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Limited federal-contract wage rates rise January 6, 2027

DOL sets January 6, 2027 rates of $14.05 generally and $9.85 in tipped cash wages for the limited older-contract coverage of EO 13658. Contract dates and renewals control coverage, while contractors must cover any tipped-worker shortfall from the full minimum.

What happened

DOL's October 8 rate notice raises the EO 13658 minimum from $13.65 to $14.05 per hour and the associated tipped cash wage from $9.55 to $9.85, beginning January 6, 2027. The notice applies to covered work on or in connection with specified federal contracts entered January 1, 2015 through January 29, 2022, provided they were not renewed or extended on or after January 30, 2022. An exercised option can be such an extension. January 6 is the express effective date, rather than an inferred January 1 annual change.

For tipped workers, the lower cash figure is not permission for total compensation below the EO 13658 minimum. When a contractor takes a tip credit, tips must supply at least the difference between the cash wage and the full required minimum; the contractor must raise cash pay if tips fall short. The notice's discussion of the later executive order and its revocation does not remove the older order's contract-date limits. These rates therefore require a contract-specific coverage assessment rather than application to all healthcare employees or every organization receiving federal payments.

Scope and timing

Authority status
Final
Applicability
Potentially applicable
Audience
Health systems, Provider networks
Jurisdiction
Federal
Recorded date
2027-01-06
Date type
effective

Why it matters

Coverage is limited to specified federal contracts entered January 1, 2015 through January 29, 2022 and not renewed or extended on or after January 30, 2022. The notice does not apply this rate to all healthcare workers or all federal contracts. Covered tipped workers must receive the full minimum through cash plus tips, with the contractor covering a shortfall.

Sources

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