The United States government shutdown brings up some potential legal issues for furloughed government contractors and their employers.
When the new federal fiscal year began on October 1, 2013 the U.S. government went into shutdown after Congress and the President failed to come to a federal budget agreement. The impasse has ostensibly arisen due to a refusal by some members of the legislative body to fund the nation’s new health care reform legislation known as the Affordable Care Act, more commonly referred to as Obamacare. The last such shutdown occurred nearly seventeen years ago, between December of 1995 and January of 1996, and was due to a dispute between then President Bill Clinton and a Republican-controlled Congress over another health care spending issue, the funding of Medicare.
According to a recent Washington Post article, the government shutdown has caused an estimated 800,000 federal workers to be placed on furlough, or temporary unpaid leave, until a budget agreement can be reached. ("Absolutely Everything You Need to Know About How the Government Shutdown Will Work.") The furloughs affect so-called non-excepted (or non-essential) federal workers as opposed to excepted (i.e. essential) employees who occupy positions related to national security, the preservation of federal property, air traffic control, and the like.
The question of essential versus non-essential government jobs has brought up some important issues related to the process by which this distinction is made, and its overall significance to the size, costs, and effectiveness of the federal government. According to a recent Time Magazine article, some 95% of Department of Education employees and
90 percent or more of the staff at the Environmental Protection Agency, Federal Communications Commission, Securities and Exchange Committee, and the Departments of Treasury and Housing and Urban Development are considered “non-essential.” (“Shutdown Highlights Basic Fact: Most of Government is ‘Non-Essential’.”)
Overall, however, more than 80% of federal employees, or approximately 3.3 million workers, are expected to continue working. This is principally due to the fact that many federal employees are not paid from annual congressional appropriations, but rather from other sources and are thus not directly affected by the current government shutdown. (“Even With the Government Shutdown, 80% of Federal Employees Will Keep Working.”)
But, for those federal workers who have been furloughed, the shutdown poses some potential legal considerations. These workers fall under the authority of the Antideficiency Act, a law initially enacted by Congress in 1884, which prohibits financial expenditures that exceed available appropriations. A recent publication by the Congressional Research Service regarding the law states,
When federal agencies and programs lack appropriated funding, they experience a funding gap. Under the Antideficiency Act, they must cease operations, except in certain emergency situations or when law authorizes continued activity…. Government shutdowns have necessitated furloughs of several hundred thousand federal employees, required cessation or reduction of many government activities, and affected numerous sectors of the economy. (“Shutdown of the Federal Government: Causes, Processes, and Effects.”)
Furthermore, contractual employers who provide furloughed workers in federal jobs may find themselves running afoul of the Worker Adjustment and Retraining Notification (or “WARN”) Act. According to the U.S. Department of Labor,
The Worker Adjustment and Retraining Notification Act (WARN) protects workers, their families, and communities by requiring most employers with 100 or more employees to provide notification 60 calendar days in advance of plant closings and mass layoffs. Employee[s] entitled to notice under WARN include managers and supervisors, as well as hourly and salaried workers. WARN requires that notice also be given to employees' representatives, the local chief elected official, and the state dislocated worker unit. (WARN Act)
Potential WARN violations are likely to be of greater concern if the shutdown happens to be a lengthy one, particularly one in excess of six months. According to another recent article,
Most contractors are planning to furlough workers on suspended projects until those projects are restarted. The [WARN] Act only applies if there is an "employment loss," which is defined as: (1) an employment termination; (2) a layoff exceeding six months; or (3) a reduction in an employee's hours of work of more than 50 percent in each month of a six-month period. (“United States: Practical Employment Law Issues Facing Government Contractors In The Wake Of The Federal Government Shutdown.”)
In any case, furloughed federal workers and their employers are urged to inform themselves of their legal rights and responsibilities.
Further information on WARN and other legal and financial implications of the government shutdown for federal contractors are also available [here].