River-Rafting Companies Challenge Exec Order That Would Raise Wages

Issued on April 27, Biden’s order stipulates that starting January 30, 2022, federal contractors must pay at least $15 per hour to all workers; a lower wage for tipped employees will be phased out by 2024. The order builds on one issued in 2014, when Biden was vice president; Donald Trump amended that order while he was president to exclude outfitters and guides operating on federal lands. Biden’s new version revokes that exemption, and as a result, many Colorado companies whose businesses rely on federal permits and property may soon have to pay their workers more.

One Colorado business that will be impacted is Xanterra, a luxury travel company that operates hotels in many national parks across the country, including Yellowsone, the Grand Canyon and Rocky Mountain National Park. Xanterra, which is is owned by billionaire Philip Anschutz, is one of the largest businesses that falls under the order. Companies that operate ski resorts will be affected, too; they primarily operate on federal land.

But many of the impacted businesses don’t have deep pockets, especially those in the river-rafting industry, according to David Costlow, CEO of the Colorado River Outfitters Association.

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That’s why the Colorado River Outfitters Association, in conjunction with Arkansas Valley Adventure, is suing the Department of Labor and the Biden administration, arguing for an exemption for those permitted to work on federal land from the order.

“As a community, we had to get together and get on the same page and say, ‘No, this is damaging to the industry,’” Costlow says. The Colorado River Outfitters Association filed the lawsuit on December 7, after submitting comments against the order in August.

According to Costlow, his group’s biggest issue with the order is that it treats federal permittees the same way it treats federal contractors. Federal contractors can renegotiate their contracts to defer some of the extra labor costs onto the government, he notes, while permittees merely pay the federal government for the right to operate on federal land — no negotiation takes place.

Rocky Mountain Adventures, a member of Colorado River Outfitters based in Fort Collins, already pays its guides $15 per hour, but business manager and co-owner Kyle Johnson says he supports the lawsuit because he doesn’t think the order is fair to permittees.

To understand the difference between how the order affects permittees and federal contractors, he points to the customers of the enterprises. For federal contractors, the customer is the government. For permittees, the customer is an individual. While Johnson says he appreciates the permits that allow his business to operate rafting trips on federal land and rivers, those permits don’t connect the government to the additional costs that his business might have to take on.

As he understands the order, he adds, any company with which his business contracts will also be subject to the new wage requirements. That limits his options for hiring janitorial or landscaping services.

His company raised the minimum wage to $15 an hour because it was the right thing to do given the cost of living on the Front Range, Johnson says, but it also affected the business and its employees in unanticipated ways. Rocky Mountain Adventures reduced hours for employees, which they weren’t happy with, because they wanted to work as much as possible during the approximately 100-day season, he notes. It stopped offering overnight trips and even full-day trips on the Poudre River because of those limited guide hours.

The company had to raise its prices by about 10 percent in 2021 and will raise them another 10 percent in 2022 to accommodate costs increased by inflation. That could cut down on customers when the business is already going through tough times. Last year “was very difficult,” Johnson says. “It’s hard to raise pricing and compensation to employees while having a terrible year and trying to keep the lights on as a small business. And all these pressures have come at once, rapid-fire with one another.”

Under Biden’s executive order, Costlow notes that other rafting companies will also face the dilemma of how to cover the wage increase while keeping prices affordable. He estimates that 600,000 people use the services of Colorado River Outfitters Association members each year; if that number drops, jobs could disappear. “The reality is, is a customer gonna pay this kind of cost?” he asks. “I don’t think so.”

In addition to arguing that it is not fair to treat federal permittees like contractors, the lawsuit contends that setting wages by executive order isn’t the correct way to make change, and could even be illegal. Costlow points to Congress tabling minimum-wage talks as a sign that the Executive Branch is overstepping. If Congress were to pass wage increases, he says, Colorado River Outfitters members would comply.

“That’s called democracy,” Costlow notes. “If I don’t like a decision my representative makes, I may not have a ton of influence, but I can at least vote no on their re-election. But if a bureaucrat does it, I have no say.” Those bureaucrats can change between administrations, he adds, making the industry subject to different whims. Costlow would like to see a specific definition of federal permittees and how they’re governed that becomes law.

“We didn’t get in the rafting industry to be tied to politics,” explains Johnson. “If we were a defense contractor, then part of that industry is dealing with that. What’s most important to me as a business owner is that I’m not exposed to the political pendulum every four to eight years.”

The Department of Labor has not yet responded to the suit; when it does, Costlow says, the plaintiffs will determine their next steps. “It’s our chance to say this was not done in a legal fashion, and we’d like you, Mr. or Ms. Judge, to determine if that’s true or not,” he concludes.