Ninth Circuit blocks contractor minimum wage, challenging executive authority under Procurement Act

The Ninth Circuit recently ruled in Nebraska v. Su that the president lacks authority under the Federal Property and Administrative Services Act of 1949 (Procurement Act) to impose a minimum wage on federal contractors, diverging from other circuits and potentially setting the stage for Supreme Court review. In a 2-1 decision, the court found the "economy and efficiency" clause of the Procurement Act insufficient for granting such authority, aligning with other federal court opinions that limit executive power under the Act. While the decision does not yet impose a nationwide block, it directs a preliminary injunction for plaintiff states, potentially exempting federal contractors within those states.

Despite the decision, federal contractors should continue to comply with the Department of Labor’s current wage rule, as broader implications remain uncertain pending further judicial developments or a change in administration. This circuit split may also impact other executive orders issued under the Procurement Act, including those related to contractor sick leave and anti-discrimination policies.