Can a Texas county require its contractors to pay workers a living wage above the state minimum?

Plain-English summary

Dallas County District Attorney Craig Watkins asked the Attorney General whether the county could require contractors to pay a "living wage" (he defined it as at least $10.25 per hour for workers on county projects) on contracts awarded under the County Purchasing Act. He asked it two ways: first, whether section 62.0515 of the Labor Code expressly authorized such a requirement, and second, if not, whether the county had implied authority to use a living wage as one factor in evaluating competitive proposals under section 262.030 of the Act.

The AG started from a basic limit on county power: a commissioners court can only make contracts as authorized, expressly or by necessary implication, by the Texas constitution and laws. The County Purchasing Act requires competitive bidding for many purchases (award to the responsible bidder with the lowest and best bid, or reject all bids) and also allows alternative methods like competitive proposals. Nothing in the Act expressly lets a county demand higher wages in a solicitation.

On the first question, the AG concluded a court would likely find that section 62.0515 of the Labor Code does not provide that express authority. Chapter 62 requires employers to pay at least the federal minimum wage. Section 62.0515 says the minimum-wage rule does not override a minimum wage a governmental entity sets in a public contract, and that a private entity that agrees to such a contract wage is bound by it. But the AG read that as making higher contract wages enforceable only where some other statute has specifically authorized the departure (for example, the prevailing-wage rules for public works construction). It is not itself a grant of power letting a county impose a higher wage. The AG noted that the Act shows the Legislature knows how to authorize specific bid requirements when it wants to, and pointed to a prior opinion concluding a school district could not require contractors to pay above a prevailing-wage statute even though higher wages were not prohibited.

On the second question, the AG did not give a yes or no. A competitive proposal under section 262.030 is awarded to the "lowest and best" evaluated offer, which means the best value considering direct and indirect costs. Watkins argued a living wage would attract more qualified workers and improve quality. The AG explained that the purpose of competitive bidding is to secure the best work at the lowest practicable price for taxpayers, and that bid specifications must have a definite, objective relationship to quality and competence or rest on clear legislative authority. Whether paying higher wages is definitively and objectively related to the quality of services under any particular contract, so that it could be a valid evaluation factor, is a fact question the opinion process cannot resolve.

Currency note

This opinion was issued in 2014. Subsequent statutory amendments, court decisions, or later Attorney General opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant for those who asked

District Attorney Watkins and Dallas County (as the opinion described it): The opinion described section 62.0515 as not expressly authorizing the county to require a higher wage on its purchasing contracts, and treated whether a living wage could serve as a competitive-proposal evaluation factor as a fact question outside the opinion process. It did not approve or forbid a county living-wage policy in the abstract.

Counties and commissioners courts (as the opinion described it): The opinion described a county's contracting authority as limited to what the law confers expressly or by necessary implication, and noted that the County Purchasing Act spells out specific bid conditions the Legislature has authorized.

Government contractors and bidders (as the opinion described it): The opinion described section 62.0515 as binding a private entity to a contract wage it agreed to, where another statute authorized that wage, but not as a freestanding source of authority for a county to demand one.

Procurement officers (as the opinion described it): The opinion described the "lowest and best" standard under section 262.030 as a best-value test, and described valid evaluation factors as those with a definite, objective relationship to quality and competence or grounded in clear legislative authority.

Common questions

Can a Texas county require contractors to pay more than minimum wage?
The AG concluded a court would likely find that section 62.0515 of the Labor Code does not expressly authorize a county to require a higher wage as a condition for a County Purchasing Act contract award. A county's contracting power is limited to what the law expressly or by necessary implication allows.

What does Labor Code section 62.0515 actually do?
The AG explained it makes a minimum wage a governmental entity sets in a public contract enforceable against a private entity that agrees to it, where another statute authorized the departure from the state minimum. It is not itself a grant of power for a county to impose a higher wage.

Could a county use a living wage as a bid evaluation factor instead?
The AG did not decide. He said it depends on whether paying higher wages is definitively and objectively related to the quality of services in a particular contract, which is a fact question the opinion process cannot answer.

What is the 'lowest and best' standard in competitive proposals?
The AG described it as a best-value test: the offer providing the best value considering associated direct and indirect costs, such as transport, maintenance, reliability, life cycle, warranties, and after-sale customer service, under section 262.022(5-a).

Did the AG say a living wage requirement is illegal?
No. The AG concluded the county lacked express statutory authority under section 62.0515 and treated the evaluation-factor route as a fact-specific question, without declaring any particular policy unlawful.

Background and statutory framework

A commissioners court may contract on the county's behalf only as authorized, expressly or by necessary implication, by the constitution and laws of Texas (Jack v. State, 694 S.W.2d 391 (Tex. App.-San Antonio 1985, writ ref'd n.r.e.)). The County Purchasing Act (Local Government Code chapter 262, subchapter C) requires competitive bidding for certain purchases, with award to the responsible bidder submitting the lowest and best bid or rejection of all bids (Tex. Loc. Gov't Code Ann. § 262.027(a) (West Supp. 2014); see §§ 262.021-.037), and authorizes alternative procedures such as competitive proposals under section 262.030.

Chapter 62 of the Labor Code requires employers to pay at least the minimum wage set under the Fair Labor Standards Act of 1938 (Tex. Lab. Code Ann. § 62.051 (West 2006)). Section 62.0515 provides that this requirement supersedes wages set in an ordinance, order, or charter provision governing private employment "other than wages under a public contract," and that it does not apply to a minimum wage a governmental entity establishes for a contract between it and a private entity, who is then bound by that contract (id. § 62.0515(a), (c)). The AG read section 62.0515 as acknowledging other schemes where the Legislature authorized departures from the minimum wage (for example, prevailing-wage rules for public works under Tex. Gov't Code Ann. §§ 2258.021-.022 (West 2008)), not as itself granting a county authority to require a higher wage. He noted the Act shows the Legislature knows how to authorize specific bid conditions (for example, Tex. Loc. Gov't Code Ann. §§ 262.025(d), 262.027(f)), and that a court reads statutes accordingly (FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868 (Tex. 2000)), citing a prior opinion reaching the same result for a school district (Tex. Att'y Gen. Op. No. JC-0011 (1999)).

On the evaluation-factor question, a request for proposals under section 262.030 is awarded to the "lowest and best" evaluated offer (Tex. Loc. Gov't Code Ann. § 262.030(b)), which means the best value considering direct and indirect costs (id. § 262.022(5-a)). The AG recited the Texas Supreme Court's explanation that competitive bidding exists to secure the best work and materials at the lowest practicable price for taxpayers, and that quality should be fixed by quality specifications rather than indirect proscriptions (Tex. Highway Comm'n v. Tex. Ass'n of Steel Imps., Inc., 372 S.W.2d 525 (Tex. 1963)). Prior opinions had concluded bid specifications must bear a definite, objective relationship to quality and competence or rest on clear legislative authority (Tex. Att'y Gen. Op. Nos. JC-0521 (2002), JC-0223 (2000), DM-113 (1992)). Whether a living wage meets that standard for a given contract is a fact question outside the opinion process (Tex. Att'y Gen. Op. No. GA-1050 (2014)).

Citations

Statutory provisions:

• Tex. Lab. Code Ann. § 62.051 (West 2006) (state minimum wage)
• Tex. Lab. Code Ann. § 62.0515(a) (supersession of local wage provisions)
• Tex. Lab. Code Ann. § 62.0515(c) (contract wages set by a governmental entity)
• Tex. Loc. Gov't Code Ann. § 262.027(a) (West Supp. 2014) (lowest and best bid)
• Tex. Loc. Gov't Code Ann. § 262.030(b) (West Supp. 2014) (competitive proposals)
• Tex. Loc. Gov't Code Ann. § 262.022(5-a) (definition of "lowest and best")
• Tex. Loc. Gov't Code Ann. § 262.025(d) (West Supp. 2014) (example of authorized bid condition)
• Tex. Gov't Code Ann. §§ 2258.021-.022 (West 2008) (prevailing wage for public works)

Cases:

• Jack v. State, 694 S.W.2d 391, 397 (Tex. App.-San Antonio 1985, writ ref'd n.r.e.)
• FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 884-85 (Tex. 2000)
• Tex. Highway Comm'n v. Tex. Ass'n of Steel Imps., Inc., 372 S.W.2d 525, 527 (Tex. 1963)

Prior Attorney General opinions referenced:

• Tex. Att'y Gen. Op. Nos. JC-0011 (1999), JC-0521 (2002), JC-0223 (2000), DM-113 (1992), GA-1050 (2014)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-1090
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2014/ga1090.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

December 1, 2014

The Honorable Craig Watkins Opinion No. GA-1090
Dallas County District Attorney
411 Elm Street, 5th Floor Re: Authority of Dallas County, under Labor
Dallas, Texas 75202 Code section 62.0515 and the County
Purchasing Act, to require payment of a wage
higher than the state-mandated minimum wage
to employees of county contractors
(RQ-1203-GA)

Dear Mr. Watkins:

You ask whether "Dallas County [is] expressly authorized to require a living wage be paid on contracts awarded pursuant to the County Purchasing Act."[1] In the alternative, you ask whether Dallas County (the "County") has "implied authority under the County Purchasing Act to include payment of living wages as a factor in a request for competitive proposals." Request Letter at 1.

"[T]he authority of the Commissioner's Court as the governing body of the county to make contracts in behalf of the county is limited to that conferred either expressly or by necessary implication by the constitution and laws of this state." Jack v. State, 694 S.W.2d 391, 397 (Tex. App.-San Antonio 1985, writ ref'd n.r.e.). The County Purchasing Act (the "Act"), Local Government Code chapter 262, subchapter C, requires that counties make certain purchases using competitive bidding, which obliges the commissioners court to "(1) award the contract to the responsible bidder who submits the lowest and best bid; or (2) reject all bids and publish a new notice." TEX. LOC. GOV'T CODE ANN. § 262.027(a) (West Supp. 2014); see generally id. §§ 262.021-.037 (West 2005 & Supp. 2014). The Act also authorizes alternative competitive procedures beyond traditional competitive bidding, such as the competitive proposal process outlined in section 262.030, about which you ask.[2] See Request Letter at 1. The Act does not expressly authorize a county to require higher wages in its solicitation for proposals under section 262.030. See TEX. LOC. GOV'T CODE ANN. § 262.030 (West Supp. 2014). You first ask whether section 62.0515(c) of the Labor Code supplies such express authorization. Request Letter at 1.

Chapter 62 of the Labor Code requires employers to pay employees at least the minimum wage established under the Fair Labor Standards Act of 1938. TEX. LAB. CODE ANN. § 62.051 (West 2006). Section 62.0515 provides that this minimum wage requirement "supersedes a wage established in an ordinance, order, or charter provision governing wages in private employment, other than wages under a public contract," except as otherwise provided. Id. § 62.0515(a). Section 62.0515 does not apply "to a minimum wage established by a governmental entity that applies to a contract ... entered into by a governmental entity and a private entity." Id. § 62.0515(c).[3] A private entity that enters into such a contract and agrees to comply with a minimum wage established by the governmental entity "is subject to the terms of that contract." Id. You contend that this enforcement provision "expressly authorizes a county to solicit and evaluate competitive proposals based upon a private entity's agreement to pay its workers more than the state-mandated minimum wage." Request Letter at 3.

Section 62.0515 acknowledges other statutory schemes through which the Legislature has authorized a deviation from the state minimum wage requirement. See, e.g., TEX. GOV'T CODE ANN. §§ 2258.021-.022 (West 2008) (requiring that public works construction employees be paid at least the general prevailing rate of per diem wages in the locality). Section 62.0515 is applicable in situations in which the Legislature has specifically authorized such a departure. But section 62.0515 does not itself provide an explicit grant of authority for a county to require a contractor to pay its workers a higher wage.[4] Other provisions of the Act suggest that when the Legislature intends to authorize a county to require bidders to comply with a specific requirement, it knows how to do so. See, e.g., TEX. LOC. GOV'T CODE ANN. §§ 262.025(d) (West Supp. 2014) (authorizing certain commissioners courts to "require that a minimum of 25 percent of the work be performed by the bidder"), 262.027(f) (permitting commissioners to "condition acceptance of a bid on compliance with a requirement for attendance at a mandatory pre-bid conference under Section 262.0256"); see also FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 884-85 (Tex. 2000) (relying on the principle of statutory construction that the Legislature knows how to enact a law effectuating its intent). Thus, a court would likely conclude that section 62.0515 of the Labor Code does not expressly authorize a county to require a higher wage as a condition for an award of the contract.

In your second question, you suggest in the alternative that section 262.030 of the Act necessarily implies the authority to include a higher wage as one of several proposal evaluation factors, to which the county would assign a relative value. Request Letter at 3; see TEX. LOC. GOV'T CODE ANN. § 262.030 (West Supp. 2014). A request for proposals under section 262.030

must specify the relative importance of price and other evaluation factors. The award of the contract shall be made to the responsible offeror whose proposal is determined to be the lowest and best evaluated offer resulting from negotiation, taking into consideration the relative importance of price and other evaluation factors set forth in the request for proposals.

TEX. LOC. GOV'T CODE ANN. § 262.030(b) (West Supp. 2014). The term "lowest and best" means an "offer providing the best value considering associated direct and indirect costs, including transport, maintenance, reliability, life cycle, warranties, and customer service after a sale." Id. § 262.022(5-a). Thus, in evaluating bids under section 262.030, the commissioners court must consider the "best value" to the county and the "associated direct and indirect costs," for which the evaluation factors developed by the commissioners court serve as a benchmark. Id.

You suggest that "including a living wage as an evaluation factor in competitive proposals would result in workers who are more highly qualified and thus more competent, and that this will improve the quality of the work provided." Request Letter at 3. The Texas Supreme Court has explained that the main purpose of the competitive bidding statutes is

to stimulate competition ... and secure the best work and materials at the lowest practicable price, for the best interests and benefit of the taxpayers and property owners. There can be no competitive bidding in a legal sense where the terms of the letting of the contract prevent or restrict competition ... or increase the cost of the work or of the materials or other items going into the project.

Tex. Highway Comm'n v. Tex. Ass'n of Steel Imps., Inc., 372 S.W.2d 525, 527 (Tex. 1963) (citation omitted). The Court has also recognized the authority of a state agency to specify the quality of materials sought, stating that "[m]atters of quality should be fixed by quality specifications and not by proscriptions" that are indirect. Id. at 529. Based on these principles, this office has previously concluded that bid specifications must have a "definite and objective relationship to matters of quality and competence" or be "adopted pursuant to clear legislative authority." See Tex. Att'y Gen. Op. Nos. JC-0521 (2002) at 5, JC-0223 (2000) at 8, DM-113 (1992) at 7. Whether the payment of higher wages is definitively and objectively related to the quality of services provided under any particular contract, such that it can be included as an evaluation factor on competitive proposals submitted under section 262.030 of the Act, requires a factual inquiry and is not a question that can be answered in the opinion process. Tex. Att'y Gen. Op. No. GA-1050 (2014) at 2 (explaining that this office is not authorized to perform factual inquiries).

SUMMARY

A court would likely conclude that Dallas County is not expressly authorized by section 62.0515 of the Labor Code to require a higher wage as a condition for a contract award under the County Purchasing Act. Whether the payment of higher wages is definitively and objectively related to the quality of services provided under a specific contract such that it can be included as an evaluation factor on competitive proposals submitted under section 262.030 of the Act requires a factual inquiry and is not a question that can be answered in the opinion process.

GREG ABBOTT
Attorney General of Texas

DANIEL T. HODGE
First Assistant Attorney General

JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

Becky P. Casares
Assistant Attorney General, Opinion Committee

[1] Letter from Honorable Craig Watkins, Dallas Cnty. Dist. Att'y, to Honorable Greg Abbott, Tex. Att'y Gen. at 1 (June 3, 2014), http://www.texasattorneygeneral.gov/opin ("Request Letter"). By "living wage," you mean that "contractors would [be required to] pay employees who work on county projects awarded under Texas Local Government Code section 262.030 at least $10.25 per hour." Id. at 2.

[2] Section 262.030 authorizes a competitive proposal procedure when a county purchases certain goods and services and when a county purchasing agent determines, with commissioners court consent, that the use of an alternative competitive proposal procedure "is in the best interest of the county." TEX. LOC. GOV'T CODE ANN. § 262.030(d) (West Supp. 2014).

[3] For purposes of section 62.0515, the term "governmental entity" includes a county. TEX. LAB. CODE ANN. § 62.0515(d) (West 2006).

[4] In an analogous situation, this office considered whether a school district could require outside contractors to pay their workers a higher wage than was otherwise mandated by a prevailing wage statute. See Tex. Att'y Gen. Op. No. JC-0011 (1999) (construing chapter 2258 of the Government Code, applicable to public works construction contracts). Although the statute provided that the payment of higher wages to a worker employed on a public work was not prohibited, this office nonetheless concluded that the statute did not expressly authorize the school district to require a contractor to pay a higher wage. Id. at 3.