5 States Sue Biden Over Minimum Wage Increase for Federal Contractors

President Joe Biden at the Eisenhower Executive Office Building in Washington, on Feb. 8, 2022. (Anna Moneymaker/Getty Images)

Five U.S. states are suing the Biden administration over its new minimum wage hike that requires federal agencies to pay contractors $15 per hour.

The change went into effect on Jan. 30, covering some 500,000 businesses that employ one-fifth of the entire U.S. labor force.

The attorneys general of Arizona, Idaho, Indiana, Nebraska, and South Carolina, led by Arizona Attorney General Mark Brnovich, mounted a federal lawsuit (pdf) arguing that President Joe Biden lacked statutory authority when he signed an executive order on April 27, 2021, to mandate the minimum wage.

The five attorneys general noted in their lawsuit that the U.S. Senate had rejected the administration’s proposal to include a $15 per hour wage increase in the coronavirus relief package, in a vote of 42–58, but Biden was “undeterred” and decided to enact that measure via executive order.

As announced by the Department of Labor (DOL), the rule applies in all 50 states, the District of Columbia, and specified U.S. territories. It requires employers to pay a minimum of $15 per hour for employees working on or in connection with covered federal contracts. The wage is subject to yearly increases, as determined by DOL, to account for inflation.

Defendants in the case are the U.S. Department of Labor and its Wage and Hour Division, President Joe Biden, U.S. Secretary of Labor Marty Walsh, and Acting Administrator of the Wage and Hour Division of the U.S. Department of Labor Jessica Looman.

Walsh previously said in November 2021 that implementing the measure “improves the economic security of these workers and their families, many of whom are women and people of color.”

Brnovich disagrees. “[Biden’s] minimum wage mandate is yet another example of attempted federal overreach that has become a pattern with this administration,” he said in a statement.

The lawsuit argues that the Biden administration has violated the Procurement Act and the Spending Clause of the U.S. Constitution.

“Congress has repeatedly and consistently reserved to itself the issue of regulating wages in the private economy. ... Congress did not confer authority under the Procurement Act upon the President or any other executive branch official to regulate the minimum compensation of the employees of contractors and other entities with ‘contract-like instruments,’” according to the text of the complaint.

A release from Brnovich’s office asserted that Congress passed the Procurement Act “to provide the federal government with an efficient system for procurement amongst its agencies, not give it unrestricted power over the minimum wage.”

The attorneys general also noted the federal mandate will cost their respective states tax revenue “by greatly increasing the labor costs for companies in the State.”

“Those businesses in turn will have lower taxable income, and hence pay less in taxes to the state treasury. That decreased revenue will cause the Plaintiff States proprietary injury,” they added.

They also predict that the mandate will cause businesses to fire employees to decrease labor costs.

“The increased unemployment from fired employees will likely increase the burden on the Plaintiff States’ unemployment insurance funds, and it will inflict economic disruption on the States’ economies as a whole,” the complaint stated.

The lawsuit is requesting the court to declare the executive order and wage hike unlawful, and block them from taking effect.

The U.S. Department of Labor and the White House did not immediately respond to The Epoch Times’ request for comment.