{"id":861,"date":"2023-10-02T20:07:01","date_gmt":"2023-10-03T00:07:01","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=861"},"modified":"2023-12-01T17:53:28","modified_gmt":"2023-12-01T21:53:28","slug":"texas-federal-court-shoots-down-executive-order-14026","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2023\/10\/02\/texas-federal-court-shoots-down-executive-order-14026\/","title":{"rendered":"Texas Federal Court Shoots Down Executive Order 14,026"},"content":{"rendered":"

\"\"<\/a>By Gerald L. Maatman, Jr., Jennifer A. Riley, and Shaina Wolfe<\/span><\/b><\/span><\/p>\n

Duane Morris Takeaways<\/em><\/strong>: <\/strong>On September 26, 2023, in<\/em> Texas v. Biden<\/em>, No. 6:22-CV-00004 (S.D. Tex. Sept. 26, 2023), Judge Drew B. Tipton of the U.S. District Court for the Southern District of Texas granted in part and denied in part<\/a>\u00a0the States\u2019 Motion for Summary Judgment and enjoined the federal government from enforcing Executive Order 14,026 and the Final Rule against the States of Texas, Louisiana, and Mississippi and their agencies. Judge Tipton found that the President acted exceeded his authority by issuing Executive Order 14,026 and unilaterally requiring federal contractors to increase their employees\u2019 minimum wage from $10.10 to $15 per hour. Other district courts have considered the President\u2019s authority in issuing Executive Order 14,026, but Judge Tipton is the first federal judge to find that the President exceeded his authority. This ruling hits only the surface of what is yet to come. The parties in other cases have already filed appeals in the Ninth and Tenth Circuits challenging district court opinions that have issued contrary rulings, and the government in this case is bound to appeal this decision to the Fifth Circuit.<\/em><\/p>\n

Procedural Background<\/strong><\/p>\n

The Federal Property and Administrative Services Act (\u201cProcurement Act\u201d or the \u201cAct\u201d) applies to federal and contractor employees. Congress implemented the Act to centralize the process by which various good and services are purchased by agencies on behalf of the government.<\/p>\n

On April 21, 2021, President Biden, relying solely on the Act, issued Executive Order 14,026 (\u201cEO 14,026\u201d) to require federal contractors and subcontractors to pay certain employees $15 per hour. EO 14,026 was scheduled to begin on January 30, 2023, with annual increases thereafter. Specifically, in issuing EO 14,026, President Biden invoked his authority to \u201cpromote economy and efficiency in procurement by contracting with sources that adequately compensate their workers.\u201d Id.<\/em> at 5. After engaging in notice-and-comment rulemaking, the U.S. Department of Labor published its Final Rule, Increasing the Minimum Wage for Federal Contractors, on November 24, 2021, implementing EO 14,026 (the Final Rule and EO 14,026 are the \u201cWage Mandate\u201d). Id.<\/em><\/p>\n

Three months later, three states \u2013 Texas, Louisiana, and Mississippi (the \u201cStates\u201d) \u2013 sued President Biden, the U.S. Department of Labor (\u201cDOL\u201d), and certain DOL executives (collectively the \u201cfederal government\u201d) challenging the validity of the Wage Mandate. Id.<\/em> at 2-3.<\/p>\n

The parties cross-filed cross-motions to dismiss and motions for summary judgment. The federal government argued generally that two of the Act\u2019s provisions, read together, provide the President with a broad grant of authority to implement policies \u201cthat the President considers necessary to foster an economical and efficient system for procuring and supplying goods and services for using property,\u201d including the Wage Mandate. Id.<\/em> at 13. The States argued that the Act is far more narrow and that it is primarily meant as a means to \u201ccentralize and introduce flexibility into government contracting to remedy duplicative contracts and inefficiencies,\u201d which does not include setting the minimum wage for federal contractors. Id.<\/em><\/p>\n

The District Court\u2019s Decision<\/strong><\/p>\n

The District Court granted in part and denied in part the States\u2019 cross-motion for summary judgment. It found that the States proved that that the President acted \u201cultra vires,\u201d or beyond his authority in issuing EO 14,026. Judge Tipton enjoined the federal government from enforcing EO 14,026 and the Final Rule against Texas, Louisiana, and Mississippi and their agencies.<\/p>\n

The District Court agreed with the States and held that Sections 101 and 102 of the Act \u201cread together, unambiguously limit the President\u2019s power to the supervisory role of buying and selling goods.\u201d Id.<\/em> The District Court found that the Act\u2019s historical context further supported its holding that the President\u2019s authority \u201cdoes not include a unilateral policy-making power to increase the minimum wage of employees of federal contractors.\u201d Id.<\/em> at 15.<\/p>\n

Judge Tipton further found that the purpose of the Act purpose conflicts with the Wage Mandate. He explained that the Act\u2019s purpose is to provide \u201ca relatively hands-off framework that enables agencies to determine for themselves the quantity and quality of items to procure on behalf of the federal government. It does not confer authority for the President to decree broad employment rules.\u201d Id.<\/em> at 20. As an example, the District Court compared the Act to two other permissible federal wage statutes \u2013 the Davis Bacon Act and the Walsh-Healey Public Contracts Act. Id.<\/em> at 20-21. Judge Tipton opined that unlike those two permissible federal wage-statutes, in which Congress expressly gave the Secretary of Labor limited <\/em>power to tailor the minimum wage of certain classes of federal contractors, the Procurement Act did not permit the President unlimited<\/em> wage-setting authority. Id. <\/em>at 21. The District Court concluded that the \u201cProcurement Act\u2019s text, history, purpose and structure limit the President to a supervisory role in policy implementation rather than a unilateral, broad policy-making power to set a minimum wage.\u201d Id.<\/em> at 22.<\/p>\n

The federal government will likely appeal the decision, and the Fifth Circuit will join the Ninth and Tenth Circuits in deciding whether the President exceeded his authority in issuing EO 14,026.<\/p>\n

Implications for Employers<\/strong><\/p>\n

The District Court\u2019s decision is a huge win for employers in Texas, Louisiana, and Mississippi as the federal government is prohibited from enforcing EO 14,026. Companies should stay tuned for the imminent showdown in the Fifth, Ninth, and Tenth Circuit\u2019s on the President\u2019s Authority over increasing the minimum wage for federal contractors and subcontractors.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Shaina Wolfe Duane Morris Takeaways: On September 26, 2023, in Texas v. Biden, No. 6:22-CV-00004 (S.D. Tex. Sept. 26, 2023), Judge Drew B. Tipton of the U.S. District Court for the Southern District of Texas granted in part and denied in part\u00a0the States\u2019 Motion for Summary … <\/p>\n

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