Upcoming Increase in Minimum Wage for Federal Contractors

President Biden recently signed an executive order raising the minimum hourly wage for federal contractors to $15 beginning on January 30, 2022. The current hourly minimum is $10.95 under an executive order that President Barack Obama signed in 2014. Although the Secretary of Labor must engage in notice-and-comment rulemaking in the coming months to implement the new executive order (the new order requires regulations to be issued on or before November 24, 2021), it appears that the new order will have a muted impact on the sector overall.

What does this regulatory development mean for you as a health care provider? A provider's participation in Medicare or Medicaid does not make you a federal contractor. The same is true with respect to participation in TRICARE following the issuance of new regulations last year.

However, if you are currently in a contract with the U.S. Department of Veterans Affairs (VA) or plan to be in the future, the new executive order could impact you depending on the type of contract and when you enter into or renew such contracts. For example, if you have a Veterans Care Agreement (VCA), the new executive order should not impact you because of statutory language in the VA MISSION Act of 2018 providing that entering into a VCA does not generally make one a federal contractor. In contrast, contracts under older, legacy VA programs may be affected.

We will keep members apprised of any further information that might impact you on this matter, and as regulations are proposed for public comment.

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