What Happens to Pay, Benefits During a Government Shutdown?

​If a government shutdown occurs Nov. 17, it will have wide-reaching impacts on everything from national parks (the Department of the Interior said it plans to close the majority of national parks and monuments to the public during a shutdown) to air travel (disruptions and slower service are expected as thousands of air traffic controllers and Transportation Security Administration personnel will have to work without pay, which may mean many will call out from work to find other ways of making money).

A shutdown would also have an impact on another important factor: federal employees' pay and benefits.

Some agencies, such as the U.S. Postal Service, will not be affected in that way because they don't rely on taxpayer dollars for funding. But for many federal employees, pay and benefits will be affected by the shutdown. The U.S. Office of Personnel Management offers guidance on this important facet of the government closure.

"Many federal employees are subject to be placed on unpaid furlough in the event of a government shutdown," said Lexi Clarke, chief people officer at compensation firm Payscale. "The duration of the furlough is determined by the length of the government shutdown. If you're considered an essential employee, you will be required to work without pay during the government shutdown."

Here's everything to know about pay and benefits for federal employees during a shutdown.

Pay

Furloughed federal workers and employees who are deemed necessary and continue to work will not be paid during the shutdown. However, they will be paid for their work after the government reopens.

That's thanks to a 2019 law signed as part of the measure to fund the government at the end of the 35-day shutdown from December 2018 to January 2019, according to Government Executive. In short: They will all automatically be granted back pay to cover their work during the shutdown once funding is restored.

"Employees who were required to perform excepted work during the lapse will receive retroactive pay for those work periods," according to the OPM guidance. "Retroactive pay is provided at the employee's standard rate of pay. If the retroactive pay cannot be provided on the normal pay date for the given pay period, it must be provided at the earliest date possible after the lapse ends."

Similarly, employees who work overtime during the shutdown will be entitled to premium pay—but they will not receive it until after the shutdown ends.

Pay for Federal Contractors

For employees of federal contractors, pay works differently. According to The Washington Post, without funding, contractors must either stop working or risk not being paid if they continue. Unlike federal civilian employees, contractors do not receive back pay unless their company provides it. These companies are not eligible for reimbursement by the government.

"While implications can vary for employees of federal contractors, it will largely depend on the terms in their contract and terms of employment," Clarke said. "Usually, those employees could be laid off or furloughed without pay."

Health Insurance

Federal employees will continue to have health care coverage during the government shutdown. Premiums for their coverage under the Federal Employees Health Benefits program will accrue over the course of the shutdown, and then will be taken out of employees' first paycheck after the government reopens.

Federal employees can make changes to their coverage during a shutdown if they have a significant life event during that time, such as the birth of a child.

For a furloughed employee's flexible spending account, payroll deductions will cease for any employee who does not receive pay. "The employee remains enrolled in FSAFEDS, but claims for eligible health care expenses incurred during a non-pay status will not be reimbursed until the employee returns to a pay status following the lapse and allotments are successfully restarted," according to the OPM guidance.

Other Insurance Benefits

Employees enrolled in the Federal Employees Dental and Vision Insurance program will maintain their coverage. Payroll deductions will temporarily cease for any employee who does not receive pay and be taken out of the first paycheck after the government reopens.

Retirement Benefits

Federal retirees will still receive their monthly annuity payments, as those payments come from a trust fund that is not affected by the shutdown.

Contributions to the Thrift Savings Plan will be paused until the government shutdown ends.