A federal court recently tossed out five states’ challenge to President Biden’s minimum wage increase for federal contractors, but may not have the final say on the matter.
Biden issued an executive order in April 2021 that was followed up with a final rule seven months later, requiring covered federal contractors to pay their employees a $15 minimum wage starting in 2022, which was increased to $16.20 per hour due to inflation. The rule also eliminated the tipped minimum wage for contractors by 2024, ensured that federal contract workers with disabilities receive the $15 minimum wage and restored the minimum wage protections for outfitters and guides on federal lands (by revoking a May 2018 executive order from President Trump).
In early February 2022, Indiana, Idaho, Arizona, Nebraska and South Carolina challenged the wage hike in the U.S. District Court for the District of Arizona, which rejected it last week.
“The court finds there is a sufficiently close nexus between [executive order] 14026 and the final rule and the [Federal Property and Administrative Services Act’s] goals of economy and efficiency in federal contracting,” wrote U.S District Judge John Tuchi, in the ruling, contrasting one of the plaintiff’s arguments. “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.”
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