Labor & Employment Law Daily Wrap Up, DOL NEWS—FY 2026 budget eliminates OFCCP, cuts nearly 4K jobs, (Jun 2, 2025)

By Patricia K. Ruiz, J.D.

The DOL said its FY 2026 budget protects workers, improves government efficiency.

According to the Department of Labor, its FY 2026 budget seeks to cost-effectively close the gap between the skills of the American workforce and the needs of job creators, investing in proven programs while eliminating activities that are ineffective or unproven. The FY 2026 budget also seeks to protect the safety and financial security of workers and to restore government efficiency, according to the DOL Budget in Brief.

FY 2026 budget request. The DOL requested $9.0 billion in discretionary funding for FY 2026, a decrease of $4.5 billion from FY 2025, and requested $44.7 billion in mandatory funding, a decrease of $11.3 billion from FY 2025. The DOL also requested funding for 10,821 FTE employees, a decrease of 3,946 FTE employees from FY 2025.

Closing skills gap. The FY 2026 budget seeks to close the gap between the skills of the American workforce and the needs of job creators in a cost-effective manner. The DOL claims the “current patchwork of workforce development programs” creates an inefficient system that complicates implementation and creates challenges for states and communities to respond to their workforce needs to support broader economic growth. The budget consolidates multiple DOL workforce development programs into a single Make America Skilled Again (MASA) grant program, to which it provides $3.0 billion, allowing program administrators to spend less time and money complying with Federal requirements. The budget includes $2.8 billion for states to administer to the Federal-State Unemployment Insurance (UI) system, including a $25 million increase to support the DOL’s commitment to improving identity verification services for states.

Due to what the DOL perceives as poor performance, the FY 2026 budget eliminates Job Corps and eliminates the Community Service Employment for Older Americans (CSEOA) program. The budget also provides funding for the Veterans’ Employment and Training Service’s (VETS) core programs and shifts duties to monitor contractor compliance with the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 from the OFCCP to VETS.

OFCCP eliminated. The FY 2026 budget provides $1.6 billion in discretionary resources to protect workers’ health and safety, wages, and retirement. Further, pursuant to Executive Order (EO) 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, the budget eliminates the OFCCP—stating that overseeing “illegal DEI practices” was the main oversight activity of the agency—and transfers its statutory program areas to other agencies. The DOL reasoned that this realignment of responsibilities will ensure consistent oversight while shrinking the Federal bureaucracy. The budget maintains $49 million in funding for the Office of Labor-Management Standards (OLMS) to help the agency maintain effective oversight of unions’ compliance with their statutory reporting requirements.

Restoring government efficiency. The FY 2026 budget takes steps to “restore fiscal discipline and eliminate wasteful spending,” by reorganizing the Bureau of Labor Statistics (BLS), the Census Bureau, and the Bureau of Economic Analysis at the Department of Commerce, aiming to leverage data collection and analysis synergies, increase cost-effectiveness, improve data quality, and reduce respondent burden; by eliminating the Women’s Bureau (WB), which the DOL called “an ineffective policy office that is a relic of the past;” streamlining the Bureau of International Labor Affairs (ILAB), providing $70 million, including $38 million in grant funding, and reorienting it to focus its core work of enforcing the labor provisions of trade agreements, ensuring workers and businesses benefit from international trade; and defunding the DOL’s IT Infrastructure Modernization budget activity, a reduction of $22 million, eliminating redundancy, given that the DOL has other levers for funding IT modernization projects.

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