Last week, President Obama followed through on his State of the Union address, signing an executive order raising the federal minimum wage for employees of federal contractors and subcontractors to $10.10 per hour, effective January 1, 2015. Future annual increases will be tied to the Consumer Price Index. Tipped employees’ minimum wage will increase to $4.90, with additional annual increases until it reaches 70 percent of the regular contractor minimum.

The executive order applies these increases to all federal contractors and subcontractors regardless of the degree of removal from the prime federal contract. The Secretary of Labor will issue regulations implementing the order no later than October 1, 2014.

The new executive order is only expected to impact a few thousand workers, mostly in custodial and food service positions at federal facilities. However, the new federal minimums and indexing provisions for employees of contractors could become the eventual models for future legislation intended to apply more broadly to the non-contractor workforce.