By: Shannon Gough
On January 25, 2019, the longest government shutdown on record ended after 35 days.[1] The recent government shutdown directly impacted approximately 800,000 federal employees who were furloughed or working without pay, but many other employers and workers were affected across the country, including those from the private sector.[2] While a number of the federal employees are now receiving back pay for the time they were away from work, many federal employees are contractors and are not guaranteed back pay.[3]
The adverse impact of the shutdown on federal contractors cannot be understated.[4] Though it is unclear exactly how many federal contractors were affected, an estimated 4.1 million people and companies are federal contractors in the US.[5] During the shutdown some of these federal contractors simply were out of work, while others deemed “essential” were required to work without pay, knowing they had little hope of compensation for their time.[6] Government shutdowns can be disastrous for federal contractors, particularly those that are lower-wage hourly workers.[7] Contactors surviving paycheck to paycheck could lose their job, home, etc., and face serious economic hardship as the shutdown drags on.[8] Moreover, private companies that employ these contractors may also face devastating consequences, such as cash flow issues, loss of employees, and the possible permanent shutdown of the company.[9] A government shutdown also has numerous unexpected impacts on businesses that affect “the approval of new loans, initial public offerings, the processing of tax documents, and the approval of new products such as prescription drugs, among other effects.”[10] Ultimately, these unexpected impacts can have lasting effects on the overall health of the economy.[11]
In addition to the economic consequences that may result from not paying federal contractors back pay, a recent court decision suggests there may also be legal consequences.[12] In 2017, the U.S. Federal Claims Court held in Martin v. United States that the government’s failure to pay required minimum wages and overtime to non-exempt employees during the 2013 shutdown violated the Fair Labor Standards Act (hereinafter “FLSA”).[13] Here, the court rejected the government’s argument that payments made without appropriations would violate the Anti-Deficiency Act concluding that this Act does not cancel the government’s obligations under the FLSA.[14] Currently, at least two collective claims have been filed in response to the most recent shutdown, alleging that the shutdown illegally forced more than 400,000 “essential” federal employees to work without pay in violation of the FLSA.[15]
These court cases signal federal
contractors’ growing discontent with being the collateral damage of an unstable
government.[16]
While the courts might eventually award back pay to the federal contractors in
these claims, by the time these awards come to fruition, the damage to workers
and businesses has already been done.[17]
Businesses, particularly those that
employ federal contractors, should support legislation to address this, such as
the recent legislation supported by three dozen U.S. senators that guarantees
back pay for low-wage federal contractors for work missed during the shutdown.[18]
The bottom line is that a government
shutdown is a losing situation for everyone, but permitting federal contractors
to suffer for a shutdown they did not cause not only offends the FLSA, but is
also an affront to the dignity of all American workers.
[1] See Viktor Reklaitis, The Government Shutdown is Ending, After Becoming the Longest on Record – by a Wide Margin, MarketWatch (Jan. 25, 2019), https://www.marketwatch.com/story/the-government-shutdown-already-ranks-as-the-2nd-longest-in-20-years-2019-01-03 (noting the previous record was 21days during Clinton administration in 1995).
[2] See Tonya Riley, Federal Contractors Have Never Gotten Back Pay for Shutdowns. Democrats are Trying to Fix That, Mother Jones (Jan. 10, 2019),
[3] See id.
[4] See Sean Higgins, Federal Contractors Are Hardest Hit by Shutdown Because They Won’t Get Back Pay, Wash. Examiner (Jan. 19, 2019), https://www.washingtonexaminer.com/policy/economy/federal-contractors-are-hardest-hit-by-shutdown-because-they-wont-get-back-pay.
[5] See id.
[6] See David Welna & Marisa Peńaloza, Not Expecting Back Pay, Government Contractors Collect Unemployment, Dip Into Savings, NPR (Jan. 7, 2019), https://www.npr.org/2019/01/07/682821224/most-contractors-do-not-expect-to-get-back-pay-when-the-shutdown-ends; Deanna Paul, ‘Nothing Short of Inhumane’: Union Sues Trump Administration Over Shutdown, The Wash. Post (Jan. 2, 2019), https://www.sltrib.com/news/nation-world/2019/01/02/nothing-short-inhumane/.
[7] See Zoe Carpenter, Who Gets Hurt When the Government Shuts Down, The Nation (Jan. 9, 2019), https://www.thenation.com/article/trump-government-shutdown-contractors-low-wage-housing-food-stamps/.
[8] See id.
[9] See Erik Sherman, When the Government Shuts Down, Contractors and their Employees Pay a Steep Price, NBC News (Jan. 10, 2019), https://www.nbcnews.com/business/business-news/when-government-shuts-down-contractors-their-employees-pay-steep-price-n957226; see also Frank Konkel, Here’s How the Shutdown Hurts Government Contractors, NextGov (Jan.15, 2019), https://www.nextgov.com/cio-briefing/2019/01/heres-how-shutdown-hurts-government-contractors/154197/.
[10] See Gabriel T. Rubin, How the Shutdown is Hitting Business; Here’s a Roundup of the Impact after a Month of Political Impasse, Wall Street J. (Jan. 23, 2019), https://www.wsj.com/articles/shutdown-hits-industries-nationwide-11548075600.
[11] See Paul Davidson, Government Shutdown: How it Could Hurt the Economy, USA Today (Dec. 31, 2018), https://www.usatoday.com/story/money/2018/12/31/government-shutdown-how-could-hurt-economy-and-volatile-market/2435168002/.
[12] See Susan McGuire Smith, Court Awards Back Pay to Federal Employees Over 2013 Government Shutdown, FedSmith (Feb. 17, 2017), https://www.fedsmith.com/2017/02/17/court-awards-back-pay-to-federal-employees-over-2013-government-shutdown/.
[13] See id.
[14] See id.
[15] See Paul, supra note 5.
[16] AFGE, American Federation of Government Employees and Kalijarvi, Chuzi, Newman & Fitch Sue the Government Over Shutdown (Dec. 31, 2018), https://www.afge.org/publication/american-federation-of-government-employees-and-kalijarvi-chuzi-newman–fitch-sue-the-government-over-shutdown/.
[17] See Leada Gore, 25,000 Federal Workers Still Waiting for Back Pay from 2013 Shutdown, AL News (Jan. 10, 2019), https://www.al.com/news/2019/01/25000-federal-workers-still-waiting-for-back-pay-from-2013-shutdown.html.
[18] See Robert J. Terry, Senators Push for Back Pay for Contractors Impacted by Shutdown, Wash. Bus. J. (Jan. 10, 2019), https://www.bizjournals.com/washington/news/2019/01/10/senators-push-for-back-pay-for-contractors.html.
