Does the minimum wage increase outlined in Executive Order 14026, effective January 30, 2022, apply to banks that are FDIC-insured? We have no offices on federal lands.

We do not believe that the minimum wage increase in Executive Order 14026 applies to banks unless an institution enters into a procurement contract with the federal government (for example, to provide financial services in a federal building).

Executive Order 14026 establishes a $15 minimum wage as of January 30, 2022, for certain federal contractors and subcontractors. The order applies only to four specific types of procurement contracts, ranging from construction to laundry services provided to the federal government.

After examining each of the four specific types of covered contracts and the definitions provided in Executive Order 14026’s implementing regulations, which will also become effective on January 30, 2022, we do not believe that they would encompass a financial institution’s acceptance of deposit insurance provided by the federal government. Consequently, we do not believe that financial institutions will be generally covered by Executive Order 14026 solely because they accept federal deposit insurance.

However, it is possible that a bank could choose to enter into a federal procurement contract that would subject it to Executive Order 14026’s minimum wage requirements. For example, the Department of Labor’s commentary to the final rule creating Executive Order 14026’s implementing regulations states that a credit union providing financial services in a federal building would be covered by the minimum wage requirements. On the other hand, certain credit card services are exempt if they meet several prerequisites under the Service Contract Act.

For resources related to our guidance, please see:

Executive Order 14026, Increasing the Minimum Wage for Federal Contractors (April 27, 2021) (Sec. 2(a). “Executive departments and agencies . . . shall . . . ensure that contracts and contract-like instruments (as defined in regulations issued pursuant to section 4(a) of this order and as described in section 8(a) of this order) include a clause that the contractor and any covered subcontractors (as defined in regulations issued pursuant to section 4(a) of this order) shall incorporate into lower-tier subcontracts. This clause shall specify that, as a condition of payment, the minimum wage to be paid to workers employed in the performance of the contract or any covered subcontract thereunder . . . shall be at least: . . . (i) $15.00 per hour, beginning January 30, 2022; . . .”)

Executive Order 14026, Increasing the Minimum Wage for Federal Contractors (April 27, 2021) (Sec. 8(a). “This order shall apply to any new contract; new contract-like instrument; new solicitation; extension or renewal of an existing contract or contract-like instrument; and exercise of an option on an existing contract or contract-like instrument, if (i):

(A) it is a procurement contract or contract-like instrument for services or construction;

(B) it is a contract or contract-like instrument for services covered by the Service Contract Act;

(C) it is a contract or contract-like instrument for concessions, including any concessions contract excluded by Department of Labor regulations at 29 CFR 4.133(b); or

(D) it is a contract or contract-like instrument entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public; and

(ii) the wages of workers under such contract or contract-like instrument are governed by the Fair Labor Standards Act, the Service Contract Act, or the Davis-Bacon Act.”)

29 CFR 23.30(a) (“This part applies to any new contract, as defined in § 23.20, with the Federal Government, unless excluded by § 23.40, provided that (1)(i) It is a procurement contract for construction covered by the Davis-Bacon Act; (ii) It is a contract for services covered by the Service Contract Act; (iii) It is a contract for concessions . . . ; or (iv) It is a contract entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public; . . .”)

Department of Labor Final Rule, Increasing the Minimum Wage for Federal Contractors, 86 Fed. Reg. 67126, 67150 (November 24, 2021) (“The Department included in the NPRM additional examples of agreements that would generally be covered by the Executive order and part 23 under this approach, regardless of whether they are subject to the SCA, such as delegated leases of space in a Federal building from an agency to a contractor whereby the contractor operates a . . . credit union . . . in the space to serve Federal employees and/or the general public.”)

Department of Labor Final Rule, Increasing the Minimum Wage for Federal Contractors, 86 Fed. Reg. 67126, 67164 (November 24, 2021) (“. . . 29 CFR 4.123(e)(2) exempts from SCA coverage contracts for seven types of commercial services, such as financial services involving the issuance and servicing of cards (including credit cards, debit cards, purchase cards, smart cards, and similar card services) . . . Certain criteria must be satisfied for the exemption to apply to a contract. . . .”)