The U.S. Department of Labor announced last week that covered federal contractors and subcontractors will be required to pay workers an hourly minimum wage of $10.20 an hour beginning January 1, 2017. The minimum cash wage for tipped workers will increase to $6.80 an hour.

The annual increases are required by an Executive Order issued in February 2014, which mandates that the DOL raise the hourly minimum wage paid by certain federal contractors every calendar year based on inflation. The Executive Order also specifies that the minimum cash wage for tipped workers must increase by 95 cents a year until it reaches 70 percent of the minimum wage paid to other hourly workers under the Executive Order.

The current minimum wage for federal contractors is $10.15 an hour, and the current minimum cash wage for tipped workers is $5.85 an hour.