President Obama’s much-anticipated Fiscal Year 2014 budget proposal would fund several federal agency employment initiatives and enforcement efforts. Among other programs that would affect employers, the FY 2014 budget would provide a 10% income tax credit for small businesses that hire new employees or increase wages. Links to various portions of the budget can be found on the Office of Management and Budget’s webpage. The President’s budget proposal is subject to Congressional approval, where it will likely face opposition. The budget is, nonetheless, an important signal of the Administration’s priorities, and the proposal indicates that employers should prepare for greater enforcement and regulatory activity. A summary of key agency budget levels and the programs to be funded are as follows:
Department of Labor
The President’s FY 2014 budget would allocate $12.1 billion in discretionary funding for the DOL, up more than $20 million from the amount provided in 2012. The new budget proposal reflects the Department’s emphasis on strengthening enforcement of worker protection laws. The stated purpose of these funds is to “bolster the enforcement of critical wage and hour, whistleblower, and worker safety laws.” Approximately $1.8 billion is allotted for the agency’s worker protection agencies alone. Broken down by some of the DOL’s sub-agencies, the following amounts would be provided in FY 2014:
Wage and Hour Division (WHD)
The WHD would receive $243 million in 2014, an increase from the $226 million received in 2012, and $229 million provided through the 2013 continuing resolution. A significant portion of this amount is to combat the misclassification of workers as independent contractors. As discussed in the proposal, in 2014 the agency estimates that “265,000 persons are expected to be aided under the [Fair Labor Standards Act] through securing agreements with firms to pay back wages owed to their workers. In government contract compliance actions, about 25,000 persons will be aided through securing agreements to pay wages owed to workers.” The budget allocates approximately $14 million to combat misclassification, including $10 million in grants to states to help them identify and recover unpaid taxes. Approximately $4 million is slated to fund misclassification investigations.
The budget also encourages the establishment of state paid family leave laws. Approximately $5 million would be allocated to a State Paid Leave Fund to provide technical assistance and support to states that are considering paid leave programs.
Approximately $3.4 million would be provided for increased enforcement of the FLSA and Family and Medical Leave Act (FMLA), and about $5.8 million would allow the WHD “to develop a new integrated enforcement and case management system to allow investigators to capture higher quality and more timely data to analyze trends in labor law violations, target investigations and compliance assistance efforts, and evaluate the impact and quality of enforcement.”
Office of Federal Contract Compliance Programs
The OFCCP would receive $108 million under the 2014 budget, up slightly from the $105 million it received in 2012, and $106 million under the 2013 continuing resolution. The budget explains that the OFCCP priorities include:
1) Narrowing the persistent pay gap between men and women; 2) Expanding its commitment to enforcing the rights of women and under-represented groups; 3) Ensuring that federal contractors recruit, hire, and retain veterans and individuals with disabilities; and 4) Strengthening outreach to community-based organizations for worker education and to the regulated community for comprehensive understanding of new rules.
Occupational Safety and Health Administration
A significant portion of DOL funds would be allocated to OSHA. Specifically, under the 2014 budget OSHA would receive $571 million, up from $567 million it received in 2012. Of this amount, approximately $22 million, an increase of almost $6 million, would fund the agency’s various whistleblower protection activities. OSHA is charged with enforcing the whistleblower provisions in 22 separate statutes.
Another $22 million would be used to fund the development and enforcement of safety and health standards.
Office of Labor Management Standards
The OLMS would receive approximately $47 million under the budget proposal, up from the $41 million it received in 2012. According to the budget, “in 2014, OLMS plans continued efforts to advance transparency and financial integrity protections, primarily through audits, investigations and compliance assistance efforts. OLMS will ensure that federally sponsored transportation grants are processed in a timely manner providing requisite protection to employees against adverse impacts as a result of federal assistance.” In its most recent regulatory agenda, OLMS announced its intention to proceed with finalizing the “persuader” reporting requirements under the Labor-Management Reporting and Disclosure Act.
Employee Benefits Security Administration
Under the FY 2014 proposal, the EBSA would be allocated $189 million in which to carry out its functions. Among other goals, the agency would use the funds to help establish automatic workplace pensions and expand the small employer pension plan startup credit. As discussed in the proposal:
employers who do not currently offer a retirement plan will be required to enroll their employees in a direct-deposit Individual Retirement Account (IRA) that is compatible with existing direct-deposit payroll systems. Employees may opt out if they choose. To minimize burdens on small businesses, those with 10 or fewer employees would be exempt. Employers would also be entitled to a tax credit of $25 per participating employee—up to a total of $250 per year—for six years. To make it easier for small employers to offer pensions to their workers in connection with the automatic IRA proposal, the Budget will increase the maximum tax credit available for small employers establishing or administering a new retirement plan from $500 to $1,000 per year. This credit would be available for four years.
According to its budget request EBSA will continue: “a multi-faceted enforcement program that effectively targets the most egregious and persistent violators;” and “a strong regulatory framework with an active regulatory agenda.” The Agency will also undertake significant additional responsibilities and workload in response to the Affordable Care Act.
The DOL held a live web chat to discuss the budget after its release. An archived version of the chat can be found here.
Other Independent Federal Agencies (NLRB, NMB, EEOC)
The detailed budget for other independent federal agencies, including the National Labor Relations Board, National Mediation Board, and Equal Employment Opportunity Commission, can be found here. Specifics contained in these agency budget proposals are as follows:
National Labor Relations Board
The President’s budget proposal calls for a $10 million increase in NLRB funding for 2014. Specifically, the NLRB would receive approximately $285 million for FY 2014, up from the $275 granted in the 2013 continuing resolution. In FY 2012, the NLRB was allocated $277 million to carry out its functions.
National Mediation Board
The budget would keep NMB funding levels stead at approximately $13 million for 2014, the same amount provided in both 2012 and 2013.
Equal Employment Opportunity Commission
The EEOC would also receive a funding boost under the FY 2014 budget proposal. The amount allocated in the budget for this agency is $373 million, up from $362 million provided under 2013’s continuing resolution, and $360 million allocated in 2012. The budget states that this amount is to allow the agency to align its “staffing and funding request with the new Strategic Plan for fiscal years 2012–2016.” The budget notes that the EEOC’s priority “for agency resources continues to be litigating systemic cases and maintaining a manageable inventory of cases.”
Department of Health and Human Services
The FY 2014 budget proposal would give the U.S. Department of Health and Human Services (HHS) approximately $80.1 billion, about $4 billion more than allocated to the HHS in 2012. As discussed in the HHS’s detailed budget, a significant portion of that amount would allow the agency to carry out provisions of the Affordable Care Act (ACA).
Notably, the agency would receive about $1.3 billion to help states establish their health insurance exchanges, which will start functioning on October 1, 2013 to provide insurance coverage as of January 1, 2014. According to the proposal,
the Exchanges will facilitate the purchase of qualified health plans in the individual market and provide for the establishment of a Small Business Health Options Program to allow small businesses to offer qualified health plans to their employees. Section 1311 of the Patient Protection and Affordable Care Act (P.L. 111–148) provides amounts necessary to enable the Secretary to award grants to States beginning no later than March 23, 2011, and allows for renewal grants through January 1, 2015.
In addition, about $1.4 billion is slated to help the HHS carry out in the first quarter of FY 2015 sections 1402 and 1412 of the ACA, which address reduced cost-sharing for individuals enrolled in qualified health plans.
The budget also proposes to expand the small business tax credit to encourage more employers to provide health insurance to their employees. Specifically, the budget proposes to expand this credit to employers with up to 50 full-time equivalent employees, and provide a more gradual phase-out.
Additionally, the proposal includes HHS funding to accelerate the issuance of state innovation waivers:
The Budget empowers States to develop their own innovation strategies to ensure their residents have access to high-quality, affordable health insurance, achieving the same outcomes as those achieved through the Affordable Care Act. Similar to legislation previously introduced in the Senate and endorsed by the President, the Budget proposes to make “State Innovation Waivers” available starting in 2014, three years earlier than under current law. These State strategies would provide affordable insurance coverage to at least as many residents as would have been covered without the waiver and must not increase the Federal deficit. The Administration is committed to the budget neutrality of these waivers
More on the HHS’s budget can be found here.