After Congress Fails to Pass Funding Bill, Government Agencies Shut Down

Allen Smith, J.D. By Allen Smith, J.D. December 21, 2018
After Congress Fails to Pass Funding Bill, Government Agencies Shut Down

​Congress and President Donald Trump could not agree on if or how to pay to build a wall along the border of Mexico by the government funding deadline of Dec. 21, and as a result, nine out of 15 federal departments and dozens of agencies will close. The Equal Employment Opportunity Commission (EEOC) and Department of Homeland Security, among others, have announced their plans for the closure.

Approximately 380,000 federal employees may be furloughed, and 420,000 federal employees will have to work without pay during the shutdown. Most of the government, including the departments of Defense and Labor, has been funded through September 2019. But the departments of Homeland Security, Justice, Commerce and Agriculture and the EEOC are still awaiting their budgets.

Leslie Stout-Tabackman, an attorney with Jackson Lewis in Reston, Va., noted that other departments and agencies that would run out of money include:

  • Department of the Interior.
  • Department of Housing and Urban Development.
  • Environmental Protection Agency.
  • General Services Administration.
  • National Archives.
  • Peace Corps.
  • Small Business Administration.
  • State Department.
  • U.S. Treasury.

"Federal contractors with these agencies will most certainly be affected," she said. While Congress has, in the past, passed legislation to pay back the federal government employees who worked without compensation during shutdowns, federal contractor employees typically do not receive back pay.

The EEOC's Contingency Plan

The EEOC announced its contingency plan for a shutdown:

  • Staff would not be available to answer questions from the public or respond to correspondence.
  • Charges would be accepted but not investigated.
  • It would not litigate in federal courts if courts grant the agency's requests for extensions.
  • Mediations would be canceled.
  • Federal employees' appeals of discrimination complaints would not be decided.
  • Outreach and education events would be canceled.

Of the agency's 2,078 staff, 103 are expected to be retained during a shutdown.

[SHRM members-only toolkit: Managing Equal Employment Opportunity]

E-Verify Offline

E-Verify participants will not be able to access E-Verify during a government shutdown, said Leigh Ganchan, an attorney with Ogletree Deakins in Houston. "Additionally, E-Verify customer support is usually also closed during a shutdown."

Recognizing the unique compliance challenges caused by a shutdown, U.S. Citizenship and Immigration Services has typically implemented temporary policies to lessen the burden of these inconveniences.  The policies include suspending the three-day rule for E-Verify cases affected by its unavailability and extending the period during which employees may resolve E-Verify tentative nonconfirmations. But employers still must complete I-9 forms no later than the third business day after an employee starts work, and they may not take any adverse action against an employee while the worker's case is in an extended interim case status due to E-Verify's being unavailable.

LCAs Will Still Be Processed

The Labor Department will continue to operate in the event of a partial shutdown, as it already has its funding. Thus, the department's Office of Foreign Labor Certification will continue to process all labor condition applications (LCAs).

Employers must complete and sign a certified LCA as part of the H-1B petition. In the LCA, the employer makes certain attestations regarding its responsibilities, including regarding the wages, working conditions and benefits it will provide to the H-1B foreign worker.

Effect of Departmental Closures on Business

Closing numerous departments and agencies would be bad for business, according to Sen. Patrick Leahy, D-Vt. He said in a news release prior to the shutdown that closure would hurt:

  • Community and economic development. Cities, counties and states would not be able to move forward with new community development block grant projects, impeding local economic investment.
  • Energy sector. Lease sales and permits for oil, gas, coal and other minerals on federal lands and waters would be suspended.
  • Farmers. The U.S. Department of Agriculture would shutter every local and state farm service center across the nation. To stay afloat, many farmers rely on the department as their lender.
  • Housing industry. The Federal Housing Administration (FHA) would experience delays in loan processing and approvals. Thousands trying to buy a new home or refinance an FHA-insured mortgage would have to wait for the shutdown to end.
  • Local businesses near public lands. A shutdown would hurt the economies of localities that depend on national parks for tourism.
  • Small businesses. More than 30 million U.S. small businesses employing 59 million employees would no longer have access to federally assisted loans.
  • Steel and aluminum industries. A shutdown would halt the process for seeking exemptions from tariffs.


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