Hunton Employment & Labor Perspectives

The government shutdown may have ended six weeks ago, but its impact may be felt for months to come.  The Office of Management and Budget recently released a report entitled “Impacts and Costs of the October 2013 Federal Government Shutdown,” which details the costs of the government shutdown and the impact it had on government workers, which in turn impacts the private sector workplace as well.

The OMB reports that the shutdown resulted in a combined total of 6.6 million lost work days, the largest amount ever recorded due to a government shutdown.  These lost work days translated into a significant cutback, or in some cases a complete stoppage, by federal agencies that are tasked with overseeing, executing and enforcing certain laws that govern the private workplace.  Of particular import, the OMB reports:

• Equal Employment Opportunity Commission:  During the shutdown, the EEOC retained only those personnel who were necessary to "protect government and individual property rights” and the EEOC suspended all investigations and mediation of pending charges.   As a result, over the course of the sixteen day closure, a backlog of approximately 3,150 new charges was created.  The OMB predicts that it will take the EEOC approximately one month to work through this backlog.
• Occupational Safety and Health Administration:  More than 90% of the government’s OSHA inspectors were furloughed during the shutdown.  Inspectors that were permitted to work during the shutdown were only authorized to respond to matters of “emergencies involving the safety of human life or protection of property.”  As a result, almost 1,400 workplace safety investigations were stopped by OSHA, and only 283 inspections were opened during the sixteen days, which amounted to just 16% of the total inspections opened during the same time in 2012.   Furthermore, approximately 500 small businesses were directly impacted when one third of OSHA’s Consultation Program, through which States provide free on-site safety and health assistance to small businesses, was halted during the shutdown.
• Department of Labor:  During the shutdown, the Wage and Hour Division of the Department of Labor was permitted to respond only “to incidents involving imminent serious injury or death of a child or farmworker.”  Thus, over the course of sixteen days, the WHD opened only one new investigation and put more than 6,000 ongoing investigations on hold.  The OMB also reports that “back wage payments of approximately $8.8 million for an estimated 12,100 workers went uncollected.”
• Government Contractors:   Many private employers have contracts to provide goods or services to the federal government, many of those contracts being with the Department of Defense.  While government contractors of all types were impacted by the shutdown, the OMB reports that "over the first two weeks of the shutdown, small businesses contracts with DOD were cut by almost one-third and spending was down 40%, compared with the same period in the previous year."

Thus, the OMB report, in detailing the effects of the government shutdown shows that the private sector was indeed impacted, and still continues to be impacted.  Private sector employers may expect to see an uptick in activity by certain federal agencies now that the government is back at work and attempting to work through the backlog that was created as a result of the sixteen day shutdown.