Government Shutdown: What Federal Employees and Contractors Need to Know About Pay, Benefits, and Work

As of October 1, 2025, the U.S. federal government has entered a shutdown after Congress failed to pass funding legislation. Nearly 1.6 million federal employees and contractors are affected. Here’s what workers need to know about pay delays, benefits continuity, and back pay rights during the shutdown, based on OPM and Congressional Research Service guidance.

• Excepted employees (e.g., TSA, military, air traffic controllers) must continue working without pay but will receive full back pay once funding resumes.
• Furloughed Federal employees are placed on unpaid leave and cannot perform any work during the shutdown, yet are legally guaranteed back pay under the 2019 Government Employee Fair Treatment Act.
• Federal contractors are not covered by this law, most will lose pay for paused contracts unless agencies approve “make-good” arrangements.
• FEHB health insurance coverage continues uninterrupted, but TSP contributions and leave accrual are paused until paychecks resume.
• Congress and political appointees continue receiving pay through permanent appropriations, a recurring point of public criticism during shutdowns.

The United States federal government entered a shutdown at 12:01 a.m. EDT on October 1, 2025, after lawmakers failed to reach agreement on funding legislation. While media coverage highlights the political standoff, the more pressing reality is the impact on federal employees and government contractors. For them, a shutdown is not an abstract policy debate, it is an immediate question of paychecks, health benefits, and job security.

This guide outlines the practical effects of the shutdown, drawing on current law, U.S. Office of Personnel Management (OPM) shutdown guidance, and historical precedent from prior closures such as the 2013 and 2018–2019 shutdowns.

Do Federal Employees Have to Work During a Shutdown?

The answer depends on how agencies classify employees under the Antideficiency Act, which prohibits agencies from spending money not appropriated by Congress. Employees fall into two broad categories:

• “Excepted” (essential): These workers perform duties vital to safety and property protection, including air traffic controllers, TSA officers, Border Patrol agents, military personnel, and emergency responders. They must continue to report to work even though they are not paid until after the shutdown ends.

• “Non-excepted” (non-essential): These employees are placed on furlough, which legally bars them from working, checking email, or volunteering their services without pay.

To date the 2025 government shutdown has furloughed about 900,000 federal employees, while another 700,000 are continuing to work without pay.

Will Federal Employees Get Paid on Their Normal Payday?

During a shutdown, payroll operations are halted. If a payday falls while funding has lapsed:

• Furloughed employees receive no pay until after the shutdown.

• Excepted employees continue to work but also go unpaid until Congress passes appropriations.

When the shutdown ends, agencies process back pay retroactively. In past shutdowns, employees typically received compensation within a few business days. For example, after the 2018–2019 shutdown, the longest in U.S. history at 35 days, workers were reimbursed quickly once appropriations resumed.

Will Furloughed Employees Eventually Get Paid?

Yes, for federal employees. The Government Employee Fair Treatment Act of 2019 guarantees back pay for furloughed workers once the shutdown ends. This protection means employees are reimbursed for the time they were legally barred from working, regardless of the shutdown’s length.

However, contractors are not covered. Their wages depend on agency decisions and contract terms. In practice, many private contractors, particularly lower-wage service staff such as janitors, cafeteria workers, and security guards, never recover missed income. During the 2018–2019 shutdown, tens of thousands of contractors lost weeks of pay permanently.

What About Federal Contractors?

Contractors face the greatest financial uncertainty in any shutdown. Their contracts may be paused, meaning they cannot work or bill for services. Some are later allowed “make-good” arrangements, but these vary widely by agency and contract language. Reporting during the 2018–2019 shutdown found that many workers, especially in support services, never regained lost wages.

Do Congress and Political Appointees Still Get Paid?

Yes. Members of Congress continue to receive their salaries because their compensation is funded through a permanent appropriation under Article I of the Constitution. This exemption is a recurring source of public frustration during shutdowns, as lawmakers’ paychecks continue uninterrupted while federal employees wait for back pay. Political appointees may continue working if their roles are excepted or supported through alternative appropriations.

What Happens to Benefits Like Health Insurance, Leave, and Retirement?

Shutdowns disrupt cash flow but generally do not cut off core benefits:

• Health Insurance: Coverage under the Federal Employees Health Benefits (FEHB) Program continues. Premiums accrue and are deducted once paychecks resume.

• Annual and Sick Leave: Furloughed employees cannot use leave. Leave accrual may pause if the furlough is prolonged.

• Retirement and TSP Contributions: Contributions to the Thrift Savings Plan (TSP) and federal pension systems are paused during the shutdown and resume once pay restarts. This may temporarily slow retirement savings growth, particularly where employer matching is involved.

What Happens When the Shutdown Ends?

Once Congress passes, and the President signs, a funding bill, agencies call employees back to work, payroll systems resume, and back pay is processed retroactively. In recent shutdowns, employees typically received back pay within several business days.

Agencies may provide guidance on how to account for missed time and benefits. Contractors return to work based on contract terms, and payments depend on agency decisions.

Key Takeaways

• Excepted employees must work during the shutdown and are reimbursed later.

• Furloughed employees cannot work but are guaranteed full back pay under law.

• Contractors often do not receive back pay, making them the most financially vulnerable.

• Health coverage continues, while leave and retirement contributions may pause.

• Payroll resumes quickly after appropriations, but financial stress lingers for many workers.

Final Word

A federal shutdown is more than a political standoff, it is an economic disruption that directly impacts millions of households. Federal employees are protected by back pay guarantees, but uncertainty over timing can strain budgets, forcing reliance on savings or credit. Contractors, who lack legal protections, bear the brunt of the financial hardship.

Shutdowns reveal the vulnerabilities of those who serve the public yet remain dependent on congressional action for pay continuity. By understanding the framework of pay, benefits, and legal protections, employees and contractors can better prepare for the financial consequences of what has become a recurring feature of U.S. governance.