Implications of a Government Shutdown for Employers and Educators

By Erin Fowler, Kendra Yoch, Mary Deweese, Karlie Dunsky, Tejas Shah, Trevor Holmes, and Hrishi Shah - Franczek Radelet P.C.

January 19, 2018

As the looming threat of a government shutdown becomes more real, we briefly review prior shutdowns and provide guidance on what employers and educators might anticipate. Government shutdowns are not as rare an occurrence as one might think; shutdowns have occurred in 1976, 1977, 1978, 1979, 1981, 1982, 1983, 1984, 1986, 1987, 1990, 1995, 1996, and 2013.

Employment and Labor Law

From an employment and labor law perspective, a shutdown involves three major agencies: (1) the National Labor Relations Board (“NLRB”); (2) the Equal Employment Opportunity Commission (“EEOC”); and (3) the Department of Labor (“DOL”). In many respects, a government shutdown in 2018 will likely mirror the shutdown that occurred in October of 2013. Specifically, in 2013, although the EEOC accepted Charges of discrimination filed by employees to preserve the statute of limitations, the EEOC suspended all ongoing investigations and was unable to begin any new investigations. Additionally, the DOL suspended its then-current wage and hour investigations. If the 2013 shutdown provides any indication, new investigations likely will not begin.

Only the NLRB has enacted rules since 2013 that have significantly impacted the NLRB’s responses to petitions. Unlike in 2013, quickie election rules now govern the processing of election petitions. Despite these new rules, we anticipate that the NLRB will approach a shutdown in a similar fashion as it did in 2013. We expect that the NLRB will suspend its investigations and election hearings, opting to extend any deadlines mandated by the rules.

Immigration

In the event of a government shutdown, the biggest impact to immigration will be stoppages at the Department of Labor (DOL).

• During a shutdown, the DOL will not accept or adjudicate any petitions, including labor condition applications (LCAs) for H and E visas, prevailing wage determinations and labor certifications (for permanent residency sponsorship).

• Responses to Requests for Information or Audits will be held and will marked as received on the date the agency resumes business.

• The iCert and PERM websites used for these applications will not be available; nor will phone or email inquiry assistance lines. These delays will impact the timeline for permanent residency sponsorship cases and could detrimentally impact an employer’s efforts to secure work authorization for a foreign national.

• Most agencies involved in immigration adjudications, enforcement and processes will remain intact, as they are fee-funded operations or essential government functions. U.S. Citizenship and Immigration Services (USCIS) will continue to accept and adjudicate petitions, but the e-Verify program will shut down. This would impact e-Verify-registered employers by causing delays in verification of new employees’ work authorization.

• Customs and Border Protection will continue to operate normally at ports of entry, but there could be an impact on visa applications filed at the border, such as TN visa requests. U.S. consulates abroad may be impacted due to a lack of funding, and the Department of State could limit visa adjudications during a shutdown to only diplomatic visa requests and “life or death” emergencies.

• Immigration courts and Immigration and Customs Enforcement will continue to function normally.

K-12 Education

A government shutdown would have a limited impact on K-12 students and school staff. The Department of Education would furlough over 90% of its staff in the event of a government shutdown and investigations by OCR would be suspended. Investigations by other agencies, such as the EEOC and the NLRB, would also be halted. Individuals would likely continue to be able to file complaints with these agencies, which would be investigated after normal operations resume. Because federal aid to schools has largely already been disbursed, the economic impact on individual districts would be limited. However, Head Start grants are disbursed on the first of each month, so many Head Start programs could be financially affected by a shutdown lasting past February 1. Additionally, districts receiving Impact Aid funding may be affected because the program is current-year funded. These districts may be unable to receive technical support in advance of the January 31 deadline for 2018-2019 Impact Aid funding.

Employee Benefits

A government shutdown would have the greatest impact on the Department of Labor’s employee benefits-related enforcement activity.  The DOL’s Employee Benefits Security Administration (EBSA), which is largely responsible for enforcement activity directed at retirement and welfare plans, would cut its workforce to 46 employees from a total of over 900.  This would likely halt the EBSA’s compliance audit activity for the duration of the shutdown.     

Because the Pension Benefit Guaranty Corporation (PBGC) is funded by insurance premiums and employer-sponsored retirement plan assets, its operations will not generally be affected by the shutdown.  The impact on the IRS is unclear, though many employees tasked with processing determination letters, reviewing qualified plan corrections, and ensuring Affordable Care Act compliance will presumably be furloughed for the duration of the shutdown.  This will likely slow the agency’s review of pending applications that employers may have submitted on behalf of their qualified retirement plans.