9th Circuit Vacates Raised Minimum Wage for Federal Contractors’ Employees

The 9th U.S. Circuit Court of Appeals has ruled against the implementation of the Biden administration’s raised minimum wage for employees of federal contractors. The decision created a split among appeals courts that might ultimately be resolved by the U.S. Supreme Court. 

We’ve gathered articles on the news from SHRM and other outlets.

Court Rules Against Executive Order

The 9th Circuit vacated the U.S. Department of Labor (DOL) rule implementing an executive order from President Joe Biden. The executive order (EO), EO 14026, had set a $15 minimum wage mandate for federal contractors—a minimum wage with annual increases that’s currently at $17.20 per hour. The federal contractor minimum wage increase resulted in three lawsuits. In one of these lawsuits, the 10th Circuit declined to halt the pay requirement earlier this year. Another lawsuit raising identical legal questions has been brought before the 5th Circuit.

In the case before the 9th Circuit, Nebraska and three other Republican-led states challenged the executive order and a DOL rule that implemented it. The 9th Circuit revived the challenge. The appeals court panel sent the case back to the district court, where the states may move to permanently strike down Biden’s order.

(Bloomberg Law and Reuters)

Argument Before the Supreme Court

Recreational touring companies that lost their challenge before the 10th Circuit want the Supreme Court to review their claim that Biden’s raised minimum wage requirement for federal contractors goes beyond his authority. Biden was allowed to issue the policy under the Federal Property and Administrative Services Act, the 10th Circuit found. The 10th Circuit declined to permanently enjoin the DOL’s final rule increasing the minimum wage for covered employees of certain federal contractors.

(Bloomberg Law and SHRM)

Biden’s Executive Order

Biden’s executive order set a salary floor of $15 per hour—up from the previous $10.95 per hour minimum—with increases to be published annually. The $15 minimum wage took effect Jan. 30, 2022. EO 14026 applies to employees of entities that contract with the federal government who work on or in connection with a federal government contract—an estimated 500,000 employers. 

(Jackson Lewis)

Challenges to Agencies’ Rules on the Rise

Employers may have to follow fewer regulations and could be in a better position to challenge rules from federal agencies like the DOL, following the U.S. Supreme Court’s decision in June overruling a 1984 decision that held courts should defer to federal agencies’ reasonable interpretations of ambiguous laws passed by Congress.

“The Supreme Court has made a monumental decision in Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce, overruling Chevron deference,” said Emily M. Dickens, J.D., chief of staff and head of government affairs for SHRM.

“This ruling overturns decades of established precedent, fundamentally changing how courts evaluate the boundaries of regulatory authority and executive actions,” Dickens added. “This decision sets a new precedent to guide lower courts to not give deference to a federal agency’s interpretation of laws when challenged.”

(SHRM)