How the Government Shutdown Is Affecting Employers

When the latest federal government shutdown began in December, the government had passed some but not all spending bills. As a result, some agencies have remained operational while others have not. A further complication is that employees within agencies are required to be classified as “exempt” or “furloughed.” (Other terms include “essential” and “nonessential” although, to spare feelings these were changed in 1995 to “excepted” or “non-excepted.”) Employers thus have to inform themselves on how the shutdown affects their business.

Just as the shutdown has affected different branches of the government differently, for some employers the shutdown may have little effect, while for others it effectively shuts them down as well. Perhaps the effect of the shutdown that has the broadest impact on employers is the unavailability of E-Verify services (as well as Self-Check and Self-Lock), which are conducted by the U.S. Citizenship and Immigration Services (USCIS).

E-Verify Notice

In response to the shutdown, the USCIS issued an advisory notice to employers. It says:

We understand that E-Verify’s unavailability may have a significant impact on employer operations. To minimize the burden on both employers and employees, the following policies have been implemented:

  • The “three-day rule” for creating E-Verify cases is suspended for cases affected by the unavailability of E-Verify.
  • The time period during which employees may resolve TNCs will be extended. The number of days E-Verify is not available will not count toward the days the employee has to begin the process of resolving their TNCs.
  • We will provide additional guidance regarding “three-day rule” and time period to resolve TNCs deadlines once operations resume.
  • Employers may not take adverse action against an employee because the E-Verify case is in an interim case status, including while the employee’s case is in an extended interim case status due to the unavailability of E-Verify.
  • Federal contractors with the Federal Acquisition Regulation (FAR) E-Verify clause should contact their contracting officer to inquire about extending federal contractor deadlines.

Regarding I-9s, the notice says:

The lapse in government appropriations does not affect Form I-9, Employment Eligibility Verification requirements. Employers must still complete Form I-9 no later than the third business day after an employee starts work for pay, and comply with all other Form I-9 requirements outlined in the Handbook for Employers (M-274) and on I-9 Central.

For employers that rely on E-Verify, the shutdown could effectively put a stop to placing new hires. As the Department of Homeland Security (DHS) indicates:

[E]mployers with federal contracts or subcontracts that contain the Federal Acquisition Regulation (FAR) E-Verify clause are required to enroll in E-Verify as a condition of federal contracting. Employers may also be required to participate in E-Verify if their states have legislation mandating the use of E-Verify, such as a condition of business licensing. Finally, in some instances employers may be required to participate in E-Verify as a result of a legal ruling.

For these employers, the shutdown puts a halt to hiring. Employers will need to confirm their standing and policy regarding E-Verify and other DHS services during the shutdown.

Other Agencies

The Department of Labor (DOL) has funding, along with the Departments of Defense, Education, Energy, Health and Human Services, and Veterans Affairs. The DOL has issued a FAQ sheet on the furlough to provide advice to affected employers. If the government shutdown reduces work for exempt employees, the FAQ indicates:

An employer must pay an exempt employee the full predetermined salary amount “free and clear” for any week in which the employee performs any work without regard to the number of days or hours worked. However, there is no requirement that the predetermined salary be paid if the employee performs no work for an entire workweek. Deductions may not be made from the employee’s predetermined salary for absences occasioned by the employer or by the operating requirements of the business.

If the shutdown leaves no work to do, and the employer directs an employee to go home, the FAQ addresses this question:

Can an employer reduce the leave of a salaried exempt employee?
An employer can substitute or reduce an exempt employee’s accrued leave (or run a negative leave balance) for the time an employee is absent from work, even if it is less than a full day and even if the absence is directed by the employer because of lack of work, without affecting the salary basis payment, provided that the employee still receives payment equal to the employee’s predetermined salary in any week in which any work is performed even if the employee has no leave remaining.

With the government being as complicated as it is, the DOL’s FAQ may not cover every question. The National Law Review offers a summary of some additional situations, reminding employers that

When employers sponsor foreign workers under H-1B, H-2B and E-3 visas, they are required to pay the rate set forth in the labor condition applications certified by the…DOL. Even foreign workers placed on a non-productive status or reduced work schedules must be paid at the certified pay rate.

Similarly, other employment standards and practices governed by the DOL remain effective during the shutdown. In addition, employers should consider whether the “Worker Adjustment and Retraining Notification…Act notice requirements” will be implicated if the shutdown will go on long enough to force a mass layoff or plant closing. Finally, as the Office of Federal Contract Compliance Programs (OFCCP) is part of the DOL, it remains open.


The Equal Employment Opportunity Commission, however, is for the most part closed. It has posted a notice saying it is “currently closed because of the government shut-down” but that “a limited number of EEOC services are available.” For example, “The EEOC will accept Federal Sector hearing requests during the shut down.” For employers, the shutdown will likely mean further delays before hearings occur, which allows for more time to prepare.

As for employers who are contractors to federal agencies, the advice is to stay abreast of the agency’s status and needs during the shutdown. While federal employees may get back pay for the time they worked, contractors are not as fortunate, however. With any luck, the shutdown will end soon and allow them to return to work.

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