Texas, Louisiana and Mississippi sue Biden over minimum wage hike for federal contractors

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By Bethany Blankley (The Central Square)

Texas Attorney General Ken Paxton defendant the Biden administration again on Thursday, this time for requiring federal contractors to pay a minimum wage of $15 an hour. It is the 21st lawsuit that the attorney general presents against the administration. Joining him are the attorneys general of Louisiana and Mississippi.

“The president has no authority to override Congress, which has sole authority to set the minimum wage and has 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 service provider regulated by the Colorado Division of Parks and Wildlife, and the Colorado River Service Providers Association (CROA). ). The CROA, a nonprofit trade association, represents more than 150 independent operators who conduct business primarily on federal land using special use permits through the Forest Service or Bureau of Land Management.

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They argue that the requirement amounts to “a seizure of executive power to force a social agenda through federal contractors.”

At issue is a final decision of the US Department of Labor. rule issued on November 16, 2021, in response to a executive order President Joe Biden issued on April 27, 2021. The order is similar to the one issued by former President Barack Obama in 2014.

The rule change increases the minimum hourly wage for employees performing work on or in connection with federal contracts to $15 starting last month, January 30.

It also eliminates the tipped minimum wage for federal contract employees by 2024, guarantees a $15 minimum wage for workers with disabilities performing work on or in connection with federal contracts, and imposes minimum wage requirements on vendors and guides who operate on federal lands.

“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 goals, Defendants unilaterally seek to impose a sweeping policy, a dramatic and rapid increase in the minimum wage for federal contractors, with little apparent regard for the widespread economic havoc that will result.”

Both lawsuits name Biden, Secretary of Labor Marty Walsh and the US Department of Labor, and its Wage and Hour Division and administrator, as defendants.

In defense of the rule, Walsh He said reporters, “makes progress in reversing decades of income inequality.”

The DOL maintains that raising the minimum wage “improves worker productivity and results in higher quality work by boosting worker health, morale, and effort; reduce absenteeism and turnover; and reduce supervision and training costs.”

Once the rule is fully implemented, the DOL projects that 327,300 of the 1.8 million potentially affected workers will see a wage increase.

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But AVA argues that it, and other similar companies, could go bankrupt, creating a ripple effect of direct and indirect job losses.

AVA, which offers a full range of outdoor experiences year-round, including guided multi-day river rafting trips in the summer, is not a federal contractor and never has been. But because it has a special land use permit to operate on federal land, it is subject to the requirement. She argues that she is wrongly included in a federal contractor category, forcing her to “adopt a salary model that is fundamentally incompatible with the way the counseling industry operates.”

The Trump administration understood the distinction, he argues in his lawsuit, which in 2018 granted him a waiver from the Obama-era mandate.

Obama’s tenure did not “promote economy and efficiency in making these services available to those seeking to enjoy our federal lands,” the waiver held, according to the PLF complaint. Instead, it “threatens to significantly increase the cost of guided hikes and tours on federal lands, preventing many visitors from enjoying the great beauty of America’s great outdoors.”

To comply with the rule, AVA would be forced to reduce the length and type of trips its guides offer, reduce their hours, or radically increase fees. Being forced to pay $15 an hour for multiple 24-hour rides could be the end of them. Travel is a major source of AVA’s business, which if canceled could put them out of business altogether. The same would be true for CROA members.

The DOL estimates that the rule change will affect more than 500,000 private businesses, including approximately 40,000 that provide concessions or recreational services that require special use permits or licenses on federal lands. It also estimates that it will result in the transfer of income “from employers to employees in the form of higher wages” of “$1.7 billion per year for 10 years.”

But the “average annual direct costs to employers are estimated at $2.4 million” for each business, 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 to 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 by higher claims for unemployment benefits and a deteriorating economy, and younger and less educated workers could bear the brunt of this economic disaster. With this knowledge, Congress has repeatedly rejected a federal minimum wage of $15 an hour.”

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

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

“Only Congress can make laws that establish minimum wages,” said PLF attorney Caleb Kruckenberg. “The president cannot establish a minimum wage by administrative decree. The Constitution says that only Congress can make laws that bind the public.”

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

Distributed with permission from The Center Square.





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