The 2025 Federal Budget Impasse, OSHA’s Reduced Operations, and Why Worker Safety Will Not Collapse

Quick Hits

• The partial government shutdown in 2025 has curtailed OSHA’s routine operations, but this is unlikely to cause a dramatic near-term deterioration in worker safety.
• During the shutdown, OSHA’s contingency plan focuses on preserving essential functions that protect human life and property, such as responding to reports of imminent danger, investigating fatalities, and maintaining a minimal supervisory structure. This ensures that the most severe hazards are still addressed, even though routine inspections are significantly reduced.
• Employer behavior regarding safety is continuously shaped by reputational risks, contractual obligations, and insurance economics. These factors provide strong incentives for maintaining and improving safety performance, regardless of OSHA’s scaled-back inspection activities during the shutdown.

OSHA’s normal inspection reach is inherently limited relative to the universe of regulated workplaces, which means the marginal deterrence from routine federal inspections is modest compared with other structural forces. The primary drivers of day-to-day safety performance are external to the OSHA inspection cadence and are anchored instead in market, contractual, and financial incentives, including reputational exposure, customer and supply-chain qualification systems, and insurance and workers’ compensation underwriting and cost structures.

The Budget Impasse and How a Federal Shutdown Constrains Agency Operations

A federal budget impasse arises when the U.S. Congress and the president do not enact appropriations or a continuing resolution to fund agencies. In the absence of appropriations, the Antideficiency Act generally requires agencies to suspend operations that are not excepted for the protection of human life or property or otherwise legally authorized to continue. OSHA, like many agencies, executes a contingency plan that places most routine functions on hold while preserving a narrow set of activities that directly mitigate imminent threats. These excepted activities typically include responding to reports of immediate danger, investigating fatalities and catastrophes, and maintaining a minimal supervisory structure to coordinate those responses.

The contours of the OSHA shutdown plan reflect long-standing institutional choices about how to prioritize mission under fiscal constraint. Because the agency’s enforcement arm is built to triage risk—using complaint and referral systems, serious event reports, industry emphasis programs, and targeted inspections—its contingency posture narrows to the cases with the most acute consequences. While that narrowing reduces routine oversight, it preserves the ability to address the highest-severity hazards. It also means that the day-to-day cadence of scheduled or emphasis-based inspections slows sharply, with predictable effects on citation issuance and abatement orders.

OSHA’s Baseline Reach Is Limited, Even in Normal Years

Understanding OSHA’s normal reach is essential to placing shutdown impacts in context. In any given fiscal year, OSHA conducts 30,000 to 35,000 inspections across roughly 8 million workplaces. The nation’s workplace universe is so large that even in a fully funded year, only a small fraction of establishments will see a federal Compliance Safety and Health Officer (CSHO). By some estimates, it would take OSHA more than 225 years to inspect all workplaces at its recent annual rates of inspection activities.

What Continues During a Shutdown: Excepted OSHA Functions

The common fear that a shutdown removes the agency’s ability to respond to the worst hazards is misplaced. OSHA’s contingency plans preserve core functions designed to protect human life and property. Field offices retain skeleton crews, primarily managers, capable of responding to reports of imminent danger, serious injuries, fatalities, and multi-hospitalization events. These events are where the prospects for severe harm are concentrated, and the ability to investigate them serves both immediate abatement needs and longer-run deterrence of similar hazards.

Fatality and catastrophe investigations, in particular, often address employer practices with systemic implications. Even during a shutdown, initiating these investigations preserves the chain of custody for physical evidence, secures witness testimony while memories are fresh, and signals to the regulated community that the most serious incidents will not be ignored. In many cases, the mere prospect of a fatality investigation motivates rapid abatement and management attention independent of the eventual issuance of citations.

Why a Prolonged Reduction in Federal Inspections Does Not Upend Safety Outcomes

The central reason the shutdown’s reduction in routine inspections is unlikely to produce dramatic, near-term safety deterioration is that the primary drivers of workplace safety are embedded in employer incentives that operate continuously and are largely independent of the federal inspection cadence. Employers confront a set of pressures that shape safety investments, and these pressures do not pause when appropriations lapse.

Reputation is one such pressure. High-visibility incidents and poor safety records impose costs far beyond regulatory penalties. Customers, investors, employees, and local communities respond to perceived indifference to safety with real economic consequences. Management teams understand that a serious event can erode brand, impair recruiting and retention, and invite private litigation and contractual consequences. These reputational impacts discipline safety performance on a continuous basis and are indifferent to whether OSHA is fully staffed in a given week.

Contractual and supply-chain governance is another powerful driver. Large owners and prime contractors increasingly impose stringent safety prequalification and performance requirements on vendors. These requirements go far beyond compliance with minimum legal standards and are enforced through access to work, often using third-party safety platforms to monitor and institutionalize associated processes. The penalty for deficiency is immediate: loss of site access or disqualification from bidding. Because these systems operate continuously and are monitored by counterparties with strong economic leverage, their influence does not wane during a federal shutdown.

Insurance and workers’ compensation economics provide a third structural incentive. Underwriters price risk based on a firm’s loss history, safety programs, and industry exposures. Sustained poor safety performance translates into higher premiums, tighter terms, deductibles that shift more risk back to the insured, and sometimes difficulty securing coverage at all. In the workers’ compensation arena, experience modification factors mechanically tie an employer’s claim history to its premium cost structure, and unfavorable modifiers can also bar entry into certain bid pools. These financial mechanisms reward continuous reduction of incident frequency and severity and penalize deterioration regardless of OSHA’s weekly inspection totals. They also motivate investment in controls, training, and supervision as levers to reduce claim frequency and costs.

Short-Term Risks From a Prolonged Shutdown and Why They Are Bounded

None of this is to say that a prolonged shutdown carries no safety risk. Routine inspections can deter some noncompliance, and the absence of that deterrence may embolden a minority of actors already inclined to cut corners. Backlogs in case processing, citation issuance, and settlement approvals can slow formal abatement orders and create gaps in the feedback loop that normally prompts corrective action. Outreach, training, and compliance assistance programs that help small and mid-sized employers build capacity are also important in the long run, and pausing them is a genuine loss.

However, these risks are bounded in several ways. First, OSHA’s excepted functions preserve the ability to respond to imminent danger and high-severity incidents, focusing scarce resources where the stakes are highest. Second, the backlog effect is transient. When appropriations resume, cases can be prioritized based on risk, and long-dwelling hazards identified before the shutdown can still be addressed. Third, the persistent and continuous incentives described above—contractual prequalification, insurance economics, reputational risk, and private governance—continue to shape employer behavior every day, and their magnitude generally exceeds the marginal deterrence effect of the possibility of a routine federal inspection. Fourth, many employers maintain internal audit and assurance programs that function independently of external enforcement, motivated by corporate policy, customer commitments, and board oversight.

Practical Guidance

For employers, the practical steps during the shutdown period are the same steps that drive safety performance in any environment. Maintaining robust hazard identification and control processes, reinforcing supervision and worker participation, monitoring leading indicators, and executing prompt corrective actions remain the most effective strategies for preventing injuries. Maintaining documentation, training records, and incident investigations will ease the transition when oversight resumes and will also support insurance renewals, customer audits, and platform requalifications. For contractors, continuous alignment with third-party safety platforms, and client-specific requirements is non-negotiable because those systems are the gateways to continued work and will continue to be enforced.

Conclusion

The 2025 federal budget impasse and resulting shutdown will reduce OSHA’s routine footprint for as long as appropriations remain lapsed. Yet a sober assessment of the agency’s baseline reach, the preservation of excepted life-safety functions, and the structure of private incentives points toward a limited near-term impact on aggregate worker safety. OSHA’s routine inspections represent a small share of the interactions that shape employer behavior in any given year.

Meanwhile, reputational exposure, third-party safety platforms, and the economics of insurance and workers’ compensation provide continuous and potent incentives to maintain and improve safety performance. State Plans, private standards, and internal governance further reinforce those incentives. Short-term risks from reduced public presence are real but bounded, particularly where imminent danger response is preserved. The wise course for employers is likely to treat the shutdown not as a reprieve but as an opportunity to deepen safety systems that will stand up to renewed oversight and to the relentless scrutiny of customers, insurers, workers, and the public.

Next Steps

Ogletree Deakins’ Workplace Safety and Health Practice Group will continue to monitor developments and will provide updates on the Governmental Affairs and Workplace Safety and Health blogs as additional information becomes available.

This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.

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