Department of Labor’s Proposed Budget Signals the Dismantling of the OFCCP
Department of Labor’s Proposed Budget Signals the Dismantling of the OFCCP
Bayan Biazar, Associate
The U.S. Department of Labor (“DOL”) recently released its Proposed Budget for the 2026 fiscal year,[1] following President Trump’s issuance of Executive Order 14173 in January of this year. In light of the Proposed Budget, many fear that the DOL is now aligning with the current administration’s broader efforts to shut down the Office of Federal Contract Compliance Programs (OFCCP), thereby completely removing any authority the OFCCP has to audit and investigate federal contractors for potential discrimination based on race, sex, and other protected classes.
Executive Order 14173 and the Rescinding of Executive Order 11246
In January of this year, President Trump signed Executive Order 14173 (“EO 14173”), titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” Among other things, EO 14173 provides that “federal contractors and subcontractors shall not consider race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation’s civil rights laws” during their employment, procurement, and contracting practices.[2]
President Trump likewise rescinded Executive Order 11246 (“EO 11246”) via EO 14173, which had been in effect since President Lyndon B. Johnson signed it in 1965. EO 11246 required organizations who did business with the federal government to affirmatively recruit women and minorities for employment. EO 11246 also expressly prohibited federal contractors from committing discriminatory acts on the basis of race, color, relegation, sex, and national origin. As part of EO 11246, the OFCCP was granted the authority to audit and investigate federal contractors for any potential discrimination claims made against them.
By virtue of President Trump’s issuance of EO 14173 and rescission of EO 11246, the OFCCP’s authority to audit and investigate federal contractors for alleged discrimination is now effectively gone. Since the signing of EO 14173, the OFCCP has only been responsible for overseeing the enforcement of Section 503 of the Rehabilitation Act[3] and the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”). This limited responsibility has forced the OFCCP to lay off most of its workforce.
The Potential Effect of the DOL’s Budget Proposal
The DOL’s Proposed Budget for the fiscal year of 2026 proposes transferring the limited, remaining responsibilities that the OFCCP still has regarding Section 503 of the Rehabilitation Act to the Equal Employment Opportunity Commission (EEOC), which itself is facing a budget reduction amounting to millions of dollars. The DOL states that the transfer of this responsibility to the EEOC “will ensure consistent oversight while shrinking Federal bureaucracy.”
The DOL is also seeking to transfer the OFCCP’s current oversight of the VEVRAA statute to the DOL’s Veterans’ Employment and Training Services Division. Currently, the OFCCP has enforcement authority to enforce VEVRAA’s provisions and promulgate its regulations. However, if the DOL attempts to completely remove these powers and responsibilities and transfer the OFCCP’s current oversight powers to the DOL’s Veterans’ Employment and Training Services Division, Congressional action will be required to amend the current VEVRAA statute.
Key Takeaways
The transfer and removal of the above remaining OFCCP responsibilities and the release of the DOL’s budget seem to align with EO 14173 and the current administration’s efforts to shut down the OFCCP completely. The Proposed Budget itself states, “Executive Order 14173 permanently removes the primary basis for OFCCP’s enforcement authority and program work.” Assuming Congress approves the DOL’s proposed budget, then the OFCCP will effectively exist in name only, thereby further paving the way for its elimination by the current administration. Such efforts reflect the Trump administration’s ongoing war against DEI initiatives in both the public and private sectors, which do not appear to be abating any time soon. Campbell Litigation will continue to monitor these and other issues affecting employer obligations regarding discrimination under federal and Colorado law.
[1] The fiscal year for 2026 runs from October 1, 2025, through September 30, 2026.
[2] See https://www.rockymountainemployersblog.com/blog/2025/5/29/department-of-justice-to-use-the-false-claims-act-to-combat-dei for a more detailed discussion on Executive Order 14173.
[3] Generally speaking, Section 503 of the Rehabilitation Act prohibits federal contractors from discriminating in employment against individuals with disabilities and requires federal contractor employers to take affirmative steps to recruit, hire, promote, and retain individuals with disabilities.