On Thursday May 7, 2009, Department of Labor (DOL) Secretary Hilda L. Solis released the agency's proposed budget for fiscal year 2010. The proposed budget, along with other information, demonstrates that DOL intends to increase its enforcement efforts of employment and wage laws that specifically apply to federal government contracts.
Office of Federal Contract Compliance Programs
The proposed budget calls for a significant increase in funding and staff for the Office of Federal Contract Compliance Programs (OFCCP). Specifically, OFCCP has requested an increase in its annual budget from $82.1 million to $109.5 million, as well as the hiring of an additional 213 full-time employees.
A large portion of the requested funds will be used to increase field office staffs, which will allow the offices to increase their abilities to perform compliance evaluations and investigations. Funds will also be used for increasing national office support to the field offices in areas such as the analysis of validation studies for employment tests and statistical analysis of employment practices. Other priorities include increasing enforcement and outreach efforts related to compensation discrimination and enforcement litigations.
Wage and Hour Division
The Wage and Hour Division (WHD) has requested an approximately $30.86 million increase in its annual budget for the hiring of an additional 288 full-time employees. The WHD intends to hire 200 investigators and 88 technical, professional and managerial staff in fiscal year 2010. The requested amount will increase the WHD's enforcement staff, which, correspondingly, is likely to increase the number of complaint based investigations conducted and will enhance the agency's ability to conduct direct investigations of employer worksites.
The American Recovery and Reinvestment Act of 2009 (the ARRA) increased the DOL's "Department Management" account by $80 million to be used for the enforcement of worker protection laws and regulations, as well as coordination of activities related to the infrastructure and unemployment insurance provisions in the ARRA. The Secretary was given authority to distribute these funds to the various agencies within DOL to fulfill its mission with regard to the ARRA. Secretary Solis has already designated part of the money to fund the hiring of 116 full-time employees for the WHD through September 2010.
Section 1606 of the ARRA has expanded Davis-Bacon-related labor standards to cover federally assisted construction projects, including awards made by state or local governments using ARRA funds, which previously would not have been subject to Davis-Bacon prevailing wage rates. Additionally, the amount of ARRA funds designated for infrastructure projects will increase the number of Davis-Bacon-covered construction projects for several years. The WHD intends to use its increased funds to publish up-to-date and accurate Davis-Bacon prevailing wage determinations for use on ARRA construction projects and to establish a targeted enforcement program for ARRA covered projects. As noted in its budget submission, "[t]he amount of Federal spending on infrastructure projects will quadruple under the Recovery Act. As a result, WHD can expect its enforcement of the Davis-Bacon and related Acts to increase by an equivalent measure over the period of several years."
WHD officials have indicated that contractors can expect to witness increases in enforcement and outreach activities with regard to Davis-Bacon and the McNamara-O'Hara Service Contract Act (SCA) in fiscal year 2010. Current estimates are that Davis-Bacon investigations will rise from 400 this year to 1,100 in the next fiscal year and that SCA investigations will rise to 1,400 in the next fiscal year. It is also projected that at least 90 contractors working on ARRA projects will be referred to debarment next year, as compared to the ten the WHD referred this year. With regard to outreach and education efforts, the WHD intends to issue a new prevailing wage resource manual, as well as publishing SCA and Davis-Bacon "fact sheets" for the first time. The WHD will be offering six regional training sessions for contractors starting this summer.
Implications for Contractors
Federal contractors are well advised to use the approximately four months until fiscal year 2010 begins to review the adequacy of their compliance efforts with the laws, Executive Orders and regulations enforced by the DOL. Actions contractors can take include:
- Reviewing compensation practices for indicators of possible discrimination;
- Reviewing employment tests for indicators of possible discrimination;
- Reviewing progress toward meeting established affirmative action goals;
- Confirming that employees have been assigned to appropriate labor categories for prevailing wage and benefits purposes under Davis-Bacon and SCA;
- Confirming that they are using the correct Davis-Bacon and SCA prevailing wage determinations;
- Reviewing the methods being used to satisfy Davis-Bacon and SCA fringe benefit requirements to ensure that the benefits qualify as "bona fide" benefits under the Acts; and
- Confirming that the subcontractors performing Davis-Bacon and SCA covered work are compliant with those Acts.