As ordered by the Biden administration, the Department of Labor’s new minimum wage hike, which requires federal agencies to pay their contractors a $15-per-hour minimum wage, has officially taken effect.
At first glance, the policy appears to impact only government employees, or at least that’s how it’s being presented to the public. But the fine print tells a different story — and reveals how much the president has exceeded his constitutional authority.
The first step to understanding the problem with the wage hike is to answer one vital question: What is a government contractor? The first-blush answer might be a consultant working for a federal agency such as the Department of Defense, Department of Agriculture, or Veterans Affairs. Seems simple enough, right? Well, not exactly. The new rule scoops in many more businesses.
Duke Bradford, for example, is the founder and owner of the Colorado-based company Arkansas Valley Adventures, an outdoors outfitter that facilitates whitewater rafting and rock-climbing adventures for its patrons.
Duke’s company is not part of any federal agency; it’s an entirely private business. Decades ago, after years of dreaming, he turned his love of the outdoors into a company that gives his patrons the gift of adventure — and he did it on his own without any help from the government.
But his business relies on the use of federal land, as does most outdoor recreation in the American West. And to access that land and serve his customers, he has to obtain special use permits. This means he must pay the federal government a fixed percentage of service fees in exchange for a yearly lease on the land.
That is the extent of the interaction he has with the federal government. But under the new wage rule, Duke is bound to pay his employees $15 per hour, plus overtime, which will have disastrous economic consequences for his business and his employees.
Duke says he has nothing but respect for his employees and he treats them accordingly. But his business model does not fit the typical 9-to-5 mold.
Guides at Arkansas Valley Adventures are seasonal employees who come into town when the weather is ripe for adventure and then journey elsewhere when the cold comes. They work as much as possible, almost always clocking more than 40 hours a week. After all, multi-day rafting trips always exceed 40 hours.
In addition to receiving tips from grateful customers, the guides are paid a flat fee per trip, based on the federal minimum wage, plus a fixed wage well above the national rate.
Requiring Duke to enforce the new wage hike puts him in a difficult position because the money to accommodate the increase must come from somewhere. To afford it, he must either cut employee hours or dramatically increase the cost to the customer. He also must consider eliminating one of the signature excursions: overnight rafting trips.
It is just not viable for Duke to pay hourly, and then overtime, wages for every hour of a days-long trip.
Duke isn’t alone. The wage hike will impact more than a half-million private firms, including 45,000 recreational outfitters like Arkansas Valley Adventures.
Putting aside for a moment the economic burden placed on private companies, the fact is the executive branch does not have authority to impose a mandatory wage increase on private businesses unless Congress passed the rule — the only branch constitutionally allowed to make laws.
Congress has not made any law that would control wages for employers whose only tie to the federal government is federal land use. But the executive branch did what it often does and searched for loopholes, stretching the meaning of “federal contractor.”
In this instance, President Biden used a 1940s-era procurement statute to sidestep Congress, displace at least five wage-related laws, and give the Department of Labor policymaking power over anyone with any financial relationship with the federal government.
The president does not get to step out of the bounds of his delegated role just because he feels passionate about an issue. He cannot enforce wage mandates created by unelected agency bureaucrats.
If the executive branch believes so strongly in this policy, it should ask Congress to consider taking action. Instead, it used an unconstitutional power grab to classify private employers, such as Duke, as federal contractors.
No matter how you feel about minimum wage increases, this is a gross abuse of power.
Pacific Legal Foundation represents Duke in his lawsuit against the administration’s violation of the constitutional separation of powers. A win for him will protect the livelihoods of his employees and secure the future of his business — and the outdoors adventure industry.
This op-ed was originally published by The Hill on February 7, 2022.