The Labor Department on Monday took key steps to increasing the minimum wages for various federal contractors next January, effectively increasing the topline minimum wage for contract work to $17.75 per hour.

The news came from a pair of notices published in the Federal Register Monday. In 2021, President Biden signed an executive order expanding his $15 minimum wage for the federal workforce to the government’s contractor workforce, as well as creating a process for the Labor secretary to update that minimum wage annually, based on the annual change in the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

But in practice, the process—and the actual minimum wage—is more convoluted than that. Biden’s executive order only applies to federal contracts that have been signed, renewed or otherwise extended after Jan. 30, 2022. For federal contracts that began prior to that date, a similar executive order signed by former President Obama controls contractors’ wages.

Beginning next January, federal contractors whose agreement with the government began, was renewed or extended after January 2022 must be paid a minimum wage of $17.75 per hour. That minimum wage applies regardless of whether those employees receive tips as part of their work. That amounts to a 3.2% increase to federal contractors’ wage floor. According to the Obama-era executive order, the tipped wage floor is set at 70% of the nontipped minimum wage, rounded to the nearest nickel.