Final regulations issued Nov. 24, 2021, raised the minimum wage for non-exempt employees working for federal contractors to $15, from $11.25, effective for new and renewing federal contracts signed on or after Jan. 30, 2022.

The final regulations were the last stop in a long line of administrative proceedings. It started with an Executive Order issued in April 2021, followed by proposed regulations issued July 22, 2021.

The order of administrative action is important, because attorneys general in Arizona and Texas have filed two lawsuits contesting the raise. The two lawsuits represent a total of eight states—Arizona and Texas, plus Idaho, Indiana, Louisiana, Mississippi, Nebraska, and South Carolina.

Do these lawsuits stand a chance of succeeding? Let’s take a look.

A very brief explanation of arbitrary and capricious

Procedure—how regulations are written and issued—is everything to federal agencies. We will spare you the excruciating details of administrative law analysis, except for these two pearls of wisdom:

• All federal regulations (aside from certain IRS regs) are subject to notice and comment. So they’re first published in proposed form in the Federal Register and public comments are solicited. Skip either step and the regulations will be invalidated.
• The arbitrary-and-capricious standard requires regulations to be reasonable and agencies to reasonably explain them and the relevant issues they considered in issuing final regulations. Regulations will be arbitrary...

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