President Biden Signs Two Executive Orders in Support of Increased Union Organizing and Announcing $15 Minimum Wage for Certain Federal Contractor Employees

President Biden recently signed two Executive Orders with substantial implications for non-union employers, as well as for those employing workers on federal contracts and subcontracts.

On April 26, 2021, President Biden signed an Executive Order establishing the “White House Task Force on Worker Organizing and Empowerment.”  The Executive Order requires the Task Force to create recommendations for actions “to promote worker organizing and collective bargaining in the public and private sectors, and to increase union density.”  Other Task Force goals include increasing worker power in marginalized communities, hard-to-organize industries, and changing industries.  Vice President Kamala Harris will chair the Task Force, and Marty Walsh, the Secretary of Labor, will serve as Vice Chair.

On April 27, 2021, President Biden signed an Executive Order requiring federal contractors and subcontractors to pay certain covered workers at least $15.00 an hour.  The minimum wage for tipped workers is increased to $10.50 hourly.  Critically, if tipped workers do not receive enough tips such that their total wages equal $15.00 hourly, employers are required to increase their wages to ensure the $15.00 hourly wage is earned.  The increased minimum wages must be paid beginning January 30, 2022, and are thereafter set to increase yearly on January 1st in an amount determined by the Secretary of Labor.

The Executive Order applies to a number of federal contracts, including procurement contracts; contracts for services, concessions, or construction; contracts covered by the Service Contract Act; or contracts involving federal property or lands related to offering services for federal employees, their dependents, or the general public.  For the Executive Order to apply, workers’ wages under the relevant contract or subcontract must be governed by the Fair Labor Standards Act, the Service Contract Act, or the Davis-Bacon Act.

Of note, the increased wage requirements do not apply to all employees, but only to those working in connection with the contract. Also, the Executive Order only applies to new contracts, contract-like instruments, extensions and renewals of existing contracts, and exercises of option contracts entered into or occurring on or after January 30, 2022.

It appears that the wage Executive Order will effectively place the onus upon federal agencies to ensure that new federal contracts comply with the new wage levels.  What is unclear, though, is how the obligation will extend to subcontractors, including those holding subcontracts currently in existence, but not up for extension or renewal prior to January 30, 2022.  The Secretary of Labor is charged with issuing regulations related to the Executive Order by November 24, 2021, and those regulations may provide some guidance on the issues unaddressed by the Order’s language.