Federal Government Shutdown: How Are Employers Affected?

After a brief federal government shutdown late in the evening Feb. 8, Congress finally passed a two-year budget that will ensure the federal government remains in operation for at least the next two years.

Employers can breathe a sigh of relief that government functions related to hiring new employees will continue for the foreseeable future, most notably E-Verify. With two federal government shutdowns in three weeks, though, it’s worth examining how a shutdown can impact employers in case another occurs in one or two years.

E-Verify

Employers who use E-Verify will feel the biggest impact of a federal government shutdown. When the money runs out, the E-Verify system must stop its operations, meaning employers will not be able to process new hires and verify a person’s eligibility to work. Additionally, all support from E-Verify closes, so employers cannot view cases, change or create an account, or access any of E-Verify’s customer support.

Employment experts, however, do not advise ceasing all hiring during a federal government shutdown. Completing your I-9 form in good faith and submitting it as E-Verify services become available is an affirmative defense if the government claims you hired an unauthorized worker. Be mindful, though, that once E-Verify services are restored there will likely be a backlog of new cases processed by the system.

Federal Contractors

Federal contractors may also be significantly impacted by a federal government shutdown. When the money runs out, it often means that federal contractors will not get paid – but not always. For businesses with contracts to provide goods and services to the federal government, the best thing you can do is check the terms of your contract and communicate with your contracting officer prior to the shutdown. Doing so will be key to making the best possible decisions if a government shutdown occurs.

Federal Agencies

Finally, a number of other employment-related federal agencies also will not operate during a shutdown. Looking back to the October 2013 government shutdown, we know that the Bureau of Labor Statistics ceased monitoring labor market activity during that shutdown. The National Labor Relations Board (NLRB) also had to stop processing cases during the shutdown, so the management of employer-union relations can be stalled.

Several enforcement agencies such as the Wage and Hour Division, the Occupational Safety and Health Administration (OSHA), and the Equal Employment Opportunity Commission (EEOC) all either shut down completely or maintained only minimal staffing.

The good news is that the shortest-ever government shutdown ended the morning of Feb. 9 with President Trump signing a two-year $400 billion budget deal. This gives employers assurance that the services necessary to make hiring decisions will remain operational for the next two years.

However, the political parties remain divided, and confidence in Congress remains low. In the future, employers can mitigate the effects of a federal government shutdown by being proactive in their hiring decisions and communicating with contracting officers where applicable.