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Employment Law Worldview

Will DOL Cuts Give Employers a Break?

Posted in Wage and Hour

President Obama’s Director of the Office of Management and Budget announced earlier this week that the White House’s budget proposes to cut the Department of Labor’s funding for fiscal year 2012 by 5%.  In other words, the DOL is going to have to do more with less.  Or maybe they’ll just have to do less.

Some employers are hopeful that, as a result of expected budget cuts, the DOL might just curb its appetite for wage and hour audits.  After all, fewer dollars mean fewer resources for government workers to pursue and lead labor-intensive, onsite investigations.  Right?

Not exactly.

Before employers become too relaxed about wage and hour compliance, they need to read the fine print.  As reported by Dietrich Knauth at Law 360, “The budget also requests $50 million for an effort headed by the Wage and Hour Division and the Occupational Safety and Health Administration to fight misclassification of workers as independent contractors.”  The administration has consistently criticized employers for denying misclassified workers the legal benefits and protections of employees.

Besides, wage and hour audits — unlike many other DOL initiatives — actually have the potential to generate revenue for the government.  And in a downturn economy where revenue slashing initiatives are the rage, the DOL might just step up fines and penalties.  Which means employers should be prepared with self-audits and compliance initiatives.  2011 won’t be a year to rest!