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How Does the DOL’s Budget Reduction Impact its Enforcement Efforts?

June 3, 2011 Written by: Written by Mike Rogers,Chief Compliance Officer

You may be wondering how reductions in the DOL budget for 2012 will impact its enforcement activity. The DOL’s new budget contains $77 billion less when compared to last year. But don’t think this means there will be an equal reduction in the agency’s enforcement efforts – far from it.

In fact, the DOL plans to hire more than 350 new employees, including 177 investigators and enforcement personnel. Nancy Leppink of the Wage and Hour Division is quoted as saying, “In 2010, the Wage and Hour Division pursued an aggressive enforcement and outreach program of the government contract programs, the Davis-Bacon Act and the Service Contract Act. Wage Hour’s proposed FY 2012 budget would allow us to continue these and other enforcement efforts.”

The Wage and Hour division also plans to establish a “compliance baseline” for the construction industry in 2011, so it can measure improvements in compliance going forward.

Despite operating with less funding overall, the US Department of Labor has not lessened its focus on compliance for government contractors. It continues to be a priority for the DOL and other federal agencies, as evidenced by the joint DOL-Treasury initiative to identify and prevent misclassification of employees as independent contractors. This effort includes $12 million for the Wage and Hour Division to hire 90 new investigators. The announcement for the program specifically mentioned the construction industry as having “misclassification characteristics”.

Contractors who work on taxpayer-funded projects can expect increased scrutiny for compliance over the next two years, despite budget reductions for federal agencies.