Five states sued the Biden administration on Feb. 8 over its executive order raising the minimum wage for federal contractors to $15 an hour. We've gathered articles on the news from SHRM Online and other media outlets.
President's Authority for Action Questioned
The states—Arizona, Idaho, Indiana, Nebraska and South Carolina—maintained President Joe Biden overstepped his authority when he signed an executive order last April calling for the minimum wage hike. The executive order took effect Jan. 30. The plaintiffs said the order violates the Procurement Act and the Spending Clause of the U.S. Constitution. They noted that the Senate rejected a proposal similar to Biden's order before he signed the executive order.
States' Argument
"To be sure, the executive branch may have authority to set some provisions of contracts to ensure the contracts are performed efficiently," the complaint said. "But the Procurement Act provides no clear notice to states that accepting federal contracting funds will require them to surrender their sovereignty over the wages that they pay their own workers."
Who the Wage Hike Affects
In Arizona, which has a minimum wage of $12.80, state Attorney General Mark Brnovich's office said the executive order would apply to "law enforcement, whitewater rafting and fast-food restaurants, as well as all three Arizona state universities and the Civil Rights Division of the Office of the Arizona Attorney General." The lawsuit argued that an increased minimum wage for federal contractors will result in job losses as organizations try to make up for added payroll costs.
Ripple Effect
When Biden signed the executive order last year, a White House statement predicted that the wage increase for thousands of employees working on federal contracts would have a ripple effect. The order "will have impacts beyond federal contracting, as competitors in the same labor markets as federal contractors may increase wages too, as they seek to compete for workers," the statement said.
Final Rule Implementing the Executive Order
A final rule issued by the U.S. Department of Labor in November 2021 implemented the executive order not only by increasing the minimum wage for workers performing work on covered federal contracts, but also by:
- Continuing to index the minimum wage for federal contract workers to keep pace with inflation.
- Eliminating the tipped minimum wage for federal contract workers by 2024.
- Ensuring a $15 minimum wage for workers with disabilities who perform work on covered contracts.
- Restoring minimum-wage protections to outfitters and guides who operate on federal lands.
The executive order promotes efficiency in federal contracting and has other benefits, according to Wage and Hour Division Acting Administrator Jessica Looman.
"The final rule adds value for taxpayers by boosting worker productivity and reducing employee turnover and absenteeism," she said. "It also allows federal contractors to retain top talent and reduce recruiting and training costs."
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