What the Government Shutdown Means for Small and Emerging Government Contractors

January 29, 2018

What the Government Shutdown Means for Small and Emerging Government Contractors  

The government shutdown of 2013 lasted 16 days.  Although a government shutdown impacts a government contractor of any size with nonessential employees, it is a much greater challenge for a small company with limited resources.  Both the House and Senate passed legislation to extend fiscal year 2018 government funding until February 8, with the goal of reaching an agreement on funding for the rest of the fiscal year (through September 30) and on various immigration reforms. In the event that a resolution cannot be agreed upon beyond February 8, 2018, we offer the following considerations as they impact your employees.
Communicating the impact to your people in an authentic manner to all employees will go a long way in establishing trust. This will help employees better understand the ‘why’ behind operational decisions that impact their pay and future employment.
While we are all hopeful that the House, Senate and the Executive Office can find common ground sooner rather than later, we want to emphasize the importance of communication while navigating the possibility of a government shut-down.  Communication not only with the contracting officer for your contracts but also your employees.  If no information is provided many times things are made up. 
For navigating the uncertainty we have provided the following Frequently Asked Questions (FAQ’s):

  • How will I know if there is going to be a complete shutdown of the operation or there will be a need for essential personnel to be left onsite to keep the business operating?
    • Contact the Contracting Officer to discuss the implications of a government shutdown on your existing contracts and be sure to clarify who and/or what roles are considered essential to the operation.
    • Ensure all employees are aware of their classification (essential or non-essential) for any existing contracts that are affected and execute a retention plan if necessary.
  • If furloughs are instituted during the shutdown are there other considerations I should be thinking about?
    • Yes, will you issue partial or full furloughs- if so, which employees will be impacted?
    • 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.
    • Ensure you follow the published guidelines for exempt employees and consider the partial workweek exemptions in place for exempt employees. Refer to the Department of Labor Wage and Hour Division’s Fact Sheet #70 FAQ's Regarding Furloughs for additional information.
  • How will our employees be compensated in the event of government shutdown?
    • Work with your Human Resources department and/or your HR designee to discuss the possibility of employees leveraging their PTO.
    • Do your homework. 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.
    • Consider leveraging retention bonuses for key personnel.
  • What about the impact to employee benefits?
    • Work with your broker and/or Human Resources to understand the impact on employee benefits that a reduction in work schedule may trigger.
  • Should we move forward with staffing any new contracts in anticipation of the contract award after the government shutdown is over?
    • Yes, and ensure any offer letters that are extended include language stipulating employment is "contingent" upon the contract award.
    • Review existing employment contracts and commission plans for potential conflicts.
  • What if a layoff becomes necessary?
    • Consider using the resources available through Rapid Response through the Department of Labor at no additional cost.
    • If a layoff cannot be avoided, follow published guidelines for compliance with the WARN Act (Worker Adjustment Retraining Notification) if you are a business with at least 100 employees, laying off at least 50 people at a single place of employment. 
Communication is exceptionally critical during this time of uncertainty. We encourage you to set up a regular communication schedule to notify employees of pending changes or escalations. Being authentic in communicating what you do and don’t know, will go a long way to build and maintain trust.
For further information contact Helios HR at the HR Resource Center at 703-860-4086 or resourcecenter@helioshr.com

The information contained in this notice is provided for informational purposes only.  It should not be interpreted as legal advice for any purpose or on any issue or subject.  We recommend you obtain the advice of an attorney in a proper jurisdiction if you have questions or concerns regarding your company specifically.

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