H.R. 7322: True Shutdown Fairness Act

The bill known as the True Shutdown Fairness Act aims to ensure that federal employees and contractors continue to receive their standard pay during government shutdowns or lapses in appropriations in fiscal year 2026. Here is a breakdown of the main provisions of the bill:

Payment of Employees and Contractors

During any period of government shutdown, the bill requires that federal employees (referred to as "covered employees") and contract workers receive their regular pay, which includes:

• Standard Employee Compensation: This encompasses basic pay, allowances, pay differentials, benefits, and other regular payments to federal employees.
• Payments to Contractors: Contractors providing services to the federal government are mandated to continue paying their contract employees similarly during a shutdown.

Definitions

The bill defines several key terms to provide clarity:

• Agency: Any federal authority across the executive, legislative, or judicial branches.
• Contract Employee: Employees of contractors who are affected by funding lapses or who may face financial interruptions due to a government shutdown.
• Covered Employee: All federal employees with some specific conditions pertaining to their status regarding being on duty or furlough.
• Lapse in Regular Appropriations: The period when the government lacks budget funding through continuing resolutions or annual appropriations.

Appropriations Mechanism

The bill specifies that for the fiscal year 2026, appropriations will be made to federal agencies to cover salaries and contractor payments in the event of a government shutdown. The key points include:

• Agencies will receive funds for employee compensation during funding gaps.
• Payments for contract employees will ensure contractors can continue to compensate their workforce.

Agency Responsibilities

Federal agencies are required to take the following actions under the bill:

• Provide standard pay to federally employed staff as soon as possible, but no later than seven days after the enactment of the bill if a shutdown is ongoing.
• For future shutdowns, adhere to the regular pay schedule for employees.

Contract Adjustments

The bill also allows agencies to adjust existing contracts to help contractors recover reasonable costs incurred during a shutdown, ensuring:

• Contractors can be compensated for standard employee pay that becomes due as a result of the lapse in appropriations.
• Agencies will provide compensation to contractors based on submitted evidence of incurred costs.

Limitations on Reductions in Force

Additionally, the bill includes provisions to prevent federal agencies from:

• Implementing reductions in force (layoffs) during periods of a government shutdown.
• Placing employees on administrative leave for more than 10 workdays within a year during a lapse in appropriations.

Funding Duration and Conditions

Funds appropriated under this bill are intended to last until:

• A new appropriations bill is passed for fiscal year 2026, or
• Another measure is enacted that effectively nullifies these appropriations for the agency.

The bill’s intention is to provide stability for federal workers and contractors during periods when the government cannot provide normal funding, helping to alleviate financial stress for those relying on government jobs or contracts.

Relevant Companies

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