By: Jenna Bishop on September 27th, 2023

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How Federal Contractors Can Prepare for a Government Shutdown

Risk Management | Business Management & Strategy | GovCon

As October 1st, the end of the fiscal year gets closer, so does the potential for a government shutdown. Understandably, questions about how to prepare for a shutdown are top of mind for government contractors. We’ll discuss considerations and how to prepare your workforce for an uncertain situation.

Communicate with Employees

First and foremost, communication is of the utmost importance. Your business, as well as your employees, are facing a great deal of uncertainty, and it can be a stressful time for all. It will help to revisit your organizational culture and values to determine the messaging. Communications should be as clear and transparent as possible to prepare employees for what changes they can expect in the event of a shutdown.

There are several people-related topics to consider when developing your communications and approach:

  • Are there other projects impacted employees can assist with during the shutdown?

If so, determine how the projects will be managed and if any training is required for employees.

  • How will overhead or indirect staff be impacted by a shutdown?

Identify if any employees will be able to continue working or if all employees will be placed on a leave of absence.

  • Will employees be paid or placed on an unpaid leave of absence?

It’s important to consider FLSA status and ensure employees are paid properly during this time; more information is available in this DOL Fact Sheet #70: FAQs Regarding Furloughs and Other Reductions in Pay and Hours Worked Issues.

  • Will impacted employees be able to use accrued vacation or PTO?

Consider whether the company can sustain employees exhausting their PTO balances or if employees will be allowed to go ‘negative’ in their balances.

  • If employees are on unpaid leave, how will benefits be handled?

Depending on the length of the shutdown, COBRA may need to be offered if eligibility requirements are not met.

  • How will other benefits be handled?

401k and HSA contributions, as well as any company match, will need to be stopped during an unpaid leave of absence; 401k loan requests may be received, etc.

  • How will time be logged?

Communicate to employees what charge code should be used and when time should be entered.


It’s also important to notify employees ahead of time on how return-to-work communications will be handled. We strongly recommend confirming personal emails or phone numbers with employees, so they do not check their work emails during a shutdown. It should be clearly communicated to impacted employees they cannot perform any work during a shutdown, including checking email. Ensure employees are aware they need to hear from your business before returning to work; just because there is an announcement on the news that a resolution has been found does not necessarily mean employees can immediately return to work, as this information is communicated to the business from the contracting officer.

Considerations for Your Business and Contracts

Essential Vs. Non-Essential Employees

The leadership team will need to work with the contracting officers to determine who is essential versus non-essential personnel and communicate that information, as well as what it means, to affected employees.

In addition, leadership should determine who will be designated as the point of contact for contracting officers. This person will be responsible for staying in touch with contracting officers and keeping leadership updated.

Contract Awards

If your business is anticipating the award of any contracts, you’ll want to ensure any offer letters, including language stipulating the offer of employment, are contingent upon the contract award. This is important not only during periods of uncertainty but also as a general business practice when recruiting for contracts pre-award.

Layoffs & Regulations

If layoffs are unavoidable, ensure you are familiar with federal and state Worker Adjustment Retraining Notification (WARN) Act requirements. Consider using Rapid Response, a complimentary DOL tool, as a resource if needed. Be sure to also familiarize yourself with other laws in states or localities where employees perform work and what effect those regulations may have in the event of a shutdown.

EEO-1 Reporting Implications

Another consideration in terms of the looming potential government shutdown is the EEO-1 Reporting. If the shutdown occurs and lasts for a month or longer, it may bleed into the submission window for EEO-1 Reports (10/31/2023 - 12/5/2023). This means the portal may or may not be available, support staff who are typically available to answer questions and assist employers could be furloughed, and processing/review by the EEOC might be slower than usual. It might be helpful to start gathering and analyzing data now. If the shutdown occurs and impacts reporting, document any attempts to file that were unsuccessful, maintain a record of any outreach efforts to the EEOC for assistance, and note any technical issues you may have to help support any inquiries if delayed submission happens.

As you navigate this difficult time, keep in mind employees may be feeling stressed and uncertain about their future, as much as you may be feeling stressed and uncertain about the future of your business and the impact this will have on the organization and its employees. Be sure to treat your employees with kindness and respect and be as transparent and communicative as possible to help maintain morale.