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How Federal Contractor Minimum-Wage Rules Affect Overtime Pay

Federal contractor minimum wage and overtime are separate obligations. Learn which older contracts may remain under EO 13658, the 2026 rates, and how to assess overtime coverage and pay.
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Federal contractor minimum wage and overtime are separate checks: a covered worker must receive the applicable hourly wage floor, and a worker entitled to overtime generally must receive at least 1.5 times the applicable regular rate for hours over 40 in a workweek. The old Executive Order 14026 minimum-wage regime was revoked in March 2025 and is no longer enforced by the U.S. Department of Labor (DOL). A narrower set of older contracts may still fall under Executive Order 13658, so the contract’s dates and renewal history matter.

First, identify which contractor wage rule applies

Having a federal contract does not, by itself, establish that every employee working for the contractor is covered by a particular executive-order minimum wage. The contract, the worker’s work, and the governing rule must be checked. In particular, two executive orders that older articles may discuss have different current status.

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Rule Current status What to check
Executive Order 14026 Revoked March 14, 2025. DOL says it no longer enforces the order or its implementing regulation, 29 CFR part 23. Do not use its former minimum wage as a current federal contractor wage requirement merely because an older page or contract material mentions it.
Executive Order 13658 May still apply to a limited group of contracts. Generally, the contract must be a qualifying Davis-Bacon Act or Service Contract Act contract entered into, renewed, or extended from January 1, 2015 through January 29, 2022, and not renewed or extended on or after January 30, 2022. Confirm the actual contract terms and history.

DOL’s Wage and Hour Division describes the current status and annual rates in its “Executive Order 13658, Establishing a Minimum Wage for Contractors: Annual Update,” and explains the coverage boundary in Fact Sheet #83A, “Establishing a Minimum Wage for Contractors Under Executive Order 13658.” These are the relevant official references for understanding whether the executive-order floor is at issue. Neither status nor rate should be inferred from the employer’s federal-contractor status alone.

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The 2026 EO 13658 hourly floors

For work covered by EO 13658, DOL announced rates effective May 11, 2026 of $13.65 per hour for non-tipped employees and $9.55 per hour for tipped employees. These are DOL’s 2026 rates, not universal federal contractor rates; they apply only when the order’s coverage criteria are met. The EO 13658 minimum is a monetary hourly wage floor, so fringe benefits cannot be counted toward satisfying that floor.

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How the wage floor and overtime fit together

Think of the minimum wage as a floor for covered work, and overtime as a separate calculation for overtime-eligible work. Meeting the hourly floor does not erase an overtime obligation. Likewise, paying overtime does not excuse an employer from meeting the applicable minimum wage for covered hours.

For an employee covered by applicable overtime law, the general benchmark is at least one and one-half times the applicable regular rate for hours worked over 40 in a workweek. The precise rate is not automatically determined by multiplying the EO 13658 minimum by 1.5 in every pay arrangement. The regular rate, applicable wage rules, pay components, and the worker’s overtime coverage all matter.

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A 2021 DOL final rule implementing EO 14026 stated that the Fair Labor Standards Act (FLSA) and the Contract Work Hours and Safety Standards Act require overtime payment of not less than one and one-half times the regular rate of pay or basic rate of pay for covered workers’ hours over 40 in a workweek. That sentence is from the former EO 14026 rule text, which DOL says it no longer enforces. It is useful as historical rule text, not as a statement that EO 14026 remains active. The general overtime framework should be assessed under the law currently applicable to the particular worker and contract.

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Why the regular rate matters

Overtime is tied to the applicable regular rate, not simply to a headline minimum-wage figure. The former EO 14026 rule described the regular rate as generally calculated by dividing total earnings in the workweek by the total hours worked for which that compensation was paid. It also described a tipped-worker calculation under that rule that included employer-paid cash wages and any tip credit taken, while excluding tips received above the tip credit. Those are descriptions from the former rule; they should not be treated as a universal calculation for every current pay arrangement.

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As a practical matter, a worker’s regular rate may require examining the complete workweek pay record, rather than just the stated hourly base wage. The applicable treatment of pay components can depend on the governing law and arrangement. Avoid concluding that the overtime rate is correct from a posted EO 13658 minimum alone, especially where the employee is tipped or received other forms of pay.

Which wage rate is the right floor?

Where a higher wage is required by another applicable federal, state, or local law, the higher requirement controls; the executive-order minimum is not a ceiling. A worker or payroll reviewer should therefore avoid treating the EO 13658 amount as the final answer before checking any applicable prevailing-wage requirement and the laws for the work location.

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The EO 13658 floor also cannot be satisfied by adding the value of fringe benefits to a lower cash hourly wage. That distinction is important when reviewing a pay statement or wage schedule: benefits may be part of a compensation package, but DOL says they do not count toward this particular monetary hourly minimum. The wage floor and overtime rate remain separate questions, and compliance with one does not resolve the other.

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A step-by-step way to assess a pay concern

  1. Find the contract, not just the employer name. Identify the contract under which the work was performed and whether it is a qualifying Davis-Bacon Act or Service Contract Act contract. If the employer has several federal contracts, determine which one relates to the worker’s duties and hours.
  2. Check the contract dates and changes. For possible EO 13658 coverage, check when the contract was entered into, renewed, or extended, and whether it was renewed or extended on or after January 30, 2022. The historical date range and later contract action are material; do not assume an older original award remains in the covered category without checking its history.
  3. Determine whether the worker and work are covered. Review the worker’s duties and the terms that apply to the contract. DOL’s fact sheet discusses coverage and exemptions, but the existence of the contract alone does not settle the individual’s status. If exemption status is uncertain, get advice from DOL or an employment-law professional rather than treating a job title as dispositive.
  4. Identify the relevant wage floor. If EO 13658 coverage is established for work on or after May 11, 2026, compare the hourly cash wage with the applicable $13.65 non-tipped or $9.55 tipped floor. Then check whether another applicable federal, state, local, or prevailing-wage requirement is higher.
  5. Separate covered straight-time hours from overtime hours. Organize the time record by workweek and total hours worked. Do not use a pay period as a substitute for the workweek when applying the over-40 benchmark; overtime is assessed by workweek.
  6. Check overtime eligibility and the rate calculation. Determine whether the worker is covered by the applicable overtime law and whether an exemption applies. For an overtime-covered worker, review the regular-rate calculation and the pay components used for that workweek. The executive-order floor alone is not enough information to verify the overtime rate.
  7. Compare the calculation with the pay record. Keep the time records, pay statements, relevant contract information, and any wage schedule together. If the records do not show how the employer handled hours over 40 or the applicable wage floor, ask payroll for an explanation tied to the specific workweek and contract.

What changes the answer for an individual worker

A reliable individual assessment needs more than a job title or a single hourly figure. At minimum, the relevant facts include:

  • Which contract covers the work and whether its type and date history fit EO 13658’s limited coverage category.
  • The worker’s duties, work performed on the contract, and any relevant exemption status.
  • The workweek’s hours and how the employer recorded them.
  • The worker’s pay components, including whether the employee is tipped and how compensation was treated in the regular-rate calculation.
  • The jurisdiction and any higher applicable federal, state, local, or prevailing-wage rate.

Without those details, it is not possible to determine whether a particular worker is covered, whether an exemption applies, or what the correct overtime amount is. The right next step for a specific dispute is to compare the actual contract and workweek records with current DOL guidance and any laws that apply where the work took place.

Common errors when reading older contractor wage information

  • Applying an obsolete EO 14026 rate. Older material may list the former $15 base or later EO 14026 figures. DOL’s stated position is that the order was revoked in March 2025 and that it no longer enforces the order or its implementing rule.
  • Assuming every federal contractor employee receives the EO 13658 amount. EO 13658 reaches a narrower category of contracts, and the individual’s duties, coverage, and exemption status also matter.
  • Treating a minimum wage as the overtime rate. The minimum-wage floor answers one question; overtime for covered workers is a distinct obligation based on the applicable regular rate.
  • Counting fringe benefits toward the EO 13658 cash floor. DOL says the required monetary hourly wage cannot be met by including fringe benefits.
  • Stopping at the executive-order rate. Another applicable wage rule can require more, so the EO amount should not be treated as a maximum or as a substitute for a jurisdiction-specific review.

Official guidance to consult

DOL’s Wage and Hour Division sources relevant to this issue are its annual update for EO 13658, which addresses EO 14026’s revocation, EO 13658’s scope, and the 2026 rates; Fact Sheet #83A, which describes EO 13658 coverage, exemptions, the higher-wage rule, and the monetary wage requirement; and the 2021 final rule implementing EO 14026, which contains the historical overtime and regular-rate language. Read the final rule with DOL’s current non-enforcement statement in mind. For a specific worker, use the actual contract history, work duties, hours, pay information, and applicable jurisdiction’s requirements rather than relying on a general explainer alone.

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