Consequences of federal wage order
A lawsuit filed by rafting outfitters in Colorado has shined a light on the implications of a new federal rule that significantly raises the minimum wage for federal contractors, and puts some local businesses in a fog of uncertainty.
The order issued by President Biden went into effect Jan. 30 and requires all new federal contracts to incorporate a minimum wage of $15 per hour for most employees and a minimum wage of $7.90 per hour for tipped workers. The order also includes plans to raise the minimum wage annually, phase out the lower minimum wage for tipped workers by 2024, and mandates overtime pay for work beyond 40 hours at $22.50 per hour.
The Colorado raft companies sued the federal government following Biden’s order, arguing that their permits to use federal land for overnight trips don’t make them federal contractors who must pay the higher wage. In the suit, they contend that paying those rates, particularly on multi-day trips where overtime is accrued, would make those types of excursions economically unfeasible.
A federal judge, however, dismissed that stance in a recent ruling, stating that outfitters follow other federal rules and must follow the wage rule as well.
The judge’s dismissal has left companies that operate under a permit on federal land scrambling to determine exactly what the new rule means for them — and it turns out their future is as clear as the muddy waters of the Colorado River.
In fact, the local guide companies we spoke with still aren’t sure if they’re even affected by the minimum wage order, while the federal agency charged with issuing their permits couldn’t tell us how the rule will be implemented.
Yet, for Montana Outfitters and Guides Association President Dusty Crary, the implications for his members are crystal clear.
“If they make us adhere to this new rule, it is going to shut us down,” he told the Inter Lake, bemoaning the wage and overtime requirements as a “completely unworkable” one-two punch for companies that utilize Montana’s vast tracts of federal land.
“We would have to charge so much that nobody would come on our trips anymore,” he said.
This isn’t the first time federal wage rules have affected outfitters on federal land.
President Obama in 2014 created a $10.10 hourly minimum wage with overtime provisions for federal contractors, including recreational firms using federal lands.
Four years later, President Trump issued an executive order exempting hunting, fishing, mountaineering and rafting guides and other “seasonal recreational services” workers, arguing the minimum wage “threatens to raise significantly the cost of guided hikes and tours on federal lands.”
The minimum wage hike aside, Biden’s order to rescind Trump’s exemption was a mistake and the rollout has been clunky at best.
His order was issued last spring. How is it possible that local outfitters still aren’t sure how the rule will impact their business; and why can’t the federal agency tasked with overseeing these permits explain how the rule will be implemented?
The White House may have had the best of intentions in demanding a livable wage for seasonal workers, but the unintended consequences and lack of communication could be devastating for many in the outdoor industry.