Texas District Court Enjoins President Biden’s $15-Minimum-Wage-for-Federal-Contractors Order

A recent ruling by a Texas district court found President Biden’s Executive Order in violation of the Federal Property and Administrative Act (the Procurement Act). This violation concerns President Biden’s unilateral decision to raise the minimum wage for federal contractors’ employees to $15 per hour. Federal contractors should take note of the district court’s decision and its effect on minimum wage standards, particularly in Texas, Louisiana and Mississippi.

On April 27, 2021, President Biden issued Executive Order 14026, titled “Increasing the Minimum Wage for Federal Contractors,” using the Procurement Act as its legal foundation. This executive order raised the hourly minimum wage paid by federal contractors and subcontractors to certain employees to $15 per hour beginning Jan. 30, 2022, with annual increases thereafter. Following the notice-and-comment rulemaking process, the Department of Labor published its Final Rule on Nov. 24, 2021, and effectively implemented Executive Order 14026 (jointly referred to as the Wage Mandate).

In February 2022, or two months later, three states—Texas, Louisiana and Mississippi—filed a lawsuit against President Biden and the Department of Labor in the Southern District of Texas, challenging the validity of the Wage Mandate.

• The states collectively argued that the Wage Mandate contradicted the Procurement Act’s intended purpose, which is to consolidate and introduce flexibility in government contracting and reduce inefficiencies, rather than grant the president broad regulatory authority to set a $15 minimum wage for federal contractor employees.
• The federal government countered that Sections 101 and 121(a) of the Procurement Act, read together, provide the president broad authority to unilaterally implement policies “that the president considers necessary to foster an economical and efficient system for producing and supplying goods and services and for using property,” including the Wage Mandate.

The district court sided with the states. Interpreting Sections 101 and 121(a), the district court found that those sections clearly limit the president’s role to overseeing the buying and selling of goods and that allowing the president to unilaterally decree broad employment rules—i.e., minimum wage rules for federal contractor employees—is “inconsistent” with the operative sections of the Procurement Act. As a result, the district court ruled that President Biden exceeded his authority under the Procurement Act and enjoined President Biden and the Department of Labor from enforcing Executive Order 14026 and the Final Rule against Texas, Louisiana, Mississippi and their respective agencies.

Please contact Loden Walker or any members of Phelps’ Labor and Employment team if you have questions.