A shutdown of the federal government did occur at midnight on September 30, 2025. As a result, your business operations may be impacted in several key areas.
When Congress doesn’t enact appropriations legislation bills before the start of a new fiscal year, the federal government does not receive funding. A continuing resolution can fund the federal government for as little as several days or as much as a full year. But if neither a continuing resolution nor appropriation legislation is passed, nonessential government services are halted during a shutdown.
Immigration and E-Verify/Form I-9
The USCIC may be considered essential and continue to operate, but likely will not be at full strength. Employers may face delays in sponsorship for employee work authorizations. Travel visa processing may also face delays. It is possible that the three-day rule for completing Form I-9 will be temporarily suspended and E-Verify may be temporarily unavailable.
Work and Contracts
The federal government may also issue stop-work orders, impacting businesses with government contracts. Federal government workers may be furloughed, and non-exempt employees do not have to be paid for non-worked hours caused by a closure. Exempt, salaried employees may need to be paid a partial salary for a partial week worked, although they are not required to be paid for weeks in which they perform no work.
If paid sick leave is a requirement in the state of an employee impacted by a furlough, an employer may not require the use of paid sick leave when the absence isn’t caused by illness, injury, or another covered condition. The FLSA doesn’t prohibit employers from requiring employees to use accrued leave or vacation time during a furlough or closure.
Tax Implications
The IRS will also likely be impacted by a government shutdown. This would likely result in an inability to take incoming calls, process refunds or nonautomated collections, or process paper documents, although electronic filings are typically not impacted.
Benefits
Employers should also review benefits and policies to determine any other impacts caused by furloughs or reduced hours. A discontinuation of benefits may trigger the need to issue a COBRA notice. Furloughs also may render employees ineligible for unemployment benefits, although this depends on individual state law.
This post may be updated to reflect any additional guidance or changes that impact the situation.
This article is informational and does not constitute legal or financial advice. Consult with an employment lawyer or accountant for additional clarification on how these changes impact your company.
