Last week, the U.S. Supreme Court declined to hear an appeal of a Tenth Circuit Court of Appeals decision upholding former President Joe Biden’s executive order increasing the minimum wage applicable to employees of certain federal contractors working on federal land. In 2021, the order increased that minimum to $15 per hour, and an escalator clause has raised the current rate to $17.75. The challengers to the order claimed that the president does not have authority under the federal procurement statute.
The Supreme Court did not provide the majority’s reasoning for rejecting the appeal. The Tenth Circuit concluded that the statute gives the executive branch expansive authority to set terms and conditions for federal contracts, including employee pay levels. The appellate court tied its reasoning to potential worker productivity and quality associated with higher pay.
This decision reaffirms broad presidential powers over companies that bid for federal contracts. Employers have limited options for opposing such requirements other than declining to participate in the federal contract.
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