What a Government Shutdown Means for Employers: Many Agencies Will Sharply Curtail Operations, Delaying New and Pending Cases

Federal appropriations are set to expire at midnight (ET) on Saturday, September 30. Unless lawmakers agree to a spending plan before then, much of the federal government will shut down. And most federal agencies will stop all but their most essential operations:

  • Many agencies will stop processing charges and investigations.
  • Most of them will cancel hearings and reschedule them when the government reopens.
  • Most will shutter their public-information offices, making it difficult if not impossible for employers to get updates about their cases or other agency activities.
  • Many agencies will close their regulatory groups, delaying any new rules, guidance, or regulations.

Below, we break down these effects agency by agency. But the most important thing for employers to know is that, if the government shuts down, they can and should expect delays.

Department of Labor (DOL)

According to the DOL’s contingency plan, the agency will curtail its enforcement and regulatory efforts. It will continue to do what it sees as necessary to protect safety, health, and property, such as investigating child-labor violations, processing certain benefits payments, and supporting federal and state unemployment programs. But it will not offer any technical assistance, conduct compliance audits, or prepare for congressional oversight. The agency will hold no administrative hearings and will shutter multiple subagencies, including the Bureau of Labor Statistics, the Office of Administrative Law Judges, and the Office of Federal Contractor Compliance Programs. It will also pause all regulatory efforts.

That last item could affect several DOL initiatives, including a proposed rule changing the Fair Labor Standard Act’s definition of “independent contractor.” The DOL submitted a final rule on Friday morning (September 29) to the White House’s Office of Information and Regulatory Affairs (OIRA). Such a submission is usually one of the last steps before a final rule is published. But because both OIRA and the DOL will be affected by the shutdown, publication could be delayed.

Equal Employment Opportunity Commission (EEOC)

Like the DOL, the EEOC will stop all nonessential operations. It will do only what it needs to do to make sure claimants preserve their rights. To that end, the EEOC will continue to accept charges through its online portal. In addition, the EEOC will screen those charges to identify cases in which a deadline is about to expire or that involve threats to life or property. But otherwise, it will start no new investigations, hold no hearings or mediations, investigate no nonessential charges, hold no outreach programs, and process no FOIA requests. Nor will it respond to questions about pending cases.

The EEOC’s plan raises questions about parties’ filing deadlines. The Commission does not address filing deadlines in its shutdown plan. But after the last government shutdown in late 2018, the EEOC rescheduled hearings, mediations, and interviews when it reopened. It also automatically extended filing deadlines for position statements and other information requests. We expect the EEOC to handle deadlines in a similar way after the coming shutdown.

National Labor Relations Board (NLRB)

The NLRB will likewise cease all nonessential activities. According to its contingency plan, it will process no new representation petitions or unfair labor practice charges. It will pause administrative litigation and hold no administrative hearings. In fact, the Board’s administrative law judges (ALJs) have already started notifying parties to expect delays if the government shuts down. In particular, ALJs have told Littler attorneys that hearings will be canceled, and cases will be continued until the government reopens.

NLRB members themselves will continue working. As presidential appointees, the members are exempt from federal laws requiring agencies to discontinue most of their activities during a shutdown. So, the members may continue to make progress on pending cases, but they will be operating with a skeleton staff: the Board’s plan lists only seven employees who will support the Board members during a shutdown. As a result, the members’ output may be minimal.

We also expect the Board’s regulatory efforts to slow. The Board recently proposed a rule expanding joint-employment liability under federal labor law. That rule has not been finalized. If the Board furloughs its regulatory staff as planned, the rule will almost certainly be delayed.

Department of Justice (DOJ) and the Federal Trade Commission (FTC)

The DOJ and the FTC have become increasingly important to employers. Both agencies have taken steps to address perceived competitive imbalances in the labor market. For example, the FTC recently proposed a rule to ban almost all noncompete agreements. It has also issued guidance targeting certain independent-contracting arrangements. And the DOJ has sued several large employers for alleged labor-market collusion.

Those activities will slow or cease during the shutdown. The DOJ has announced it will deprioritize all civil litigation. It will ask for continuances in pending cases and will bring no new cases unless necessary to protect life or property. Similarly, the FTC will pause most of its litigation, new investigations, and regulatory activities. The FTC has not yet announced when it will publish a final noncompete rule. But whatever the planned date, the shutdown will likely delay the rule even further.

The U.S. Court System

For now, the U.S. court system will remain open. Courts have independent funding: they can operate by drawing on the money they collect through filing fees and other charges. That money will allow them to operate as normal for “several weeks.” After that, courts will likely have to curtail their activities and operate in a reduced capacity. The details of those reductions will be left up to individual courts and administrators.

Courts typically announce any changes in services or schedules on their websites. Littler is monitoring court websites to determine disruptions to upcoming appearances and deadlines.

Other Complications

The shutdown could affect employers in other ways beyond the shuttering of federal agencies or reductions in courthouse operations. For example, some employers, such as government contractors, may choose to furlough workers during the shutdown. Others may consider voluntary or mandatory paid leave. Those choices could raise additional legal issues under state and federal WARN acts, as well as wage-and-hour laws. These issues are likely to be complex and fact specific. Employers should work with experienced counsel to understand their rights and obligations.

As we approach the shutdown, these issues will evolve. New complications are likely to arise if Congress is unable to come to a resolution quickly. WPI is following the situation closely. We will keep our clients informed about any developments.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.