The result is that many people who work for the government through third-party employers are left without work — or pay.
Other workers on government contracts might continue to receive salaries, but their employers run a big risk of never being reimbursed for keeping people at the ready.
And even if they do eventually get a reimbursement check for the expense, it can take six months to a year for it to arrive, putting the companies, particularly if smaller businesses, in financial danger.
Most employees, whether of the federal government or contractors it uses, are furloughed during a shutdown because of the Antideficiency Act originally passed in 1884 and amended since.
Part of incurring expenses is having people continue to work, which means an agency owes them for their labor.
Some companies may keep people working by moving them to other projects.
Or there may be other requirements, like a union contract, that force a business to keep certain people on the job.
So, the companies cannot afford to lay off people and hope they will remain available in a tight labor market where they have more options.
“With prior shutdowns, we’ve had instances where it’s particularly hard for small businesses who have difficulty dealing with all this and fronting the money,” said Jessica Abrahams, chair of the government contracts practice at law firm Drinker Biddle.
“There are some who would argue that when you submit a health insurance claim, often you’re faced with all of these different people at the insurance company that deny the claim,” Abrahams said.
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