Policy Week in Review - Federal Workplace Legislation and DHS Funding

JD Supra Government Contracts

Published March 27th, 2026

Detected March 28th, 2026

Summary

This policy update covers federal workplace legislation and DHS funding issues. Key developments include the Senate passing partial DHS funding, President Trump issuing an executive order on DEI discrimination by federal contractors, and the DOL proposing a rule to increase wages for foreign workers in certain visa programs.

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What changed

This "Policy Week in Review" from Littler's Workplace Policy Institute highlights significant federal actions impacting the workplace. The Department of Homeland Security (DHS) faces a continuing shutdown, with the Senate passing partial funding legislation that the House rejected. President Trump issued an executive order on March 26, 2026, titled "Addressing DEI Discrimination by Federal Contractors," which mandates a clause prohibiting racially discriminatory DEI activities in federal contracts and allows for contract cancellation or debarment for non-compliance. The Department of Labor (DOL) also proposed a rule to increase prevailing wages for foreign workers in H-1B, H-1B1, E-3, and permanent labor certification programs, aiming to protect American workers' wages and job opportunities.

Federal contractors must review their existing and future contracts for compliance with the new DEI clause and be aware of potential enforcement actions, including contract termination or debarment, and False Claims Act liability. The DOL's proposed rule on foreign worker wages will require attention from employers utilizing these visa programs, with public comments due 60 days after publication in the Federal Register. The ongoing DHS shutdown and related executive orders may also impact government contractors and federal employees, necessitating close monitoring of legislative and executive actions.

What to do next

Review federal contracts for compliance with the new DEI clause prohibiting racially discriminatory DEI activities.
Monitor the Department of Labor's proposed rule on foreign worker wages and prepare to submit public comments if applicable.
Stay informed on developments regarding DHS funding and potential impacts on government contracting.

Penalties

Contracting agencies are authorized to cancel, terminate, or suspend contracts, and to suspend or debar contractors for failure to comply with the DEI clause. The Attorney General is directed to prioritize potential claims under the False Claims Act against violating contractors.

Source document (simplified)

March 27, 2026

Policy Week in Review – March 27, 2026

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At a Glance

The Policy Week in Review, prepared by Littler’s Workplace Policy Institute (WPI), sets forth WPI’s updates on federal legislation, regulations, and congressional activity affecting the workplace.
Senate Passes Partial DHS Funding Legislation; House Rejects It; DHS Shutdown Continues

After a shutdown lasting over a month (41 days) at the Department of Homeland Security (DHS) and ensuing failed negotiations in the Senate to reach consensus on legislation to fund the Department over demands for reforms to immigration enforcement, the Senate finally voted early this morning to pass a bill to partially fund the DHS. The deal funds most of DHS except for Immigration and Customs Enforcement and Customs and Border Patrol. The legislation shifted over to the House for consideration where it was rejected this afternoon by House conservatives who want full-year ICE and CBP funding, plus voter-ID requirements added to the bill. Moments later, amid mounting TSA pressures and long wait lines at airport security check points, President Trump signed an executive order ensuring TSA workers are paid during the continuing DHS shutdown.

White House Issues Executive Order Addressing DEI Discrimination by Federal Contractors

On March 26, President Trump issued an executive order (EO), Addressing DEI Discrimination by Federal Contractors. As outlined in the accompanying Fact Sheet, the EO requires that all federal contracts that are subject to the Federal Property and Administrative Services Act include a clause prohibiting contractors and their subcontractors from engaging in racially discriminatory DEI activities; directs the Office of Management and Budget to issue guidance to contracting agencies to ensure compliance and identify economic sectors that pose a particular risk of engaging in racially discriminatory DEI activities; authorizes contracting agencies to cancel, terminate, or suspend contracts — and to suspend or debar contractors — for failure to comply; directs the attorney general to prioritize potential claims under the False Claims Act against contractors or subcontractors that are in violation of the contractual terms prohibiting racially discriminatory DEI activities, and ensure the prompt review of related civil actions brought by private persons; and directs the Federal Acquisition Regulatory Council to amend Federal Acquisition Regulations to include this clause and remove any conflicting provisions. Read Littler’s ASAP here.

DOL Issues Proposed Rule to Increase Wages Paid to Foreign Workers in Certain Visa Programs

The Department of Labor’s Employment and Training Administration issued a proposed rule on March 26 that would update the methodology used for determining prevailing wage levels in the permanent labor certification, H-1B, H-1B1, and E-3 visa programs to align with wages paid similarly employed American workers. According to the DOL, the proposed rule is “designed to protect the wages and job opportunities of American workers by stripping away the ability of employers to pay substandard wages to foreign workers in certain visa categories.” Public comments are due 60 days from publication in the Federal Register. Read Littler’s ASAP here.

NLRB Asks Court to Rule That Its Members and ALJs Can be Fired at Will

In a motion filed in federal court, the National Labor Relations Board asked a federal judge to rule that its five presidentially appointed members, as well as its administrative law judges (ALJs), can be fired by the president at will. The Board filed the motion in a case attacking statutory removal protections for those officials. The case was filed by a company facing unfair-labor-practice charges. Those charges would have been heard first by an ALJ and then potentially reviewed by the Board members. By statute, the members and the ALJs can be removed only for certain reasons, including misconduct or neglect of duty. The company argued that these limits on removal are unconstitutional because they interfere with the president’s ability to manage the executive branch. Last year, the court ruled in the company’s favor and blocked the charges from moving forward. Now, in this recent filing, the Board asked the court to sever the removal protections. It argued that once the removal protections are out of the way, the constitutional problem will be gone, and the charges can proceed.

White House Names James Murphy as NLRB Chair

The National Labor Relations Board also announced that James Murphy had been named Board chair. A longtime Board attorney, Murphy was appointed as a Board member last year. Murphy has spoken publicly of the need to reduce the Board’s backlog of cases. The backlog grew significantly in 2025, most of which the Board spent without enough members to make up a quorum. The backlog is likely to remain Murphy’s top priority.

House Democrats Request Appropriators Increase Funding to Address Growing USCIS Case Backlogs

U.S. Representatives Lou Correa (D-CA) and Dan Goldman (D-NY), along with other House Democrats, wrote a letter to the House Appropriations Committee requesting $700 million for U.S. Citizenship and Immigration Services (USCIS) to help the agency address the growing backlog of cases awaiting adjudication. The letter attributes this backlog to DOGE-related federal workforce reductions that led to the termination of USCIS employees responsible for processing immigration and asylum applications.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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