Wage Hour Division.gifAuthored by Alex Passantino

Yesterday, President Obama released the details of his FY2014 budget.  Although significant policy differences make it highly doubtful that this budget will become “the” budget, the President’s proposal provides some clear insight into the policy preferences of the Administration. 

Buried deep within the budget documents, beyond the questions of “stimulus funds” and “entitlement reforms,” lies the answer to the question most pressing to the readers of this blog:  “What about the Wage and Hour Division?”  The answer:  “More of the same.”

WHD’s request includes a $16 million funding increase to $243 million and 63 additional FTEs, which would bring the total number of WHD employees to 1872.  The additional funds and personnel apparently would be used to continue WHD’s “fissured industry” enforcement activities, with WHD identifying business models such as “subcontracting, franchising, temporary employment, labor suppliers, [and] independent contracting” as worthy of particular scrutiny.  WHD specifically noted its continued focus on independent contractor misclassification.   

WHD will continue to emphasize enforcement under the Davis-Bacon Act and Service Contract Act, as well as in residential construction.  WHD also plans to focus on some of its more limited programs:  Section 14(c), which allows lower rates of pay to individuals with disabilities; H-2A, which is the agricultural temporary visa program; and H-2B, which is the non-agricultural temporary visa program. 

WHD’s budget request also includes $5.8 million for a “new, integrated information technology system.”  The system will allow improvements to: policies and procedures, such as the process for assessing civil monetary penalties and the certification of farm labor contractors, or opportunities to develop more comprehensive, interconnected profiles of violators in order to improve the effectiveness of the enforcement program

This system will assist WHD as it spends increasing amounts of its investigative resources on targeted (as opposed to complaint-based) investigations and uses “[p]enalties, sanctions, the FLSA hot goods provision, and similar strategies . . .  as appropriate to ensure future compliance among violators and to deter violations among other employers.” 

It should come as no surprise that WHD’s agenda for FY14 is continued, aggressive enforcement.  Taking action now — e.g., auditing and assessing pay practices, reviewing exemptions, educating field management about their role in the  investigative process — will go a long way to preventing you from being surprised by the results of that agenda.