Wage and Hour Division Requests $49 Million Increase to Pressure Fissured Industries

Labor Department Continues to Focus on Workplace Violations by Seeking Increased Funding

Original Source: Seyfarth Shaw

Co-authored by Alex Passantino and Kevin Young

Although widely regarded as being “dead on arrival,” the President’s recently released FY2016 budget request provides many insights into the Administration’s priorities.  Those insights are crystal clear when it comes to the Labor Department:  the Administration will continue to focus on equipping the Department with the resources necessary to aggressively increase its investigation, identification, and penalization of workplace violations.

Certainly included in the Administration’s plans is the DOL’s Wage & Hour Division.  WHD has requested a 22% budget increase, from about $227 million in FY2015 to about $277 million in FY2016.  This proposed increase to WHD’s budget would provide it with more than 300 new full-time positions.  The increase would also allow WHD to upgrade its technology, which would in turn improve WHD’s employer targeting and violation tracking.

Not surprisingly, WHD’s Congressional Budget Justification—which is WHD’s explanation to Congress of what it intends to do with the money it requests—identifies “Addressing the Fissured Workplace” as a key enforcement initiative.  As we’ve discussed plenty of times on this blog, WHD has focused investigative efforts in “fissured industries,” which include industries using independent contractors, employee leasing, and franchise relationships, such as restaurants, hotels, staffing companies, cleaning services, and construction, among several others.

Notably, WHD has dramatically increased its targeted cases.  In FY2014, 44% of its investigations were directed (i.e., not complaint-based), a 27-point increase from FY2010.

WHD also identifies a “reengineered” approach to FMLA enforcement.  WHD is developing strategies so, when conducting local establishment FMLA compliance, it will also provide a more in-depth review of the employer’s business practices and leave policies.  WHD hopes to have a broader impact on compliance, rather than simply resolving an individual complaint.

The budget proposal reflects the Administration’s desire to raise the minimum wage, which would require a legislative act.  The Administration’s talking points also identify another legislative proposal:  a change to the FLSA’s civil monetary penalties provisions that would allow WHD to assess a $5,000 penalty per violation against employers that intentionally keep fraudulent wage and hour records or no records at all.

Of course, the budget also notes the Administration’s current effort to revise the FLSA’s overtime exemptions for the first time since 2004.  The Administration has signaled a full-court press on narrowing the class of workers who may be classified as overtime-exempt by heightening the exemptions’ salary requirements and tightening their duty requirements.  A proposed rule is expected in the coming weeks.

Although the President’s budget proposal is not likely to be enacted by Congress in anything close to its current form, it provides a good look into WHD’s priorities for the coming year.  Targeted enforcement—particularly in the fissured industries—is at the top of the list.  We will, of course, keep you apprised of further developments.

Here at EPAY, we specialize in time and labor management for the "fissured industries" that the Department of Labor is targeting for increased wage and hour investigation. Want to learn how EPAY can help your company maintain compliance and avoid wage and hour lawsuits? Check out our Compliance Corner or contact us.