With the presidential and Congressional elections a little more than a month away, no party wanted to be responsible for shutting down the federal government and denying pay and work to millions of federal workers and military personnel. Legislators in the U.S. House of Representatives and U.S. Senate understood what the backlash could mean in the election in November and overwhelmingly passed a funding bill, 341-82 and 78-18, respectively.
President Biden signed the bill ahead of the Sept. 30 deadline to avert a shutdown, funding the federal government through Dec. 20 to set up a post-election period filled with a potential change in control of the Executive and Legislative branches, another shutdown debate, and a debt ceiling deadline looming in 2025.
For now, the following departments will be funded at their current levels: Defense, Financial Services-General Government, Homeland Security, Labor-Health and Human Services-Education, the Legislative Branch, and State and Foreign Operations, Military Construction-Veterans Affairs, Agriculture-Food and Drug Administration, Transportation-Housing and Urban Development, Energy-Water, Interior-Environment, and Commerce-Justice-Science.
Even though this current shutdown threat went unrealized, businesses and their employees who rely on the federal government and its employees for their patronage should understand what a government shutdown is and how it might impact them.
The federal government occasionally undergoes shutdowns when Congress fails to pass appropriations bills required to fund federal agencies and programs During a shutdown, many federal employees are either furloughed or required to work without pay, causing financial hardship. To provide relief, Congress passed legislation in 2019 requiring all federal employees to receive back pay after a shutdown ends
Background on Government Shutdowns
The U.S. federal government runs on funding provided by Congressional appropriations bills which must be passed annually. When appropriations lapse because Congress cannot agree on spending, agency funding is halted and the government shuts down. Shutdowns can be partial, affecting some agencies or full, impacting the entire government.
During a shutdown, each federal agency must halt any activities funded by Congress. As a result, many federal employees are prohibited from coming to work and placed on furlough. Some employees in critical roles like security and public safety must continue working but do not receive pay.
Prior to 2019, furloughed federal workers had no guarantee of back pay once the shutdown ended. Employees who worked without pay during the shutdown had to wait for Congress to pass a separate bill compensating them for their service.
The Government Employee Fair Treatment Act of 2019
To provide financial certainty for federal workers impacted by shutdowns, Congress passed the Government Employee Fair Treatment Act in January 2019. President Trump signed the bipartisan bill into law on January 16, 2019.
The Act statutorily guarantees back pay for all federal employees affected by any future government shutdowns. This includes employees who are furloughed and banned from working as well as “excepted employees” who must work without pay.
Under the law, all impacted federal employees must receive their standard pay retroactively as if the shutdown never occurred. This back pay cannot be delayed and must be provided at the earliest possible date once a shutdown concludes and funds are appropriated.
In addition, federal employees cannot be forced to use vacation days or take leave without pay during a shutdown. Any paid leave used does not reduce the amount of back pay owed.
Providing Financial Certainty
Before passage of the Government Employee Fair Treatment Act, working without pay during a shutdown created financial hardships for many civil servants. Guarenteeing full back pay alleviates this burden.
Knowing their income will be made whole removes uncertainty and anxiety for federal employees. They can feel confident still paying their mortgages, rent, utilities and other expenses during a shutdown without risk of falling behind.
This law also makes government service more appealing by insulating federal workers from temporary income disruptions. Financial stability helps the government recruit and retain talented civil servants.
Bipartisan Support for Federal Employees
Rare bipartisanship made the Government Employee Fair Treatment Act’s quick passage possible. Legislators recognized that federal employees should not bear the brunt of Congressional funding disputes.
The Senate passed the bill unanimously by voice vote on January 10, 2019. The House then passed it 411-7 just two days later. President Trump promptly signed the bill into law.
This overwhelming support reflects the importance of treating civil servants fairly. Both parties agreed federal employees deserve pay continuity when fulfilling critical duties during a shutdown.
Providing Certainty for Future Shutdowns
While the 2019 shutdown spurred passage of this law, all future shutdowns will also trigger mandatory back pay for affected federal employees.
The Government Employee Fair Treatment Act established an enduring safeguard insulating federal workers from income losses due to events outside their control. Employees can now better endure any future shutdowns without pay anxiety or financial consequences.
With guaranteed back pay in place, federal employees have one less reason to leave government service during turbulent periods. Their pay will be made whole once Congress and the President reach an appropriations agreement.
By taking care of civil servants, this law helps maintain government operations and services during shutdowns. And it brings us one step closer to avoiding disruptive shutdowns altogether.
What is a Government Shutdown?
A government shutdown means the government can’t spend money that requires annual appropriations, which affects its ability to pay its employees and keep facilities and buildings open where those employees work. Some employees are considered essential such as air traffic controllers and would have to work without pay during the shutdown. Unlike previous shutdowns, however, the Government Employee Fair Treatment Act of 2019 entitles federal employees to backpay for as long as the appropriations are lapsed.
It should be noted that employees of federal contractors are not guaranteed backpay under this 2019 law, but a company can decide if they want to provide backpay to these employees.
What Won’t Be Impacted by a Government Shutdown?
The list is small of federal agencies and processes that continue to function through a shutdown.
- Social Security checks will go out to recipients.
- Social Security Administration will not issue Social Security cards.
- The Employee Services toll-free hotline will be unavailable.
- Medicare open enrollment should not be impacted.
- Medicaid enrollment is handled through individual states.
- The U.S. Postal Service will continue to deliver the mail.
- Members of Congress still get paid.
According to the contingency documentation from the Department of Health and Human Services, federal exchange activities will continue, which means individuals will have access to the healthcare marketplace.
Accounting professionals should have conversations with their clients to gain a better understanding of each client’s financial situation and be prepared to offer any resources that might help.
Paychex continues to monitor the developments in Congress and will provide updates as they occur. We understand the challenges facing employers and offer educational resources and a variety of funding options to consider that might fit your business needs.
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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date. Heading
Congress approves bill to pay back federal employees once shutdown is over
FAQ
Do federal workers get paid during government shutdown?
Employees who don’t have to work are “furloughed,” which means they don’t get paid and don’t have to do their jobs, until the shutdown ends. Will employees who are “excepted” get paid? Employees who are “excepted” and continue to work during the shutdown will almost certainly be paid for this time.
Is Congress getting paid during shutdown?
Members of Congress get their regular paychecks even when the government is shut down, while thousands of federal workers are furloughed and don’t get paid. During the 2018-19 government shutdown, more than 800,000 federal employees were furloughed without pay, including 6,000 in Minnesota.
Do postal workers get paid if the government shuts down?
Yes. The U. S. Postal Service is not affected by a government shutdown. The U. S. The Postal Service is a separate organization that gets its money from the sales of its goods and services, not from tax dollars.
What happens to contract workers during a government shutdown?
Contractors may be forced to furlough or lay off employees due to the shutdown as well. Contractors may not be given new contracts, requests for proposals may not be sent out, and procurement activities may end.
Will government employees be paid after a government shutdown?
The Government Employee Fair Treatment Act of 2019 (P. L. 116-1) said that all federal workers would be paid after the government shutdown ended. Furloughed workers and workers who have to work during a shutdown are both entitled to this legally required back pay.
Do federal employees have to be compensated after a government shutdown?
The Government Employee Fair Treatment Act of 2019 (S. 24) says that federal workers who are allowed to take time off or are forced to work during a government shutdown must be paid for the time they are not working. Federal employees must be compensated on the earliest date possible after the shutdown ends.
Will trump guarantee back pay for federal employees impacted by shutdown?
You can subscribe to Federal Drive’s daily audio interviews on Apple Podcasts and PodcastOne. President Trump signed a new bill into law that will pay federal workers who lost money because of the partial government shutdown. Government Employee Fair Treatment Act covers both furloughed and excepted employees.
Will furloughed federal workers be paid during a shutdown?
Salaries: During a shutdown, federal workers who are furloughed or who have been deemed essential and have been forced to work because of a lack of funds will not be paid.
Do government contractors get back pay during a shutdown?
Lawyers for the government don’t have to get back pay if they have to work without pay during a shutdown like furloughed and excepted federal employees do. In many previous shutdowns, contractors did not receive retroactive pay through legislation, Bishop Jr. says.
Will federal workers get back pay after a shutdown?
Congress used to have to approve back pay for federal workers who were furloughed after each shutdown, but now that process is done automatically. In the same way, workers who put in extra hours during the shutdown will get extra pay, but not until the government reopens.
