2018 Proposed Budget Released: DOL’s Budget Cut by $2.5B

President Trump’s budget blueprint dubbed as “America First” was released Thursday, March 16, 2017. The blueprint calls for a $1.15 trillion proposed budget that seeks to provide increased spending for the military and homeland security, while cutting the spending budget for other federal agencies, including the Department of Labor (DOL).

The Department of Labor’s 2018 proposed budget will be $2.5B (20.7%) less than the annualized continuing resolution (CR)[1] for 2017 and calls for the following:

  • The expansion of Reemployment and Eligibility Assessments – an activity by various States’ employment development departments to review the individual’s efforts to seek employment and to provide information on appropriate resources to assist the individual to return to work as quickly as possible.
  • Reduced funding to ineffective and duplicative training grants. This eliminates the Senior Community Service Employment Program (SCSEP) which was found to be ineffective in transitioning low-income unemployed seniors to unsubsidized jobs.
  • Elimination of the Bureau of International Labor Affairs’ largely noncompetitive and unproven grant funding.
  • Closing of Job Corps centers for the disadvantaged youths that do a poor job in educating and preparing students for jobs.
  • Decreased federal support and shifting more funding responsibilities to the States, localities, and employers for job training and employment service.
  • Helping the States to expand apprenticeship programs
  • Elimination of OSHA’s training grants and instead refocus the agency to keeping the workers safe on the job
  • Elimination of less critical technical assistance grants by the Office of Disability and Employment and instead launching an early intervention projects that will allow States to test and evaluate methods that will help persons with disabilities to remain connected to the labor market.

What about the OFCCP?

While the proposed 2018 budget is by no means final until approved by Congress, it nevertheless squelched some speculations on the fate of the Office of Federal Contracts Compliance Programs (OFCCP) under the Trump administration. If nothing else, the proposed budget revealed that the OFCCP is here to stay, will remain a separate agency from the EEOC, and affirmative action programs will still be enforced. However, much like other agencies, it is almost certain that the trickle-down effect of the proposed budget cuts will affect the OFCCP, particularly its request for an $8,693,000 budget increase and the retention of 615 full-time employees (FTEs) as outlined in its 2017 Congressional Budget Justification document. Should this really be an area of interest or concern to anybody besides the OFCCP?

While nobody can be sure of what will happen in the next few months, we can look back at the OFCCP’s budget and operation history and maybe, just maybe, look into our crystal ball to see what the future might hold for the federal contracting community? History shows that the OFCCP operated efficiently in much leaner years: from 2003 thru 2009, its appropriated budget ranged from $78M to $84M and with FTEs ranging from 585 (in 2008) to 749. How did the OFCCP survive with much tighter belt during those lean years? One answer lies in the issuance of the OFCCP’s Active Case Management (ACM) directive in July 2003. Under this directive, compliance officers (COs) were able to expedite audits — allowing them to close audits where no systemic discrimination was found — conduct more compliance evaluations, and direct their focus on organizations where more apparent discrimination occurs. The directive definitely allowed the OFCCP to do more with less and produced more financial settlements at higher dollar amounts.

With the possibility of the trickle-down effect of the proposed budget cuts, it will not be a stretch to think that the OFCCP will once again re-invent itself so it can continue to enforce the provisions of the regulations in the most effective and efficient way. This, not coincidentally, is one of the main thrusts of the new administration: improve “the federal government’s effectiveness, efficiency, cyber security, and accountability.” There is no doubt that everybody in the federal contracting community – prime and sub-contractors, lawyers, consultants, analysts, etc. – can expect another roller coaster ride with the probable changes in the OFCCP. In the meantime, hold onto your seats and stay compliant with the current regulatory requirements.

Helpful Resources:

[1] In December 2016, the Senate passed legislation to fund the federal government until April 28, 2017 to avoid a government shutdown.

DOL Proposed Rule Increases Minimum Wage for Federal Contractors

Implementation of Executive Order 13658: With the signing of Executive Order 13658 on February 12, 2014, President Obama solidified his efforts to increase the United States’ economy and provide more opportunity for Americans. US Secretary of Labor Thomas E. Perez stated, “Raising the minimum wage for workers on federal contracts will provide a much needed boost to many who are working hard, but still struggle to get by, and it will also benefit taxpayers with improved employee retention and productivity.” This proposed increase will help pave the way for efficiency and cost effective measures aimed to benefit both federal contractors and their employees.

To implement this order, Secretary Perez submitted a proposed regulation to raise the federal minimum wage to $10.10 an hour for federal contractors. Public comments are welcome within thirty days once published in the Federal Register; please visit www.regulations.gov to submit your statements. As mentioned by the department, final rulings will be issued by October 1, 2014. If approved, federal contracts that are signed and/or modified on or after January 1, 2015 will be required to abide by Executive Order 13658.

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EEOC and OFCCP Operations During Shutdown

OFCCP Operations

OFCCP staff goes from 726 to 0 during the shutdown. As long as it lasts, OFCCP will not be able to operate.

While OFCCP operations have ceased during the shutdown, contractors need to keep in mind that this is temporary. It is highly recommended that contractors under audit continue to prepare for any/all pending audit requests and get their houses in order. This shutdown provides some breathing room, but it does not make anything go away.

EEOC Operations

EEOC goes from 2164 to 107 during the shutdown. They will continue to function in a limited fashion, will accept new charges and federal sector appeals (although they will not investigate any charges during the shutdown), and will litigate lawsuits where continuances are not granted by the court.


President Obama Nominates Civil Rights Attorney to be the New Labor Secretary

Contrary to many pundits, President Obama did not nominate a “jobs” person to be the next Secretary of Labor. Instead, the President nominated Tom Perez, a Harvard-educated attorney and current head of the Justice Department’s Civil Rights Division. Given Mr. Perez’s education and experience, it is likely that his placement at the top of the DOL will further embolden the OFCCP to continue with their current enforcement strategies and the aggressive pursuit of civil rights violations.

 Hold on tight folks . . .