AUSTIN, Texas—Eight states have filed lawsuits to block President Joseph Biden’s April 2021 executive order that set a $15-an-hour minimum wage for federal contractors. The order went into effect for contracts signed or extended after January 30.
The first, filed by Arizona Attorney General Mark Brnovich on February 8, was joined by Idaho, Indiana, Nebraska, and South Carolina. The second, by Texas Attorney General Ken Paxton, was joined by Louisiana and Mississippi.
Both argue that requiring contractors to pay $15 is an unconstitutional overreach, because Congress did not specifically authorize it, and in fact rejected raising the national minimum to $15 last year. They also contend that if contractors had to pay more than the $7.25 minimum in some states, it would increase unemployment and drive up prices, while having nothing to do with ensuring an “economical and efficient system” for federal procurement.
“Defendants are unilaterally attempting to impose a radical policy — a dramatic and rapid increase in the minimum wage for federal contractors — with little apparent regard for the widespread havoc on the economy that will result,” Paxton’s brief contends. The Arizona suit calls it “social engineering by executive fiat.”
“Ken Paxton is actually suing to lower worker wages to as little as $7.25 an hour,” Texas AFL-CIO President Rick Levy responded. “Texas needs an Attorney General who will fight for workers rather than force them into poverty. This lawsuit should offend anyone who believes in dignity for working families.”
The minimum wage in six of the eight states suing has been frozen at $7.25 for the past 13 years. Arizona’s is $12.80 and Nebraska’s is $9, both the result of ballot initiatives.
Biden’s Executive Order 14026 sets a $15 minimum wage for workers at federal contractors and their subcontractors, as well as for “concessions contracts,” such as businesses leasing federal property to provide services such as food, lodging, or gasoline. It also reverses a Donald Trump executive order that denied overtime pay to outfitters and guides working on federal land.
The workers who will get raises include cleaners and security guards in federal buildings and those who provide child care and food service for military families, Secretary of Labor Martin Walsh said in November.
Federal contracts have a long history of requirements that go beyond the minimum set by law. In 1941, 23 years before the Civil Rights Act of 1964, President Franklin Delano Roosevelt issued an executive order prohibiting all companies and unions engaged in war-related work from discriminating on the basis of race, religion, or ethnicity.
Such conditions have been common in federal contracts “since the Truman administration,” says Anastasia Christman, senior policy analyst at the National Employment Law Project. The general principle, she explains, is that they’re legal “as long as there’s a reasonable argument for them.”
In 2014, President Barack Obama issued an order raising the minimum wage to $10.10, to go up to $11.25 this year. Another order prohibited federal contractors from discriminating against lesbian, gay, bisexual, and transgender employees and applicants. In 2015, Obama mandated that employees be allowed to earn up to 56 hours a year of paid sick leave, depending on how many hours they worked.
The Federal Procurement Act’s core requirement is that contract stipulations should promote an economical and efficient system, but that doesn’t mean arbitrarily going with the lowest bidder, Christman told LaborPress. The Biden order stated that paying higher wages “generates higher-quality work by boosting workers’ health, morale, and effort” and would reduce absenteeism and turnover.
That is “probably saving money because turnover is so costly,” Christman says, and the public benefits from having security guards with enough experience to sense suspicious activity or Medicare call-center workers who can answer questions knowledgeably.
Another issue, she adds, is that the federal government, as a major player in the labor market, shouldn’t be undercutting wages.
The Arizona lawsuit disagrees. It argues that Congress’s intent has been that federal contractors’ pay should be set by “locally prevailing wages.” It says that with Obama’s $10.10 minimum, “conflict might have been incidental and more tolerable,” but that $15 is going too far.
Texas Attorney General Paxton’s press office did not respond to a phone message from LaborPress, and its voicemail gave an invalid email address for media inquiries.
The plaintiffs cite a Department of Labor estimate that the mandate will affect 500,000 private employers. It won’t be that far-reaching, Christman says. The Economic Policy Institute estimated in April 2021 that out of the roughly 2 million people who work for federal contractors, “up to 390,000 low-wage federal contractors will see a raise under this policy,” with an average annual increase of up to $3,100 if they work year-round. But some of them, it added, may be already covered by the Davis-Bacon Act, which requires prevailing wage for construction work, and the Service Contract Act of 1965, which did for service workers.
Both lawsuits argue that those prevailing-wage requirements were enacted by Congress, not imposed by executive order. In almost identical language, they use two legal concepts commonly employed in litigation to narrow the scope of government regulations: the “nondelegation” and “major questions” doctrines.
A main target is the precedent set by the Supreme Court’s 1984 decision in Chevron v. Natural Resources Defense Council. It held that courts should defer to federal agencies’ interpretation of a law they administer, as long as it has a reasonable justification and doesn’t contradict the statute.
In contrast, “nondelegation” holds that Congress cannot delegate its powers to the executive branch, while “major questions” is that if an agency is going to exercise powers of deep economic and political significance, it should have clear authorization from Congress.
Both doctrines figured in the Court’s decision in January that blocked the Occupational Safety and Health Administration’s temporary emergency workplace vaccine regulations from going into effect.
