Texas, Louisiana, Mississippi Sue Biden Over Minimum Wage Hike For Federal Contractors

Bethany Blankley, The Center Square

Texas Attorney General Ken Paxton sued the Biden administration again Thursday, this time for requiring federal contractors to pay a $15 an hour minimum wage. It’s the 21st lawsuit the attorney general has filed against the administration. He is joined by the Mississippi and Louisiana attorneys generals.

“The president has no authority to overrule Congress, which has sole authority to set the minimum wage and which already rejected a minimum wage increase,” Paxton argues.

Their lawsuit follows one filed last December by the Pacific Legal Foundation on behalf of outdoor adventure guides, Arkansas Valley Adventures (AVA), ​​a licensed river outfitter regulated by the Colorado Division of Parks and Wildlife, and the Colorado River Outfitters Association (CROA). The CROA represents 150 non-profit operators that primarily operate on federal lands with special permits from Forest Service and Bureau of Land Management.

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They argue the requirement amounts to “an executive power grab to force a social agenda through federal contractors.”

The U.S. Department of Labor’s final decision is at issue rule issued Nov. 16, 2021, in response to an Executive order President Joe Biden issued April 27, 2021. Similar to an order issued by President Barack Obama in 2014, the current order can be found here.

This rule changes raises the hourly minimum wage of federal contract employees to $15, effective from Jan. 30, 2012.

This legislation also abolishes the tipping minimum wage for federal contractors by 2024. A $15 minimum wage is provided for employees with disabilities working on or in conjunction with federal contracts. Outfitters and guides who operate on federal lands are subject to minimum wage requirements.

“President Biden has attempted to arrogate to himself the authority to impose sweeping changes on American society with little more than the stroke of a pen,” the attorneys general argue in their complaint. “In pursuit of partisan political objectives, Defendants are unilaterally attempting to impose a radical policy – a dramatic and rapid increase in the minimum wage for federal contractors – with little apparent regard for the widespread havoc on the economy that will result.”

Biden and Marty Walsh are the defendants in these lawsuits.

Walsh defends the rule. Telled reporters, it “makes progress towards reversing decades of income inequity.”

The DOL maintains that raising the minimum wage “enhances worker productivity and generates higher-quality work by boosting workers’ health, morale, and effort; reducing absenteeism and turnover; and lowering supervisory and training costs.”

DOL expects that 327 300 of the potentially affected workers (1.8 million) will be able to see an increase in their pay once the rule is implemented.

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AVA claims that AVA and its competitors could close down and create a ripple effect of lost direct and indirect jobs.

AVA, which provides a full range of outdoor experiences year-round, including guided, multi-day river rafting wilderness trips in the summer, isn’t a federal contractor and never has been. But because it holds a special land use permit to operate on federal lands, it’s subject to the requirement. It argues it’s wrongly being included in a federal contractor category, forcing it “to adopt a wage model that is fundamentally incompatible with the way that the guiding industry operates.”

Trump’s administration knew the difference, according to its complaint. In 2018, it was exempted from the Obama-era mandate.

Obama’s mandate didn’t “promote economy and efficiency in making these services available to those who seek to enjoy our Federal lands,” the exemption held, according to PLF’s complaint. Instead, it “threatens to raise significantly the cost of guided hikes and tours on Federal lands, preventing many visitors from enjoying the great beauty of America’s outdoors.”

AVA could be required to drastically increase its fees, reduce the type and length of the trips they offer or cut down on the hours that guides work. Multiple 24-hour day trips that cost $15 each hour could end their existence. The trips are a major source of AVA’s business, which if cancelled, could put them out of business altogether. The same would be true for CROA’s members.

According to the DOL, more than 500 thousand private companies will be affected by this rule change. This includes approximately 40,000 who provide recreational or concessional services that require special licenses or permits on federal lands. It also estimates it will result in the transfer of income “from employers to employees in the form of higher wage rates” of “$1.7 billion per year over 10 years.”

But the “average annualized direct employer costs are estimated to be $2.4 million” for each firm, an “economically significant” amount, the Office of Information and Regulatory Affairs determined, the PLF lawsuit notes.

And 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,” the attorneys general argue. “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.”

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The DOL acknowledges in its 348-page rule that once it’s implemented it will increase compliance costs, consumer costs, reduce profits and result in “disemployment” for some companies.

The PLF maintains that the president doesn’t have the constitutional authority to regulate minimum wage, only Congress does.

“Only Congress can make law setting minimum wages,” PLF attorney Caleb Kruckenberg said. “The president can’t establish a minimum wage through administrative fiat. The Constitution says that only Congress can make laws that bind the public.”

Even after the PLF’s lawsuit was filed last December, the DOL’s Wage and Hour Division had already begun holding virtual compliance seminars and interactive webinars for contracting agencies, contractors, unions, workers and other stakeholders to learn how to comply with the new rule.

The Center Square permission granted this syndicated version.