The Government Shutdown’s Ripple Effect on Employers - and What Comes Next
The federal government has now been shut down for one of the longest periods in U.S. history, but there’s a chance now that it could end within days. Still, even as negotiations in Washington inch toward a resolution, the impact on employers has already been significant and will continue to be felt well after operations resume.
How Employers Are Feeling the Impact
According to SHRM research, shutdowns lasting longer than 28 days disrupt day-to-day operations for nearly 90% of private employers and hinder annual financial goals for 80%. Here’s how the shutdown has affected key areas of employer operations:
Federal Contractors: Many are facing delayed payments and project disruptions that may trigger furloughs or layoffs - potentially raising WARN Act or wage compliance concerns.
Department of Labor (DOL): Regulatory work, audits, and immigration-related processes like Labor Condition Applications and Prevailing Wage Determinations are largely paused.
EEOC: Operating with only a small fraction of staff, the EEOC continues accepting discrimination charges but has paused investigations and mediations. Employers may see a wave of right-to-sue notices once operations resume.
NLRB: Most activities, including case handling and outreach, are suspended.
OSHA: Still responding to imminent threats and fatalities but has paused most inspections and compliance programs.
Federal Courts: Civil cases are delayed, with significant backlogs expected once full operations resume.
What Employers Should Do
Even during a shutdown, employers must continue to meet their legal and regulatory obligations. Key steps include:
Stay compliant: Maintain I-9 verification, OSHA safety practices, and other federal requirements.
Plan for delays: Expect backlogs in agency processes and litigation timelines once the shutdown ends.
Support employees: Communicate transparently about any operational impacts, particularly for federal contractors or teams awaiting agency approvals.
Consult counsel: Seek guidance on compliance or labor issues arising from disruptions or delayed agency activity.
Looking Ahead
While reports suggest a potential agreement could end the shutdown soon, the road back to normal operations will take time. Agencies will need weeks - or even months - to clear backlogs, process filings, and restore regular workflows.
For employers, the message is clear: plan for continued delays, stay compliant, and communicate openly. A proactive approach now will make the post-shutdown transition smoother.