Mississippi, Texas and Louisiana sued last year, challenging the President’s executive order that raised the minimum wage for federal contractors. A federal judge in Texas said the issue should be left up to Congress.
In November 2021, the U.S. Department of Labor announced a final rule that implemented Executive Order 14026 that would have increased the hourly minimum wage for employees on federal contracts beginning January 30, 2022. President Biden signed the order on April 27, 2021.
CNBC reported at the time that the rule was expected to impact some 327,000 workers, including food-service employees and nursing assistants who currently make less than $15 an hour.
On Tuesday, U.S. District Judge Drew Tipton, a federal judge in Texas, ruled against the Biden Administration, saying the President did not have the power to implement such an order.
The ruling blocks the plan in Texas, Louisiana and Mississippi, the three states that filed the lawsuit challenging the President’s executive order last year.
“We are pleased the court reached the same conclusion we did, that Congress has not given the Biden Administration authority to enact this burden on an already faltering economy thru executive fiat,” a spokesperson for Attorney General Fitch told Magnolia Tribune on Wednesday.
The judge allowed the Biden Administration seven days to file an appeal.
The Labor rule applied to all 50 states, the District of Columbia, and specified U.S. territories. It mandated, among other provisions, the increase of the hourly minimum wage for workers performing work on or in connection with covered federal contracts to $15 beginning January 30, 2022. It also eliminated the tipped minimum wage for federal contract employees by 2024.
The states argued that Biden’s order exceeded the President’s executive authority and violated the Administrative Procedures Act. They said the impacts to state government agencies would be burdensome.
The initial complaint argued:
Even the federal government, via the Congressional Budget Office, has recognized that changes in the minimum wage can lead to reductions in employment, increased costs of goods, inflation, and decreased consumption. States will be burdened with higher unemployment benefits claims and a deteriorating economy, and young, less educated workers could bear the brunt of this economic disaster. With this knowledge, Congress has repeatedly rejected a $15-per-hour federal minimum wage.
…With full awareness of the negative economic impact of artificially raising the minimum wage, and despite his failure to persuade Congress, President Biden chose to ignore the will of our federal legislators and instead forced a raise in the minimum wage through executive fiat. Through leveraging the disproportionate bargaining power of the federal government, Defendants have decided to coerce federal contractors into abiding by a policy that Congress does not endorse, potentially affecting hundreds of thousands of businesses that employ as much as one-fifth of the entire U.S. labor force.
Judge Tipton appeared to agree with the Attorneys General, saying that only Congress could set minimum wages and adopt employment policies unless it specifically grants those powers to federal agencies.