Report Reviews Pay, Other Practices in Shutdowns

Following is the portion of a Congressional Research Service report that focuses on pay practices during government shutdowns in particular and the precedent set in the most recent shutdown, in 2013.

General Practices Regarding Furloughs and Pay

An immediate shutdown effect is the “shutdown furlough” of certain federal employees—that is, placement of the employees in a temporary, nonduty, nonpay status. Shutdown furloughs are not considered a break in service and are generally creditable for retaining benefits and seniority. With regard to pay, there appears to be no guarantee that employees placed on shutdown furlough would receive pay for the time they are placed on furlough. This may be the case, because if furloughed employees are prohibited from coming to work during a shutdown, the government arguably would not be incurring a legal obligation to pay them. Several considerations, including personnel costs, future productivity, and employee retention, might be weighed when assessing the issue of retroactive pay for furloughed staff. Nevertheless, in historical practice, federal employees who were furloughed under a shutdown generally have received their salaries retroactively as a result of legislation to that effect. For example, a CR provision required that employees who were furloughed during the FY2014 government shutdown be paid retroactively:

Employees furloughed as a result of any lapse in appropriations which begins on or about October 1, 2013, shall be compensated at their standard rate of compensation, for the period of such lapse in appropriations, as soon as practicable after such lapse in appropriations ends.

In the case of excepted employees, OMB has stated several times in detailed, shutdown-related guidance to agencies that

[w]ithout further specific direction or enactment by Congress, all excepted employees are entitled to receive payment for obligations incurred by their agencies for their performance of excepted work during the period of the appropriations lapse. After appropriations are enacted, payroll centers will pay all excepted employees for time worked.

In addition, a 1981 memorandum from OMB to the heads of executive departments and agencies included the following statements:

It should be made clear that, during a [sic] appropriations hiatus, funds may not be available to permit agency payment of obligations. All personnel performing excepted services, including activities incident to the orderly suspension of agency operations, should be assured that the United States will not contest its legal obligation to make payment for such services, even in the absence of appropriations.

Historically, Congress has authorized retroactive pay for excepted employees who work during a government shutdown by ratifying and approving the obligations incurred in anticipation of appropriations. For example, the CR that was enacted following the FY2014 shutdown included the following provision:

All obligations incurred in anticipation of the appropriations made and authority granted by this joint resolution for the purposes of maintaining the essential level of activity to protect life and property and bringing about orderly termination of Government functions, and for purposes as otherwise authorized by law, are hereby ratified and approved if otherwise in accord with the provisions of this joint resolution.

Congress and the President have taken this approach before the FY1996 and FY2014 shutdowns, as well. For example, Congress and President Ronald W. Reagan provided retroactive pay to both furloughed and non-furloughed federal employees after a brief funding gap in FY1985.

The FY2014 Shutdown

After the second FY1996 shutdown, no shutdowns occurred until over 17 years later, in FY2014. In this case, a funding gap began on October 1, 2013, the first day of FY2014, after funding from the previous fiscal year expired at the end of the day on September 30. At that time, none of the 12 regular appropriations bills for FY2014 had been enacted. On September 30, OMB said in a memorandum that it did not expect a resumption of funding from annual appropriations by the end of the day on October 1. Consequently, OMB instructed the affected agencies to begin the process of ceasing operations and furloughing personnel on October 1.

On September 30, however, an automatic continuing resolution (ACR) was enacted to provide funding for a narrow category of activities at the Departments of Defense (DOD) and Homeland Security (DHS). This narrow CR provided funds for FY2014 pay and allowances for certain members of the Armed Forces and supporting contractors and civilian personnel. Full implementation of the law was delayed several days while agencies determined how to interpret and implement its provisions. The experience may be of interest if similar legislation were considered in anticipation of a potential future shutdown (see Box).

Box. Example of Operating During a Shutdown Under a Narrow

The Pay Our Military Act (POMA, P.L. 113-39) was enacted on September 30, 2013, in an effort to mitigate some effects of a shutdown on certain personnel and operations of the “Armed Forces,” which include the Army, Navy, Air Force, and Marine Corps, and, within DHS, the Coast Guard. This legislation was structured as an automatic continuing resolution to provide funding for FY2014 pay and allowances for three categories of personnel: (1) members of the Armed Forces in “active service”; (2) certain DOD and DHS civilian personnel “providing support” to these Armed Forces members; and (3) certain DOD and DHS contractors “providing support” to the Armed Forces members. As such, the act’s intended effects apparently were to ensure that (1) covered government personnel who were anticipated to be furloughed during a funding gap would, under POMA, avoid furlough, and (2) all covered individuals would be paid (including government personnel and contractors performing POMA-covered, but non-excepted activities) and, in addition, would be paid on time rather than wait for retroactive pay after enactment of interim or full-year appropriations. Upon POMA’s enactment, DOJ worked with DOD and DHS to determine how to interpret and implement the legislation. A DOD official said that DOJ advised that the law did not allow the departments to end furloughs for all civilian employees or pay all contractors. Rather, specific determinations would be necessary. Consequently, DOD and DHS did not initially avoid furloughs for the first few days of the shutdown for any of their POMA-covered, non-excepted employees, because the determinations reportedly took time to make.

On October 5, 2013, DHS and DOD announced the general parameters under which they would bring employees back to work and pay contractors during the week of Monday, October 7. For example, DOD Comptroller Robert F. Hale said the department had “roughly” 350,000 employees on furlough, and that under POMA, “my guess is that we’ll bring most of them back but no more than a few tens of thousands will remain on furlough, and it may be substantially less than that.” Mr. Hale also “offer[ed] one final note of caution about this recall,” saying “we have authority to recall most of our civilians and provide them pay and allowances. We don’t have authority to enter into obligations for supplies, parts, fuel, et cetera unless it is for an excepted activity, again, one tied to a military operation or safety of life and property. So as our people come back to work, they’ll need to be careful that they do not order supplies and material for non-excepted activities.”
Ultimately, the FY2014 shutdown lasted 16 full days, through the end of October 16. The funding gap terminated when the President signed an interim CR in the early morning of Thursday, October 17, 2013 (P.L. 113-46).

During the first week of October, information about furloughs occasionally was reported by the news media. Initial reports suggested that 800,000 or more executive branch employees had been furloughed, based on the contents of agency shutdown plans. Three weeks after the shutdown terminated, OMB released a retrospective report. According to OMB, the shutdown resulted in the furlough “roughly 850,000 employees per day” at its peak in the first few days of October, or approximately 40% of the federal civilian workforce. The number decreased during the course of the shutdown due to the implementation of P.L. 113-39 (see Box). In addition, the total number of furloughs varied over time, due to the net effect of ongoing redeterminations regarding whether an employee’s status as excepted or non-excepted should change in response to a change in an agency’s circumstances.

For the shutdowns of FY1996 and FY2014, OMB did not issue an overall estimate of the number of furloughs across all three branches of the federal government. A look at furlough and pay practices across the three branches, however, may provide further insights into the potential effects of a shutdown on federal officials and employees.