URGENT: The "Zombie" Minimum Wage—Why Revocation Didn't End Your Federal Contractor Obligations
By Ellis J. Sterling
Content Strategist & HR Subject Matter Expert
If you breathed a sigh of relief when President Trump revoked the Biden-era $15 federal contractor minimum wage (Executive Order 14026) in March 2025, you may be celebrating too soon.
For many HR leaders, that revocation signaled a return to simpler times. The reality, however, is a fragmented "split-screen" regulatory landscape that is arguably more confusing than before. While the headline-grabbing $15 rule is gone, a "zombie" mandate from the Obama administration remains fully active—and the Department of Labor (DOL) just announced it is getting a raise.
Here is the critical breakdown of the new $13.65 threshold, the May 11 deadline, and why your payroll department might be about to underpay your legacy workforce.
The What: A Tale of Two Executive Orders
To understand your current risk, you must distinguish between two overlapping regulatory regimes.
- The Revoked Rule (EO 14026): This was the Biden administration's order setting a $15+ minimum wage (indexed to $17.75 by 2025). President Trump revoked this order via EO 14236 on March 14, 2025. The DOL is no longer enforcing it.
- The Surviving Rule (EO 13658): This is the Obama-era order from 2014. Crucially, the revocation of the Biden rule did not kill this older order. It remains in effect for contracts entered into before January 30, 2022.
The New Development:
According to a February 2026 notice in the Federal Register, the DOL has increased the minimum wage for contracts covered by EO 13658.
- New Rate: $13.65 per hour (up from the previous indexed rate).
- Tipped Rate: $9.55 per hour.
- Effective Date: May 11, 2026.
This creates a bifurcated compliance map where your obligations depend entirely on the "vintage" of your contract.
The So What: The "Jan 30, 2022" Trap
The date January 30, 2022, is now the single most important data point in your federal contract portfolio. This date determines which wage framework applies to your employees, creating significant risk for HR teams managing mixed portfolios.
1. The Legacy Contract Risk (Pre-2022)
If you are servicing a long-term contract awarded, renewed, or extended before January 30, 2022, you are likely still subject to EO 13658.
- The Danger: If you assume all federal minimum wage mandates were wiped out by the recent revocation, you will fail to implement the hike to $13.65 by May 11, 2026. This exposes your firm to back-wage liability and potential debarment, even though the "main" wage rule is dead.
2. The "Ghost Clause" Risk (Post-2022)
For contracts awarded on or after January 30, 2022, the governing rule (EO 14026) has been revoked. However, this does not automatically authorize you to slash wages.
- The Danger: Your contract likely still contains the clause FAR 52.222-55. Until a Contracting Officer (CO) issues a formal modification to remove or update this clause, you are contractually bound to its terms. Unilaterally reducing wages because "the President said so" is a breach of contract until the paperwork catches up with the policy.
As noted by legal experts at Ogletree Deakins, "Contractors remain bound by existing contract clauses unless modified by the contracting officer." You are also still subject to the Service Contract Act (SCA), Davis-Bacon Act (DBA), and state laws, which often set rates higher than $13.65 anyway.
The Now What: Your 4-Step Audit Plan
To navigate this confusion, HR and Compliance leaders must immediately perform a contract-by-contract analysis. Do not wait for the May 11 effective date to start this process.
1. Segment Your Portfolio
Pull a report of all active federal contracts and sort them by the award/renewal date.
- Group A: Contracts entered into/extended before Jan 30, 2022.
- Group B: Contracts entered into/extended on or after Jan 30, 2022.
2. Check Group A for EO 13658
For your pre-2022 legacy contracts, verify if they are subject to EO 13658.
- Action: Ensure your payroll system is programmed to increase the floor to $13.65/hr effective May 11, 2026.
- Tip: Don't forget the tipped wage increase to $9.55/hr.
3. Review Group B for "Ghost Clauses"
For your post-2022 contracts, look for FAR 52.222-55.
- Action: Contact your Contracting Officer (CO). Ask if your agency has issued a class deviation or if they intend to modify the contract to reflect the revocation of EO 14026.
- Warning: Do not change pay rates for these employees until you have a signed modification or written guidance from the CO.
4. Verify Baseline Compliance
Remember that even without these Executive Orders, you must comply with:
- FLSA: $7.25/hr (federal baseline).
- SCA/DBA: Prevailing wage determinations (often $20+ depending on role/location).
- State/Local Laws: Many states (e.g., CA, NY) have minimum wages exceeding $16.00, which override lower federal contractor rates.
Master the Math of Compliance
The revocation of EO 14026 didn't simplify federal contracting—it turned it into a history test. HR managers who fail to track contract dates risk significant financial exposure.
To help you untangle these legacy clauses and ensure your systems are ready for the May 11 deadline, enroll in our "Federal Contractor Wage & Hour Masterclass: 2026 Compliance Strategies." We will provide the checklists and CO communication templates you need to secure your payroll against regulatory whiplash.