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Government Shutdown: What Does It Mean For Employers?

Posted on September 25, 2013
Connie ManiscalcoWritten by Connie Maniscalco | Email author

Sequestration Again?

Here we are again; news of a potential government shutdown is looming over the national capital region.  Wasn’t it just a few months ago that we were coping with sequestration and the potential to have to institute furloughs for our employees? At Helios, we’re hearing a lot of questions from our clients asking, “What does it mean if the government shuts down?  What about my employer that is a government contractor?  Will I be forced to take time off?  If I am a government contractor what should I be doing?”

HR Considerations in the Event of a Shutdown

Strategic Planning:

  • Identify key personnel and execute a retention plan (have you considered subbing out employees to colleagues to get you through a period of uncertainty or contingent retention bonuses?)
  • Communicate your bench strategy:
  1. How will employees be compensated?
  2. Can they leverage their PTO?
  3. Will you issue partial or full furloughs and if so, which employees will be impacted?
  • Map out the impact on employee benefits that a reduction in work schedule may trigger.
  • Consider enforcement of non-competes and policy reviews of those whose hours will be reduced or eliminated.
  • Review employment offers, employment contracts, commission plans for potential conflicts
  • Communicate what you DO know
  • If a layoff cannot be avoided, consider using Rapid Response (available through the Department of Labor at no additional cost) as a resource.
  • Follow published guidelines for compliance with the WARN ACT (Worker Adjustment Retraining Notification).

Operational Planning:

  • Stay in contact with the contracting officer to make sure you are kept abreast of what a government shut-down may mean for your employees.
  • Will you need to institute furloughs?
  • Will there need to be essential personnel left on site to keep the business operating or does it mean a complete shut-down of the operation?
  • If you have to institute furloughs, ensure you are not required to pay out accrued leave based on any individual state mandates in place for the states in which the company operates.
  • Since the Fair Labor Standards Act (FLSA) only deals with “protected leave” such as FMLA for example, there is no federal government mandate regarding the payment of leave in the event of a shutdown, but there may be state mandates in place.
  • If furloughs are instituted make sure you follow the published guidelines for exempt employees and consider the partial work week exemptions in place for exempt employees.

For contracts awaiting award notice:

  • If the government shuts down, this will more than likely result in additional delays in contract awards.
  • If you have begun to staff new contracts in anticipation of the contract award, ensure any offer letters that are extended include language stipulating employment is “contingent” upon the contract award.

Communication is the key during this time of uncertainty.  Full disclosure to your employees even if the company is uncertain of the future is much easier for the employees to embrace early on in the process.

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