Government Shutdown's Impact on Federal Contractors Far From Over
Author: David B. Weisenfeld, XpertHR Legal Editor
January 30, 2019
The record 35-day government shutdown may be over, but the after-effects remain significant for the employees directly impacted by it. While much of the media attention focused on the estimated 800,000 federal workers who were either furloughed or were working without pay, the number of federal contractor and subcontractor employees affected is even greater.
"Federal employees were severely affected in the short term, but they will eventually get paid. That's not the case for individuals working for federal contractors who face a much more unfortunate situation," said Susan Moser, who heads the Government Contractor Services Group at Cherry Bekeart, an accounting firm whose clients work under government contracts.
As Moser notes, the 800,000 federal workers will recoup five weeks of back pay now that the shutdown is over. Congress typically approves back pay for federal workers who have missed paychecks during a shutdown. That's not the case, however, for the many employees whose companies depend on government contracts and subcontracts. These workers run the gamut and can include but are definitely not limited to:
- Food-service workers;
- High-level software engineers;
- Janitorial employees; and
- Security guards.
Overall estimates of the total number of federal contract workers affected range from the tens of thousands to the millions. Moser said, "No one knows how many workers are affected," adding that the overall impact remains to be seen.
However, there is a backlog of 30 days' worth of work, so many of these government contractors are still not working and then may have to wait at least another month to get paid, according to Moser, who noted the shutdown has had a "terrible impact on her company's clients."
Different companies have tried to help their impacted employees in a variety of ways. For instance, Moser said that some employers permitted their employees to use all of their PTO time, or to have unaffected employees donate their PTO time to affected employees, to ensure they were paid during the shutdown. But she acknowledged this step was not without serious consequences.
That's because many employees were off Christmas week and planning on coming back to work in early January. Instead, Moser noted, they have used up their PTO time for the year in many cases.
The Professional Services Counsel has asked the IRS to issue urgent guidance offering tax relief for federal contractor employees who received donated leave time from peers.
Legislation has been introduced in Congress to guarantee back pay for contractors who were furloughed or forced to accept reduced work hours as a result of the government shutdown. It would apply only to workers earning less than $50,000 annually. However, Moser said she does not believe the legislation will go anywhere, leaving affected employees with little recourse.