October 7 Tip of the Week

“Government Shutdown and What it Means for Employers”

While the federal government shutdown should have a minimal impact on private employers, it will affect employers who rely on governmental contracts to fund their operations.  The government shutdown will, in essence, cease the operation of the federal agencies that are responsible for enforcing federal labor laws.  That does not mean, however, that employers no longer have to consider compliance with laws as they navigate the shutdown.  State laws remain in place and those will affect how employers treat their employees during the shutdown. 

For those employers whose funding is reliant on government sources and is not available during the shutdown, employees may be furloughed.  When furloughing employees, employers need to keep in mind the rules regarding exempt and nonexempt employees.  While nonexempt employees are only required to be paid for actual hours worked, exempt employees must be paid in full for any week in which they perform any work or in any week that they are ready and willing to work and the lack of work is due to no fault of the employee.  Employers who are considering furloughing employees need to review state wage and hour laws to ensure that they are meeting any notice requirements for changes in work hours, pay rates, or other terms and conditions of employment. 

Employers may require exempt employees to use vacation time during the furlough, if that is allowed as part of the employer’s time off policies.  Employers cannot, however, force employees – exempt or nonexempt – to use paid sick leave that is required by state law to cover absences that are caused by furloughs.  Nonexempt employees who are unpaid during the government shutdown can apply for unemployment benefits, so employers should be prepared for an increase in unemployment claims. 

For employers who believe that layoffs may result from the government shutdown, you need to be aware of both your federal and state WARN act notice requirements.  Although enforcement activities by federal agencies may be at a standstill during the shutdown, federal laws remain in effect and must be followed.  State laws and enforcement activities will not be impacted by the shutdown.  Employers who fail to comply with state laws regarding furloughs, layoffs, and wage and hour requirements remain at risk for employee complaints and state enforcement activities.  myHRcounsel is here to assist employers in navigating the effects of the government shutdown on an employer’s business.  We can help you understand your obligations under both state and federal laws and how those obligations are affected by the shutdown.