Update: On March 14, 2025, President Trump issued an Executive Order, “Additional Rescissions of Harmful Executive Orders and Actions,” which revoked Executive Order 14026, discussed below. The U.S. Department of Labor has stated it is “no longer enforcing Executive Order 14026 or the implementing rule (29 CFR part 23) and will take steps, including rescinding 29 CFR part 23, to implement and effectuate the revocation of Executive Order 14026.” We will continue to monitor further developments.

Earlier this month, the Fifth Circuit ruled in favor of a Biden administration order raising the minimum wage of many types of federal contract workers.  The executive order remains subject to litigation (in both the Fifth Circuit and elsewhere), but is currently effective throughout the country, with a narrow exception for certain state agencies. 

President Biden’s Executive Order 14026 (“the EO”), issued in April 2021, raised the hourly minimum wage to $15.00 for federal contract workers for the following contract types:

• Procurement contracts for construction projects covered by the Davis-Bacon Act (“DBA”);
• Service contracts falling under the Service Contract Act (“SCA”);
• Concessions contracts, including those excluded from the SCA by DOL regulations at 29 C.F.R. 4.133(b); and,
• Contracts related to federal property or lands and connected to providing services for federal employees, their dependents, or the general public.

EO 14026 directs the U.S. Department of Labor to annually update the hourly minimum wage.  We wrote in October 2024 about DOL’s annual update effective January 1, 2025, which raised the minimum wage for covered contracts from $17.20 to $17.75.  More details are below.

Fifth Circuit Case

In Texas v. Trump, the attorneys general of Texas, Mississippi, and Louisiana challenged EO 14026, arguing that the EO is unlawful under the Procurement Act, the Administrative Procedure Act (“APA”), the non-delegation doctrine, and the Spending Clause.  Although the lower court declined to reach the APA, non-delegation, and Spending Clause claims, it held that President Biden acted beyond his authority under the Procurement Act and narrowly enjoined the law as to the state plaintiffs and their agencies as contracting entities.

A unanimous panel of the Fifth Circuit reversed and vacated the injunction.  Specifically, the court reasoned that the EO is consistent with the purpose set out in 40 U.S.C. § 101(1)—namely, “to provide the Federal Government with an economical and efficient system” for procurement activities.  The court also rejected the states’ request to enjoin the EO under the major questions doctrine, holding that the Procurement Act does not suffer from ambiguity and that the major questions doctrine should not be extended to “proprietary, as opposed to regulatory, authority.” 

Uncertain Future for the EO

The legal battle over the EO is not over.  The state plaintiffs have filed a petition for the Fifth Circuit to rehear the case en banc, meaning that the district court’s narrow injunction remains in place for now.  Additionally, two other circuits have weighed in on the federal contractor minimum wage EO, with the Ninth Circuit ruling against the EO and the Tenth Circuit ruling in favor of the DOL’s final rule implementing it.  State v. Su, 121 F.4th 1 (9th Cir. 2024) (reversing and remanding denial of injunction and dismissal of complaint); Bradford v. U.S. Dep’t of Lab., 101 F.4th 707 (10th Cir. 2024) (denying motion for preliminary injunction). 

The Ninth Circuit’s recent ruling has not yet altered the status quo, however, pending potential en banc review.  In December 2024, the U.S. Department of Justice (“DOJ”) petitioned the Ninth Circuit to rehear the case en banc, and earlier this month, the DOJ filed the Fifth Circuit’s opinion in Trump v. Texas as supplemental authority in support of its still-pending petition defending the EO.  Moreover, even if the Ninth Circuit denies the en banc petition, it remains unclear what the scope of any injunction against the EO would look like.  The Tenth Circuit ruling in favor of DOL’s final rule implementing the EO will stand for now, as the Supreme Court denied the writ of certiorari earlier this year.  Bradford v. Dep’t of Lab., No. 24-232, 2025 WL 76436 (U.S. Jan. 13, 2025). 

Currently, the EO and its implementing rule remain in effect, and government contractors are advised to keep up with DOL’s requirements, as we discussed in our October 2024 post on the topic.  The Covington team will continue to monitor developments, including future court interventions and any actions the Trump Administration may take with respect to federal government contractor wages.