President Trump has released his proposed federal budget, setting out his priorities for the 2018 fiscal year, which begins October 1.1 As anticipated, the budget represents a marked shift in potential government spending; it proposes to eliminate roughly $3.6 trillion over the next decade. And, true to his campaign promise, the president seeks to designate funds ($1.6 billion) for commencement of the construction of a wall along the southern border.
Of particular interest to employers, the White House proposal calls for development of a national paid family leave program. The budget also significantly reduces funding for several federal agencies, including the Department of Labor (DOL). In retooling the DOL, the White House budget suggests a merger of the Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP).
Paid Parental Leave
Expanding upon a campaign proposal, President Trump’s proposed budget includes a framework for paid parental leave. The goal is to provide six weeks of paid family leave to new mothers and fathers, including adoptive parents, to enable recovery and bonding. To do so, the budget proposes “a Federal-state paid parental leave benefit program within the unemployment insurance (UI) program that would begin in 2020.” This approach requires the states to implement a paid leave system and provides them “broad latitude to design and finance the program.” Consistent with that principle, the proposal does not address other details, such as potential eligibility criteria or caps on benefits for higher-wage earners. According to the budget, the president’s plan would be fully offset by other reforms to the UI system. Notably, this proposal would not extend paid leave for other purposes, such as for employees to care for themselves or other family members in the event of a serious medical condition.
Presumably, states could opt out of the proposed federal program if they develop their own compliant system. Several states have already established such paid leave systems. California, Rhode Island, and New Jersey currently offer wage replacement for family and medical leave. The California Family Temporary Disability Insurance program, for example, offers up to six weeks of benefits (up to 55% of an employee’s usual wages) each year. Generally speaking, these programs are funded by additional payroll taxes paid by employees and are administered by the state disability or unemployment insurance agency.
New York and the District of Columbia also recently enacted paid leave laws. The New York Paid Family Leave Benefits Law will take effect January 1, 2018, and will provide up to 12 weeks of paid leave for employees to care for an infant or an ill family member, or to assist with family obligations when a family member is called into active military service.2 Employees will be eligible for benefits under the D.C. Universal Paid Leave Act beginning in 2020, which entitles them parental, family, and medical leave.3 For its part, Vermont is considering a bill (HB 196) to create a Family Leave Insurance Program that would grant employees 12 weeks of paid family and medical leave, to be funded by employee and employer contributions. Under that bill, which has passed the Vermont house, benefit contributions would begin in 2018, with benefits available as of January 1, 2019.4
Merger of the OFCCP and the EEOC
As most employers know, the EEOC enforces the various federal laws that prohibit discrimination in employment. The OFCCP, meanwhile, ensures that contractors comply with the numerous affirmative action and equal employment requirements applicable to employers that contract or subcontract with the federal government. The EEOC is an independent federal agency, whereas the OFCCP falls under the Department of Labor, now led by Secretary Alex Acosta. The guiding purposes of the agencies overlap to some extent, but they have operated separately due to their distinct origins, their focus on different sets of regulations, and the scope of their authority. The EEOC, for example, has the power to issue subpoenas, seek compensatory and punitive damages, and initiate its own litigation—but the OFCCP does not.
The agencies would be combined under the White House’s proposed budget. The proposal seeks to merge the OFCCP into the EEOC, “creating one agency to combat employment discrimination.” It envisions the agencies working together to coordinate the transition of the OFCCP’s functions to the EEOC by the end of the 2018 fiscal year. According to its proponents, this integration would promote efficiency and economy, improve service to citizens, and strengthen civil rights enforcement.
Preliminary responses have raised concerns with this proposal, as indicated during a congressional hearing the same day the proposal was released. Congressional approval also may be necessary to transfer the DOL’s authority over the OFCCP to the EEOC. On the whole, it is far from certain that this proposal will garner support and how it will fare before Congress.
Funding for Agencies that Regulate Labor and Employment
Not surprisingly, President Trump’s proposed budget would reduce funding for most federal agencies. The DOL faces a roughly 20% slash to its budget, with steep cuts for training activities and the migrant farmworker program.
The National Labor Relations Board (NLRB) would not be affected as severely under the proposed budget. The White House has suggested a decrease of approximately 6% to the NLRB’s funding. The proposed budget further notes that no funds allocated to the NLRB may be used “to issue any new administrative directive or regulation that would provide employees any means of voting through any electronic means” in a union election.
The EEOC, however, faces only a slight ($700,000) reduction in its total funding. The proposed budget reflects a commitment to the EEOC’s strategic plan through the 2018 fiscal year and supports the EEOC’s objectives to: (1) combat discrimination through strategic law enforcement; (2) prevent discrimination through education and outreach; and (3) deliver excellent service through effective systems, including data resource consolidation and knowledge sharing.
What Happens Next?
Of course, the president’s proposed budget is unlikely to be approved in its current form as it heads to Congress for evaluation. Nonetheless, these employment-related proposals are worth monitoring closely, and we will keep you informed as the complex budget process unfolds.