District court affirms president’s authority to increase federal contractor minimum wage

Judge John J. Tuchi of the U.S. District Court for the District of Arizona on January 6, 2023, rejected a challenge from a coalition of states and held that President Joe Biden (D) did not exceed his authority when he issued an executive order directing the U.S. Department of Labor (DOL) to promulgate regulations increasing in the minimum wage for federal contractors.

President Biden issued Executive Order (EO) 14026 in April 2021 requiring the DOL to issue regulations increasing the minimum wage for federal contractors to $15 an hour. Five states (Arizona, Indiana, Idaho, Nebraska, and South Carolina) in February 2022 challenged the executive order in the U.S. District Court for the District of Arizona, arguing in part that the executive order violated the clear notice requirement of the U.S. Constitution’s spending clause because states were not fully aware of the new contracting conditions under the order; that the order exceeded the president’s authority under the Federal Property and Administrative Services Act of 1949 (FPASA); and that the FPASA unconstitutionally delegates congressional authority to the president in violation of the nondelegation doctrine.

Judge Tuchi ruled in part that the executive order, in his view, did not violate the U.S. Constitution’s spending clause because the clause is not applicable to federal contracts; that the order did not exceed the president’s statutory authority under the FPASA because the order speaks to the FPASA’s federal contracting goals; and that the FPASA does not violate the nondelegation doctrine because it provides the president with an intelligible principle to guide executive action.

“As this Court and others have recognized, the FPASA’s grant of presidential authority is broad, but it is not unqualified,” Judge Tuchi wrote in the opinion. “The Court finds there is a sufficiently close nexus between EO 14026 and the Final Rule and the FPASA’s goals of economy and efficiency in federal contracting. Here, the president has rationally determined that increasing the minimum wages of contractors’ employees will lead to improvements in their productivity and the quality of their work, and thereby benefit the government’s contracting operation.”

The states can appeal the case to the United States Court of Appeals for the Ninth Circuit, but no appeal had been filed as of January 12, 2023.

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