On March 28, 2025, the United States Court of Appeals for the Fifth Circuit dismissed a challenge to Former President Biden’s Executive order increasing the minimum wage for federal contractors to $15 per hour (or $17.75 per hour at the time of the decision due to inflation and other adjustments). What is the impact of the Court’s action and what is the status of the increased federal minimum wage?

After Former President Biden signed the Executive Order, three states, Texas, Louisiana and Mississippi, filed suit to enjoin the Order from taking effect. One of the States’ arguments was that by implementing an increased minimum wage via executive order, the President exceeded his powers and was unlawfully exercising Congress’s spending power. The district court entered a partial summary judgment and permanent injunction in the States’ favor, concluding that the Executive Order exceeded the President’s authority under the Procurement Act. The Fifth Circuit Court of Appeals reversed the ruling and remanded for further proceedings. The States then asked the full panel of judges on the Fifth Circuit review the decision.

On March 28, 2025, the Court of Appeals vacated its previous opinion and judgment in favor of the States, instructing the district court to dismiss the case with prejudice. The basis for this opinion was President Trump’s Executive Order rescinding Former President Biden’s Order. As the at-issue executive order was rescinded, the Court of Appeals concluded that the matter was moot as no relief sought by the parties was any longer disputed or at issue.

Both President Trump’s Order and the Court’s opinion open the door for federal contractors to consider reducing wages for existing employees or offering reduced wages for prospective ones. Market forces, of course, will likely dictate whether to offer employees on federal projects rates higher than minimum wage.

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