After more than two weeks, the federal government shutdown finally ended late in the evening on October 16, 2013.  Although the end of the shutdown is great news for federal employees and government contractors, the last three weeks have forced many government contractors to take emergency steps as a result of the economic impact caused by stop-work orders, delays, and temporary work suspension. 

In previous client alerts on October 4 and October 15 Proskauer discussed the legal issues government contractors were facing due to the government shutdown, including FLSA and wage and hour considerations, leave policies, the WARN act, the temporary suspension of the E-Verify system, the closure of the OFCCP, unemployment benefits, COBRA benefits, and the impact of the shutdown on foreign workers.

Now that the federal government has re-opened, government contractors must continue carefully to consider these legal issues as they return employees to work and to full work schedules.  In particular, contractors must be mindful of how it treats and compensates exempt employees (i.e., those employees exempt from overtime under the Fair Labor Standards Act and similar state laws) this week.

As discussed previously, an employer generally must pay an exempt employee a fixed guaranteed minimum salary of at least $455 each week, regardless of the amount of work performed or the number of hours or days worked.  Thus, while an employer can withhold payment for any full week in which the employee does not work, it cannot do so for any partial week in which the employee works even part of one day.  Because the government shutdown ended in the middle of the week, private employers interested in returning furloughed exempt employees to work have three primary options.

First, for exempt employees who had been furloughed without pay, contractors can return them to work immediately and pay those exempt employees their entire weekly salary, despite working only one or two days.  Second, if feasible under their government contracts, contractors can insist that their exempt employees on furlough not return to work until next Monday.  Third, contractors can give employees the option of returning to work immediately, pay them their full weekly salary, but charge their paid time off or vacation banks for the days missed this week due to the shutdown.  Depending on state law and company leave policies, some employers may be able to require employees to use up paid leave or vacation for those days missed if they return them to work immediately.

Other employers, rather than furlough its employees, adopted a reduced work-hours program whereby it established a shorter workweek during the period of the shutdown and proportionately reduced its employees’ salaries.  These employers must now decide when and whether to continue with the reduced workweek (and reduced salary) program – which they can keep going forward for as long or as short as they like (subject to state law), or return to previous levels of hours and salaries.   And, employers must continue to be cognizant of notice requirements and other state-specific requirements (such as in New York, where employers must comply with the Wage Theft Prevention Act’s wage notice requirements).

Many contractors placed employees on paid time off (either involuntary or voluntary), and employees used their accrued leave or vacation so that they could continue being paid during the shutdown without implicating their exempt status.  For those employees returning to work, employers must ensure that it properly complied with its published paid time off policies and that all leave and vacation banks were properly drawn down.

Finally, now that E-Verify will again be operative, contractors should submit all appropriate paperwork in a timely fashion and the clock for responding to any Tentative Non-Confirmation notices should start to run again.