Federal Contractor Minimum Wage & Overtime Pay

Updated 5 November 2026 · Standard formula, shown below

This guide explains how the federal contractor minimum wage rules interact with overtime pay requirements. You will learn which wage rate applies to overtime calculations, how to compute the correct overtime rate, and what to do if you are a contractor or an employee facing a wage dispute. No special tools are needed beyond a calculator and your pay stub or contract details.

What You’ll Need

Your most recent pay stub or timesheet
The applicable federal contractor minimum wage rate (check the U.S. Department of Labor’s Wage and Hour Division website for the current rate)
Your regular hourly rate (if different from the minimum wage)
A calculator

Step-by-Step

Determine if you are covered by federal contractor minimum wage rules. These rules apply to employees working on or in connection with federal contracts covered by Executive Order 14026 (issued in 2021) or the older Executive Order 13658 (issued in 2014). The current minimum wage for covered federal contractors is $17.20 per hour as of January 1, 2024 (check for updates).
Identify your regular hourly rate. Your regular rate is the amount you earn per hour for your normal workweek. This may be your contractual hourly wage or your salary divided by the number of hours it is intended to cover (usually 40).
Compare your regular rate to the federal contractor minimum wage. If your regular rate is lower than the federal contractor minimum wage, then for overtime pay purposes, your overtime rate must be based on the higher minimum wage rate, not your actual lower rate.
Calculate your overtime rate. Overtime pay under the Fair Labor Standards Act (FLSA) is 1.5 times the regular rate. For federal contractors, if the minimum wage applies, your overtime rate is 1.5 Ã— the federal contractor minimum wage. For example, if the minimum wage is $17.20, your overtime rate is $25.80 per hour.
Count your overtime hours. Overtime hours are any hours worked over 40 in a single workweek (or over the applicable overtime threshold for your contract, which is usually 40).
Compute your overtime pay. Multiply your overtime hours by your overtime rate. For instance, if you worked 45 hours and your overtime rate is $25.80, you earn 5 Ã— $25.80 = $129 in overtime pay.
Add overtime pay to your regular pay. Your total weekly pay is (regular hours Ã— regular rate) + (overtime hours Ã— overtime rate). If your regular rate is below the minimum wage, you must also be paid at least the minimum wage for your regular hours, so your regular pay would be (regular hours Ã— minimum wage) if that is higher.
Document everything. Keep records of your hours, pay stubs, and any contract provisions that specify wages. This helps if you need to file a complaint.

Common Mistakes

Using your actual lower rate for overtime. If you are paid below the federal contractor minimum wage, you cannot use that lower rate to calculate overtime. The overtime rate must be based on the minimum wage.
Forgetting that the minimum wage applies to all hours, including overtime. Even if you work overtime, you must still be paid at least the minimum wage for every hour worked, and overtime premium on top of that.
Assuming the federal minimum wage applies. The federal contractor minimum wage is higher than the general federal minimum wage ($7.25). Always use the specific contractor rate.
Not checking state or local laws. If your state or local minimum wage is higher, you must use the highest applicable rate.
Misclassifying overtime hours. Some workers are exempt from overtime, but most hourly contractors are not. Check your classification.

Tips

Check the current rate annually. The federal contractor minimum wage is adjusted each year (usually on January 1). Verify the latest rate on the U.S. Department of Labor website.
Use the regular rate that includes some bonuses. For overtime, your regular rate may include nondiscretionary bonuses, commissions, and other payments. If your regular rate is above the minimum wage, use that rate.
Keep a personal log of hours. Even if your employer tracks time, maintain your own record to cross-check.
Ask your HR or payroll department for a breakdown. If you are unsure how your overtime was calculated, request a written explanation.
Seek help early. If you suspect underpayment, contact the Wage and Hour Division before the issue grows.

Troubleshooting

Your employer refuses to use the federal contractor minimum wage. Remind them that Executive Order 14026 or 13658 applies to your contract. If they still refuse, file a complaint with the Wage and Hour Division.
You are not sure if your contract is covered. Look for the contract number or ask your employer. If the contract is with a federal agency and exceeds $2,000 (for 14026) or $15,000 (for 13658), it is likely covered.
You were paid overtime at your regular rate, but that rate is below the minimum wage. This is a violation. Calculate what you should have received and file a wage claim.
Your overtime rate was based on a salary that includes overtime pay. If you are salaried, your regular rate is your weekly salary divided by the number of hours it is intended to cover. If that rate falls below the minimum wage, the same rule applies.
State law gives a higher minimum wage. Use the higher rate for both regular and overtime pay.

Frequently Asked Questions

Q: What is the current federal contractor minimum wage?
A: As of January 1, 2024, it is $17.20 per hour. This rate is adjusted annually.

Q: Does the federal contractor minimum wage apply to all employees on a federal contract?
A: It applies to workers performing work on or in connection with covered federal contracts, including those employed by subcontractors.

Q: Can my employer pay me less than the federal contractor minimum wage if I receive tips?
A: No, the federal contractor minimum wage must be paid as a cash wage. Tips cannot be used to offset it.

Q: How do I calculate overtime if I am paid a salary?
A: Divide your weekly salary by the number of hours it is intended to cover (usually 40) to get your regular rate. Then apply the 1.5 multiplier for overtime hours.

Q: What if my employer says I am exempt from overtime?
A: Exemptions are limited and depend on your duties and salary. If you are misclassified, you can file a complaint with the Department of Labor.

Q: How do I file a complaint for unpaid overtime?
A: Contact the U.S. Department of Labor’s Wage and Hour Division. You can file online or by phone. Provide your pay stubs and timesheets.

Method: the standard formula for this calculation, rounded as each result states. See how the calculators work or report an error.