OFCCP Week in Review: February 2022 #2 | Direct Employers Association

Thursday, February 10, 2022: Eight states file two lawsuits seeking to impose a $15/hour minimum wage on employees of federal contractors and subcontractors

Emboldened by lawsuits successfully barring the Biden administration’s vaccination mandates, eight states in two lawsuits have used their earlier arguments to now attempt to suspend implementation of a $15/hour minimum wage that the administration Biden seeks to impose via Executive Order 14026, and its rules on federal contractors and subcontractors. Arizona, Idaho, Indiana, Nebraska and South Carolina filed the first Complaint (styled like Arizona, et al. v. Walsh, et al.: no case number assigned yet) on Wednesday, February 9 in the United States District Court for the District of Arizona.

Texas, Louisiana and Mississippi filed the second trial (styled like Texas, et al. vs. Biden, et al., Case No. 6:22-cv-0004) on Thursday, February 10 in the U.S. District Court for the Southern District of Texas. As readers know, the movement toward raising the minimum wage for federal contractor employees began in April of last year (as we discussed here and subsequently reported in September 2021, November 2021and fair last month).

For readers who have followed our summaries of the various case decisions related to the Biden administration’s vaccination mandates for employees of federal contractors and contractors, the arguments made by the plaintiff states will be familiar. Indeed, the plaintiff states cite specific rulings enjoining the Biden administration’s vaccination mandates in support of their positions to seek now to stop the minimum wage hike for federal contractors and subcontractors.

Specifically, the plaintiff states began by asserting that they had legal “status” (i.e., the upcoming minimum wage hike would harm the states’ legal interests enough to allow them to file a lawsuit to put end to the anticipated damage). The alleged harm extends to citizens of the state, including state law enforcement officers, state university personnel, and people working on federal lands within the borders. of State. The states also argue that they have sued to protect their sovereign, quasi-sovereign and proprietary interests.

In addition, the plaintiff states argue that the court must prohibit the new minimum wage standard for the following reasons:

  • First of all, Executive Order 14026 exceeds the authority of the administration under the Federal Property and Administrative Services Act (the “Public Procurement Act”) which only authorizes regulation to ensure an “economical and efficient system”, to which the minimum wage does not not relate. Indeed, the states argue that increasing the cost of labor on federal contracts and subcontracts is contrary to the intent of the Federal Procurement Act. reduce (not to augment) the cost of goods and services to the federal government.
  • Second, the “major issues doctrine” prevents the executive branch from enacting rules of deep economic and political significance, such as minimum wage laws, since Congress has no expressly assign this power to the president. The plaintiff states cite the fact that the power to set minimum wages in the economy has traditionally belonged to Congress, and that Congress has exercised its authority over the minimum wage on numerous occasions. Indeed, both lawsuits cite the Biden administration’s failure to get a new minimum wage rate passed by Congress upon the president’s inauguration.
  • Third, the doctrine of non-delegation prevents Congress from abdicating or transferring its power to set the minimum wage to the executive branch without sanction.
  • Fourth, the USDOL rules implementing the minimum wage are arbitrary and capricious in violation of the Administrative Procedure Act since the rules do not demonstrate why the rate change is permitted, or that there is a good reason for change. The plaintiff states argue that changes to the minimum wage require an agency to: (1) show that it is aware that it is changing position; (2) provide evidence that the new policy is authorized under the law authorizing the action; (3) believe the new policy is better; and (4) provides good reasons for the new policy.
  • Fifth, other federal laws govern minimum wage requirements, including the FLSA, the Walsh-Healey Public Contracts Act, and the McNamara-O’Hara Service Contract Act.
  • Finally, the requesting States have a sovereign interest in their employment relationship with their employees, and the fixing of a different minimum wage constitutes a 10th amendment (state rights reserved) violation.

At this time, the litigation offers no relief from the minimum wage hike that President Biden ordered given that the new minimum wage standard took effect on January 31, 2022. It is also unclear on what Basically the plaintiff states in the litigation can argue a need for an immediate injunction, given the nearly one-year delay to bring an action.

As a result, federal contractors/subcontractors must now proceed with the implementation of the new minimum wage requirement already in effect and must be cautious to hope to recover the value of any wage increases they have paid since 31 January 2022, even if there is later success for the requesting states. A long legal road lies ahead with almost certain appeal of federal district court rulings regardless of who loses.

Andrew B. Reiter