By: Jesse Black
As discussions around a possible federal shutdown intensify, it’s useful to understand the mechanics: what happens to pay, benefits, and retirement for those still working and for those already retired. The following is a guide grounded in Office of Personnel Management (OPM) policy and related federal law.
Active Employees: Working, Furloughs, and Retroactive Pay
When a shutdown occurs because Congress has not approved funding (or extended a continuing resolution), agencies must suspend nonessential operations. OPM classifies this as a shutdown furlough (or emergency furlough). (U.S. Office of Personnel Management)
Excepted vs. Non-Excepted Work
- Some positions are designated excepted, meaning that their functions involve the protection of life or property, or are legally required to continue during a lapse in appropriations. These employees may still be required to work during the shutdown. (U.S. Office of Personnel Management)
- Non-excepted employees are placed in furlough status and are prohibited from performing work. (USDA)
- Agencies may also designate certain tasks connected to reductions in force (RIFs) as excepted, allowing some related work to proceed during the shutdown. OPM specifically addressed this in recent guidance. (Federal News Network)
Whether excepted or not, no one is paid during the shutdown itself. Once funding is restored, retroactive pay must be provided. This requirement stems from the Government Employee Fair Treatment Act of 2019, which amended federal law (31 U.S.C. § 1341) so that pay must be disbursed “as soon as possible after the lapse ends,” regardless of regular pay schedules. (U.S. Office of Personnel Management)
Thus:
- If your position is excepted and you work during the shutdown, you won’t receive pay until after appropriations are restored—but you are entitled to it.
- If you are furloughed (non-excepted), you are on nonwork, nonpay status during the shutdown—but again, you should receive back pay later.
Leave, Coverage, and Benefits
- Leave accrual (annual, sick) may be affected during the shutdown. OPM guidance notes that employees should receive credit for leave they would have accrued during the shutdown once appropriations resume. (FedSmith.com)
- Health insurance and other benefits (such as FEHB, FEDVIP) generally continue during a shutdown. Any premiums due for the shutdown period are typically withheld once pay resumes. (FedSmith.com)
- If you had “use-or-lose” annual leave that you couldn’t use due to the shutdown, some agencies may restore that leave or provide guidance for restoring it. (FedSmith.com)
- Certain administrative or personnel actions might slow down or pause entirely, due to staffing limitations.
Agencies must follow prescribed procedures when implementing furloughs (notices, classification, etc.), as part of regulatory and civil service rules. (DCPAS)
Retirees: What Changes (and What Stays the Same)
For federal retirees, the effects of a shutdown tend to be minimal in terms of core benefits. The key points:
- Your annuity (pension check) should continue without interruption. OPM’s retirement operations are typically funded outside of the annual appropriations process, which helps ensure continuity.
- You can generally request Thrift Savings Plan (TSP) withdrawals if needed. The TSP is administered separately, so shutdowns don’t usually block access.
- However, if you have pending actions—such as new claims, benefit applications, or correspondence with agencies—those may face delays until agency staff resume normal operations.
- Other benefit changes tied to optional programs or discretionary funding may experience administrative lag.
In short: while the shutdown may cause inconvenience, core retirement benefits are designed to persist.
What to Expect & What You Should Know
Timing and Uncertainty
One challenge with shutdowns is timing. Agencies often receive little advanced notice, and must quickly implement shutdown protocols. (U.S. Office of Personnel Management)
Even with legal protections, paying retroactive wages, processing benefit actions, or catching up on administrative tasks can take time once the shutdown ends.
RIFs (Reductions in Force) during a Shutdown
A recent development: OPM guidance allows agencies to treat certain RIF-related work as “excepted” so that planning and notice issuance can continue during the shutdown. (Federal News Network)
In practice, some staff working on RIFs may remain active, even though they won’t be paid until funding returns. But this introduces complexity and raises legal questions, especially if layoffs are pushed during a shutdown.
Eligibility for Unemployment Compensation
Furloughed employees may file for unemployment under the Unemployment Compensation for Federal Employees (UCFE) program, administered by state agencies consistent with state laws. (U.S. Office of Personnel Management)
Eligibility depends on your state’s rules, your work status (furloughed), and other factors. Keep in mind that unemployment pay isn’t guaranteed; it’s separate from the retroactive back pay owed under federal law.
What You Can Do
- Double-check whether your position is designated excepted or non-excepted.
- Plan ahead financially: anticipate a gap in cash flow.
- Save communications, requests, or urgent paperwork, but be aware that processing may be delayed.
- Explore state unemployment options if furloughed under UCFE, especially if the shutdown lasts multiple pay periods.
- Stay informed via official channels (agency notices, OPM announcements) rather than relying on rumors.
Although shutdowns create stress and short-term disruption, policies like the Government Employee Fair Treatment Act and OPM’s guidance help protect your core rights as a federal employee or retiree. The process isn’t seamless, but the structure is there to ensure that you are not permanently deprived of your pay or benefits.
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