HR Compliance: Potential Government Shutdown & Contractor Implications

HR Compliance: Potential Government Shutdown & Contractor Implications

Written by Beth Bulger, Director of HR Services

ShutdownIf lawmakers do not pass a funding extension by March 4th, we may see a government shutdown. If this occurs, only essential operations would continue, leading to a furlough of thousands of federal workers. The most recent shutdowns occurred for 5 days in November 1995 and 21 days in January 1996.

A shutdown not only impacts federal employees, but also federal contractors. In the past, federal employees have earned retroactive pay for time lost during a shutdown. Government contractors have not been so lucky. In order to prepare, government contractors should consider who is conducting essential government tasks, as these employees may still be called into work during the shutdown. As a first step, contractors should reach out to their Contracting Officers to obtain guidance and clarification on expectations of performance in the event of a shutdown. Any such communication should be documented.

Any applicable stop-work orders should also be formally documented.  Make sure you take into consideration your HR compliance issues for a government shutdown. There are some options for employees performing non-essential functions during a governmental shutdown:

  • The employer may suggest that employees take paid time off
  • Employees may be reassigned to other projects where they may be used
  • Employees may be assigned to training activities
  • Some contractors have provided advance leave or pay which is to be paid back by the employee over a period of time if the government does not reimburse the contractor for lost time

If these are not feasible options, a furlough may be necessary; necessitating that employees take leave without pay.

HR Compliance Factors to Consider when Furloughing Employees

It is important to communicate to employees that they are not to work during the furlough. If exempt employees perform any work during a furlough, they have to be compensated under the Fair Labor Standards Act (FLSA). Another factor to consider is what happens to benefits and time off accruals during the furlough period.

Contractors need to analyze the current situation and plan for a variety of outcomes. It is also suggested that employers document the situation carefully and communicate with employees before, during and after the shutdown.

If you need assistance formulating a furlough or alternative work plan for your employees, please contact our HR team.

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About the Author

FosterThomas is a leading professional services company that provides solutions in the areas of Human Resources Consulting and Outsourcing, HR Staffing, Outsourced Recruiting, Employee Benefits Brokerage, Payroll Implementation and Services, HR for Government Contractors, Business Insurance, HR Compliance and Risk Management. We help organizations by providing solutions designed with a focus on cost containment strategies and increasing HR efficiency. FosterThomas HR Consulting was established in 1993 with offices in Annapolis, Maryland (Corporate), McLean, Virginia and Raleigh, North Carolina. Today, FosterThomas occupies a unique position as a full service provider of HR services.

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