibly fast pace. For more information on additional changes, you can read here. The Cozen O’Connor  team is monitoring these changes closely and are available to assist with any questions or help you may need on these matters.