At midnight September 30, the federal government will run out of funds and contractors will start receiving stop-work orders for all work deemed non-essential. At the time of publication, compromise in Congress looks unlikely, and a protracted shutdown likely. In order to minimize costly personnel missteps, federal government contractors should consider the action items listed below BEFORE the government shuts its doors. For more comprehensive information on considerations for government contractors during a shutdown, please read our client alert “September 2025: Reducing the Negative Impacts of a Government Shutdown for Federal Contractors.”

1. Communicate with Employees. Employers should let employees know what to expect should the company receive a stop-work order for the contract on which they are working. This should include instructions to stop all work unless explicitly instructed to do so. It also might include whether employees will be furloughed or laid off, limits on paid time off utilization, and access to unemployment. Finally, employees should have a complete understanding of when and how they will be called back to work.
2. Salaried Employees. Salaried employees must be paid for a full work week regardless of quality or quantity of work, with few exceptions. Because most of these employees will have worked for two (2) days this week, these employees will be entitled to a full week of pay unless you require them to take paid time off or they are laid off....

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