What HR Managers & Employers Need to Know About a U.S. Government Shutdown
When the U.S. government shuts down, it triggers ripples that reach far beyond federal agencies. For employers, HR teams, and compliance leaders, understanding the impacts and being proactive are key to mitigating disruption. Below is a practical guide to help you navigate this period with confidence.
1. Immediate Impacts & Who Is Affected
- Federal Agency Slowdowns
Many regulatory and oversight functions may be reduced or paused. Agencies such as EEOC, NLRB, and DOL often halt non-critical investigations, hearings, and regulatory enforcement during shutdowns. OSHA and similar agencies may maintain only essential safety operations.
- Contracting & Procurement Effects
If your organization holds federal contracts, expect potential stop-work orders or delays. Unlike federal employees, contractor workers generally are not guaranteed retroactive pay. Review each contract’s terms and consult your contracting officer immediately.
- Immigration / E-Verify Changes
Some immigration services continue (for fee-funded activities), but services that depend on appropriations (like E-Verify) may pause. Employers must still complete Form I-9 within three days, but strict timing for E-Verify submissions may be temporarily relaxed.
2. Key HR & Compliance Considerations
- Furloughs, Pay, and Leave
- Non-exempt (hourly) employees: Only paid for hours worked; no pay is required for unpaid furlough days.
- Exempt employees: Must receive full weekly salary if they perform any work in that week, even a single day.
- Check your company policies and employment contracts before mandating PTO or unpaid leave during furloughs.
- WARN & Layoff Notification Laws
Federal WARN (60-day notice) usually doesn’t apply to temporary shutdown-based furloughs under six months. But state-level “mini-WARN” laws may apply—especially in states like California.
- Benefits & COBRA Implications
Shifts in employment status—hours reduced, furloughs—may trigger COBRA eligibility or affect benefit arrangements. Review plan documents and vendor rules.
- Unemployment & Partial Benefits
In many states, furloughed workers may qualify for unemployment benefits—even if they were furloughed only part of a week. Verify with your state labor agency.
3. Agency Contingency Plans You Should Know
Here are a few notable examples:
| Agency | What Happens During Shutdown |
|---|---|
| EEOC | New investigations/mediation paused; only ongoing litigation proceeds. |
| NLRB | Case handling and elections are halted; emergency matters only. |
| DOL | Most divisions pause work except for critical safety issues. |
| USCIS | Core functions may continue; but delays or partial suspensions in some areas. |
4. What You Should Do Right Now
- Review Your Policies & Contracts
Check employee handbooks, contract clauses, PTO policy, union agreements, and existing government contracts to see what authority you have around pay, leave, and furloughs. - Communicate Transparently
Let employees know your approach: how pay, leave, and operations may change, how benefits and job protections are handled, and the possibility of delays. - Consult Legal & Benefits Advisors
Before making major decisions—furloughs, layoffs, benefit changes—get legal and benefits counsel to avoid missteps. - Monitor Agency & Regulatory Updates
Regulations, enforcement, and interpretations may evolve over the course of the shutdown. Use reliable resources like SHRM’s Government Shutdown hub. - Prepare for Delays in Government Services
Expect slower response times for IRS, DOL, OSHA, and others. Be proactive in compliance filings and permit renewals.
Final Thoughts
A government shutdown is not just a political event—it’s an operational stress test for HR. The right approach is to stay informed, maintain open communication with your workforce, and lean on legal and benefits experts when needed.
Disclaimer: The information provided herein is for general informational purposes only and is not intended to be legal, investment or tax advice. It is not a substitute for professional legal, investment or tax advice, and you should not rely on it as such. No attorney-client or accountant-client relationship or any other kind of relationship is formed by any use of this information. The effective date of various provisions, amendments, and regulatory guidance may impact eligibility. The accuracy, completeness, correctness or adequacy of the information is not guaranteed, and dynamo HCM assumes no responsibility or liability for any errors or omissions in the content. You should consult with an attorney, investment professional or tax professional for advice regarding your specific situation.
