Ninth Circuit Panel Rejects EO 14026 Contractor Minimum Wage

WHAT: The U.S. Court of Appeals for the Ninth Circuit issued a split decision in Nebraska v. Su holding that Executive Order (EO) 14026, commonly known as the $15 contractor minimum wage, exceeded the President's authority under the Federal Property and Administrative Services Act. The majority also found that the U.S. Department of Labor's (DOL) rules implementing EO 14026 were subject to arbitrary-or-capricious review under the Administrative Procedure Act (APA), and in turn found that the implementing rules were arbitrary and capricious because DOL failed to consider alternatives to the prescribed minimum wage.

The majority reversed a district court order dismissing the underlying complaint, vacated the district court's denial of a preliminary injunction, and remanded for further proceedings. This panel decision creates a circuit split with a Tenth Circuit decision earlier this year finding EO 14026 to be a valid exercise of authority (for which a cert petition