White House 2015 Budget Proposal Lists Enforcement, Investment Priorities

Author: Marta Moakley, XpertHR Legal Editor

March 11, 2014

The White House proposed its 2015 budget last week, outlining the Obama Administration's enforcement priorities. An employer should expect increased enforcement of wage and hour laws and family and medical leave protections if Congress authorizes the administration's requests. In addition, funding priorities for civil rights challenges and immigration law enforcement have been outlined. New provisions regarding accelerated filing due dates for wage reporting and new electronic filing requirements (including penalty provisions) would be forthcoming if the proposed budget were approved. Finally, efforts to suppress employees from being misclassified as independent contractors would continue.

The Department of Labor announced in a press release that the budget request includes:

  • An increase of more than $41 million for the Wage and Hour Division to ensure workers receive appropriate wages and overtime pay and to enforce an employee's right to take job-protected leave for family and medical purposes;
  • Nearly $14 million to combat the misclassification of employees as independent contractors, which deprives them of the benefits and protections to which they are legally entitled and disadvantages employers that comply with the law;
  • $565 million for the Occupational Safety and Health Administration to strengthen safe workplace initiatives and to bolster its inspections program.

The Department of Justice (DOJ) announced a requested $8 million increase in the civil rights program's budget that would be used in combatting human trafficking and hate crimes and in enforcing disability rights laws. The DOJ also requested a total of $681 million for financial fraud enforcement efforts.

In addition to the new electronic filing requirements, the administration proposes to address the insolvency of state unemployment insurance trust funds by raising the federal unemployment insurance (FUTA) wage base with a corresponding lowering of the net FUTA tax rate (in order avoid an increase in an employer's FUTA tax rate). In addition, under the budget proposal the IRS may issue more definitive guidance on worker misclassification as independent contractors.

The White House's budget proposal would also:

  • Strengthen the US manufacturing base by investing in 45 national "manufacturing institutes"; and
  • Expand Promise Zones (i.e., communities with high poverty rates that would receive increased federal support, including tax credits to attract commerce and create local jobs).

The budget request seeks a $60 billion tax credit expansion, including an extension of the Work Opportunity Tax Credit (WOTC) for veterans with disabilities who use GI Bill benefits to attend a training or educational program and are hired within six months of completing the qualifying program. With respect to training initiatives, the budget request would double the number of existing apprenticeships.

The budget proposal will likely confront political hurdles resulting in the alteration or wholesale rejection of many of its requests. However, the budget outlines the Obama administration's enforcement priorities and echoes many of the themes set forth in last year's proposal. The House Budget Committee, which has been critical of the budget request, is expected to release its own fiscal plan next month.