The trend of increasing minimum wage rates will continue in 2025. We previously reported here the California 2025 state and local minimum wage rate increases.  The federal contractor minimum wage rates will likewise continue on an upward trajectory, as follows: on January 1, 2025, the hourly minimum wage for certain existing federal contracts will increase from $17.20 to $17.75.  This minimum wage rate will apply to both non-tipped and tipped workers, as the lower cash wage that contractors had been permitted to pay tipped workers was eliminated on January 1, 2024.

Covered contracts that are entered into on or after January 30, 2022, or that are renewed or extended (pursuant to an option or otherwise) on or after January 30, 2022, will be generally subject to the $17.75 per hour minimum wage rate. Contractors subject to these requirements fall into the following four categories: procurement contracts for construction covered by the Davis-Bacon Act; service contracts covered by the Service Contract Act; concessions contracts, including any concessions contract excluded from the SCA by the Department’s regulations at 29 CFR 4.133(b); and contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

The author would like to gratefully acknowledge the assistance of Joanne Warriner.

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