Each year, the President initiates the federal budget process by submitting a proposed budget to Congress. Depending on the political makeup of Congress, that proposal may be revised significantly or fail to gain traction altogether. Ultimately, Congress holds the authority to determine federal spending.

The budget process unfolds in several steps. First, by April 15, Congress is expected to adopt a budget resolution, also known as a concurrent resolution. This establishes overall spending levels for the upcoming fiscal year and provides planning targets for at least the next five years. From there, budget reconciliation bills are developed by June 15 to implement any necessary changes to existing laws in support of the budget.

The final step involves passing appropriations bills, which provide the actual funding for government operations in the new fiscal year. Budget reconciliation bills can pass with a simple majority in the Senate, while appropriations bills typically require 60 votes to overcome a filibuster.

On April 2, 2026, President Trump released an outline of the proposed FY 2027 budget. For employers, several elements of the proposal are notable. Within the Department of Labor, the plan includes $234 million in cuts to worker protection agencies.

One specific proposal would eliminate OSHA’s Susan Harwood Training Grants. The administration has argued that the program has been misused and has focused more on advancing policy positions than on building practical skills for workers. In addition, OSHA’s staffing would be reduced by 89 positions, alongside an overall budget reduction of approximately $50 million.

OSHA is expected to place greater emphasis on customer service. According to the agency’s justification, this shift is intended to “strategically utilize enforcement efforts” and move toward a more efficient, less penalty-driven approach. The goal is to reduce the burden on small businesses by lowering total penalties while focusing enforcement on the most egregious and repeat violators.

The Wage and Hour Division is proposing a $25 million budget reduction and a decrease of 37 positions from FY 2026 levels. Its justification notes that expanded use of compliance assistance is improving engagement with employers and industry. At the same time, investigative resources will be more narrowly focused on identifying and resolving egregious, systemic, and willful violations, particularly those involving child labor.

For federal contractors, the Trump administration is again proposing to eliminate the Office of Federal Contract Compliance Programs (OFCCP), consistent with the Heritage Foundation’s Project 2025 plan. Under the proposal, OFCCP’s remaining statutory responsibilities, such as enforcing nondiscrimination requirements for veterans and individuals with disabilities, would be transferred to a new Office of Civil Rights (OCR).

The OCR would also take on most non-OSHA whistleblower enforcement functions and absorb the Civil Rights Center. The proposed budget allocates $35.4 million and 110 staff positions, roughly in line with OFCCP’s current funding. However, it is unclear whether OCR would have the capacity to fully enforce and investigate complaints under VEVRAA, Section 503, and whistleblower protections.

The FY 2027 budget also proposes eliminating funding for the Women’s Bureau.

The Office of Disability Employment Policy (ODEP) would maintain its staffing level of 46 but see a funding reduction of approximately $9 million from FY 2026. ODEP will continue its work developing policies, initiatives, and grants aimed at reducing barriers to employment for individuals with disabilities. Key employer-focused programs, including the Job Accommodation Network (JAN), the Employer Assistance and Resource Network on Disability Inclusion (EARN), and the Campaign for Disability Employment (CDE), are expected to remain intact.

The Bureau of Labor Statistics (BLS) is proposed to be merged with the Census Bureau and the Bureau of Economic Analysis within the Department of Commerce. The proposal cites potential efficiencies in data collection and analysis. However, it remains uncertain whether the quality and reliability of BLS data, particularly the monthly employment report, will be maintained, especially given existing staffing shortages.

Among other agencies, the Equal Employment Opportunity Commission (EEOC) is requesting a budget of $455.45 million, an increase of approximately $20 million over FY 2026. The agency indicates this increase will support expanded enforcement related to race-based discrimination, including scrutiny of employment practices tied to DEI initiatives, as well as national origin discrimination. It will also support enforcement related to religion and the Pregnant Workers Fairness Act (PWFA).

The National Labor Relations Board (NLRB) is projected to see a $9 million budget reduction, with staffing levels remaining unchanged at 188 positions. While Immigration and Customs Enforcement (ICE) will continue its enforcement activities, its specific budget allocation remains unclear.

For HR professionals, the broader takeaway is a likely shift in enforcement risk. Federal enforcement activity may decrease, while state agencies and private litigation take on a larger role. That said, the proposed budget is unlikely to pass in its current form. Previous efforts to eliminate OFCCP, for example, have not succeeded. If a full budget is not approved, a continuing resolution may again be used to fund the government.

In the meantime, employers should anticipate reduced federal enforcement in some areas, with states stepping in to fill the gaps. Increased activity from plaintiff attorneys is also likely to play a significant role in shaping employer risk moving forward.