Appeals Court Upholds Biden Minimum Wage Order for Federal Contractors

A man walks in front of the 5th U.S. Circuit Court of Appeals in New Orleans, La., in an undated file photograph. Jonathan Bachman/AP Photo

Former President Joe Biden acted within his power when he issued an order requiring federal contractors to pay their employees at least a certain amount per hour, a federal appeals court ruled on Feb. 4.

Congress, through the Federal Property and Administrative Services Act, gave the president the authority to prescribe policies and directives if he determines that a policy or directive is necessary to carry out the act and if the action is consistent with the law. Prior court decisions have interpreted “necessary” as meaning indispensable, vital, essential, or requisite.

Biden’s 2021 order imposing the minimum wage requirement “shows the President determined that ‘contracting with sources that adequately compensate their workers’ is vital or essential,” U.S. Circuit Judge Irma Ramirez wrote for the unanimous three-judge panel assigned to the case.

She said the minimum wage order’s purpose was consistent with the Federal Property and Administrative Services Act, also known as the Procurement Act.

The order from Biden raised the minimum wage for workers on federal contracts to $15 an hour with regular increases, and the U.S. Department of Labor then adopted a rule implementing the wage hike.

The minimum wage increased in January to $17.75 an hour, more than double the $7.25 minimum wage under federal law and higher than any U.S. state.

The new ruling overturns a 2023 decision from U.S. District Judge Drew Tipton, who concluded that Biden’s order violated the law.

“The historical context of the Procurement Act supports this Court’s conclusion that the President’s authority is limited to the supervisory role of buying and selling of goods,” he said at the time. “That authority does not include a unilateral policy-making power to increase the minimum wage of employees of federal contractors.”

States, including Texas, suing over the order argued that Congress did not empower presidents “to impose national social policies in a statute designed to streamline procurement.”

The appeals court disagreed, saying that the law’s delegation of authority was “clear, unambiguous, and broad.”

The court remanded the case back to Tipton for further proceedings consistent with its opinion.

The U.S. Department of Justice and the office of Texas Attorney General Ken Paxton did not respond to requests for comment by publication time.

President Donald Trump has not said whether he will rescind Biden’s order. Removing the wage mandate would also require repealing the Labor Department rule, which could take months or longer.

Tuesday’s ruling deepens a split between the San Francisco-based U.S. Court of Appeals for the Ninth Circuit, which ruled in 2024 that Biden’s mandate was likely unlawful, and the U.S. Court of Appeals for the 10th Circuit, which, months earlier, said Biden had the authority to set wages for contractors. The U.S. Supreme Court last month declined to review the 10th Circuit decision.

U.S. appeals courts are also divided more broadly over the scope of the president’s authority under the Procurement Act, which was passed in 1949.

At least four courts have said the law only allows the president to act in specific, narrow ways, but three others have ruled that it authorizes any presidential action designed to promote economy and efficiency in federal contracting.

Reuters contributed to this report.