How Pay and Retirement Benefits are Impacted by a Partial Shutdown

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By on December 16, 2018 in Pay & Benefits with 0 Comments

Sign that reads 'government shutdown' pictured against a cloudy grey background

Another partial government shutdown is looking like a possibility, this time with a dispute in Congress over funding for a wall on the southern border.

President Trump wants $5 billion from Congress to fund construction of a wall, but Democrats are unwilling to agree.

Not all agencies and their employees would be impacted if there were to be a partial government shutdown when funding for some agencies expires at the end of the day on December 21. Congress has already funded roughly 75% of the federal government through September 2019. This includes the Pentagon, the Labor Department and the Department of Health and Human Services.

However, there are still seven spending bills that need to be passed for the Department of Homeland Security, the Justice Department, the Interior Department, the State Department, the Department of Housing and Urban Development and other parts of the government.

So what happens to the pay and benefits of federal employees and retired federal workers if there is a partial shutdown?

The Office of Personnel Management has addressed this in its Guidance for Shutdown Furloughs. The information that follows is from this document.

Pay for Federal Employees

One of the key questions federal employees are likely to ask is, “Will I be paid if I am furloughed?” The answer to this is that it is up to Congress to provide pay for the furlough period; federal employees who are considered “excepted” are not guaranteed pay for any time furloughed by default.

Holiday Pay for Christmas

Since any partial shutdown could occur during the Christmas holiday, federal employees may be wondering if they would get the holiday pay for Christmas in the event of a partial shutdown. The answer, says OPM, is that it depends.

Exempt federal employees, i.e. those not impacted by a lapse in appropriations, would get holiday pay, however, excepted federal employees would not.

Extra Holiday at Christmas?

So what about the chance of an extra holiday at Christmas? Would any shutdown impact this?

The answer to that is unknown. Any extra holiday is granted by the president via executive order. As of the time of this writing, no executive order had been issued granting an extra holiday.

If you want to see the history of when presidents have given federal employees an extra holiday on Christmas Eve, be sure to see Chance of an Extra Holiday at Christmas for Federal Employees?.

Who are “excepted” employees?

A. In the context of shutdown furloughs, the term “excepted” is used to refer to employees who are funded through annual appropriations who are nonetheless excepted from the furlough because they are performing work that, by law, may continue to be performed during a lapse in appropriations. Excepted employees include employees who are performing emergency work involving the safety of human life or the protection of property or performing certain other types of excepted work. Agency legal counsels, working with senior agency managers, determine which employees are designated to be handling “excepted” and “non-excepted” functions. See https://www.opm.gov/policy-data-oversight/pay- leave/furlough-guidance#url=Shutdown-Furlough for copies of OMB and DOJ issuances, which provide guidance on the application of these criteria.

Will excepted employees be paid for performing work during a shutdown furlough? If so, when will excepted employees receive such payments?

A. Agencies will incur obligations to pay for services performed by excepted employees during a lapse in appropriations, and those employees will be paid after Congress passes and the President signs a new appropriation or continuing resolution.

(Note: Presidential appointees who are not covered by the leave system in 5 U.S.C. chapter 63 are not subject to furlough, but are also barred from receiving pay during a lapse in appropriations. These Presidential appointees will be paid after Congress passes and the President signs a new appropriation or continuing resolution.)

Will employees receive a paycheck for hours worked prior to a lapse in appropriations?

A. Under Office of Management and Budget (OMB) guidance issued in 1980 (below), employees will receive this paycheck. Although the payroll for the last pay period before the lapse will be processed potentially during a period of furlough, the minimum number of payroll staff necessary for this process will be excepted from furlough for the minimum time required to issue the checks, including checks for the last pay period before the lapse. This guidance can be found in OMB’s August 28, 1980, Bulletin No. 80-14, Shutdown of Agency Operations Upon Failure by the Congress to Enact Appropriations, paragraph 3.b.(1) (Appropriations and funds). OMB has reviewed and concurs in this answer.

Federal Retirees

Will I Still Get My Annuity Payment?

This is one of the top questions federal retirees are likely to have. Rest assured, OPM’s answer to this question is a definitive “yes.” According to OPM, “Federal retirees under the CSRS and FERS retirement systems will still receive their scheduled annuity payments on the first business day of the month.”

I recently retired from Federal service. Will my retirement application be delayed by a government shutdown?

A. If your agency or payroll center submitted your retirement application to OPM, you will begin receiving interim annuity payments while OPM Retirement Specialists process your application. Because OPM Retirement Services is funded by the trust fund it manages, OPM Retirement Services employees will still be working normal operating hours during a government furlough.

If your agency or payroll center has not yet submitted your retirement application or the application is incomplete, you will likely experience some delay as OPM must wait on other agencies to submit all of the information needed to process your retirement. Some of these agencies may not be operating during a government furlough.

If a shutdown furlough occurs during the 3 years of service prior to retirement, what effect will time in a furlough status have on an employee’s high-3 average pay?

A. Generally there will be no effect on the high-3 average pay unless the furlough causes the employee to be in a non-pay status for more than 6 months during the calendar year.

What will happen to employees who would have retired during a shutdown furlough?

A. For employees who, on or before the requested retirement date, submitted some notice of their desire to retire, agencies should, when the lapse in appropriations ends, make the retirement effective as of the date requested. The retirement request may be informal (such as a letter requesting retirement) and can be either mailed or personally submitted to the agency. Any additional required paperwork, such as the formal retirement application form, may be completed when the agency reopens. No time spent by the retiree in such actions after the effective date of the retirement may be considered as duty time since the individual would no longer be an employee of the agency.

Pay Raise

What about a pay raise? In the midst of all of this, there is still no word on a pay raise for next year, so federal employees are likely wondering if they will get one.

The answer is that nothing has changed as of right now. President Trump has proposed a pay freeze for 2019, but the Senate had authorized a 1.9% raise in a past spending bill. At one point, the House and Senate had allegedly agreed on a raise.

Unless Congress can work out its differences and override the proposed pay freeze from the White House, presumably the freeze for 2019 will stand. As soon as official word is issued on pay for next year, we will let you know.

Federal retirees should remember that the debate over a pay raise does not impact them. Retired federal employees receive a cost of living adjustment (COLA), the amount of which will sometimes vary depending on which retirement system they fall under. The COLA is determined automatically each year by a formula and is not subject to these types of political debates. For details, see 2019 to Have Largest COLA Increase in 7 Years.

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About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

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