As Congress approaches a funding lapse resulting in a government shutdown, California employers should prepare for several indirect effects on workplace operations. Although a federal shutdown does not halt California’s employment laws, it does pause many federal agency functions, as discussed below.
Federal Enforcement Agencies
Most federal labor agencies will furlough staff and suspend routine enforcement during a shutdown. For example, the U.S. Department of Labor (DOL) will furlough over 11,000 employees, which includes investigators from the Wage and Hour Division. Similarly, OSHA will cut nearly all inspectors and cease all non-emergency inspections. The EEOC will furlough a significant portion of its staff, halting charge investigations. The NLRB will pause new union elections and most hearings.
In practice, this means complaints or audits under FLSA, OSHA, NLRA, etc., will be delayed until funds are appropriated. Employers should note that California agencies and laws remain fully in force, so actions before the California Civil Rights Department, Labor Commissioner, and DLSE will remain mostly unaffected.
Immigration and Employment Verification Delays
A shutdown halts DOL’s immigration-related processes. All foreign labor certifications, such as PERM, and Labor Condition Applications for H-1B, H-2B and E-3 visas stop until funding is restored. Employers who rely on these visas or green-card sponsorship should file any time-sensitive applications before a lapse. USCIS itself is fee-funded and will mostly continue, but its system and E-Verify/I-9 reviews are funded by appropriations and will be inaccessible while the shutdown is in effect.
Regardless, employers should still complete Form I-9s for new hires, but enrolled companies cannot run new e-Verify cases or queries during the shutdowns. U.S. embassies generally remain open for visa processing (since visas are fee-funded), but some consular posts may slow routine cases if they reserve funds are exhausted.
Federal Contracting and Notice Requirements
Businesses with federal contracts should review funding clauses and potential layoff rules. If a contract is paused or canceled, employers may need to provide WARN notices. Under the federal WARN Act, a “mass layoff” or “plant closing” requires 60 days’ notice, although a shutdown’s duration may be uncertain. Critically, California’s mini-WARN Act is even broader, and requires advance notice of a temporary shutdown in some instances. Thus, any California employer – federal contractor or not – should consider whether temporary work stoppages or furloughs trigger notice under WARN laws. Federally contracted employers should also check collective‐bargaining agreements and contract clauses for any mandated procedures during lapses in funding.
Wage-and-Hour and Furlough Compliance
Employers also at times respond to shutdowns by instituting paid leave or furloughs. However, employers should keep in mind that California’s wage-and-hour laws still apply during these periods. For furloughed hourly, non-exempt employees, they must only be paid for hours actually worked. Salaried exempt employees, however, are more constrained: under the FLSA and California law, if an exempt worker performs any work in a workweek, they must receive their full weekly salary.
California employers should also be aware of reporting requirements for furloughs of at least three weeks. Specifically, the Court in Internat. Brotherhood of Boilermakers, etc. v. NASSCO Holdings, Inc. (2017) 17 Cal.App.5th 1105, 1118 held that furloughs of at least three weeks can trigger an employer’s reporting obligations under CalWARN.
Thus, employers should carefully plan any partial-week furloughs for exempt staff, or alternatively give written instructions to ensure exempt employees do not perform any work during unpaid weeks. Employers should also consider California’s Paid Sick Leave law when altering schedules.
Union and Collective‐Bargaining Effects
A shutdown also does not relieve employers of collective‐bargaining obligations. The NLRB will likely suspend new union representation elections and most unfair labor practice
processing, but existing collective bargaining agreements (CBAs) remain in force. If layoffs, furloughs or schedule changes affect unionized employees, employers must still negotiate effects and give required notices under the NLRA and any applicable CBA. And of course, any violations during the shutdown may be enforced if and when federal funding resumes.
Relatedly, California’s governor recently signed into law AB 288, a statute that allows California’s Public Employee Relations Board to certify unions and resolve labor disputes in the private sector when the NLRB has “expressly or impliedly ceded jurisdiction.” California’s PERB will consider the NLRB to cede jurisdiction when the full board sits on a case for over a year, when the board cannot render a decision due to its lack of a quorum, when a case languishes before an NLRB judge for over six months and when an NLRB official fails to certify a union within six months of workers voting yes on union representation. The law does not go into effect until January 1, 2026.
State-Unemployment and Employee Benefits
State unemployment insurance (UI) systems are unaffected by a federal shutdown. Furloughed or temporarily laid-off employees may generally apply for California UI benefits as usual.
Employers should anticipate standard state reporting obligations for any terminations or reduced hours. Health and retirement plan obligations continue; for example, reduced hours or termination may trigger COBRA notice requirements under federal law (but COBRA administration itself is not affected by a shutdown).
Conclusion
In sum, the federal government’s shutdown mainly delays federal agency actions rather than changing California employers’ core obligations.
To the extent possible, employers should file time-sensitive immigration or labor applications before a shutdown, communicate promptly with staff about any furloughs or pay changes, and review federal versus California notice and wage rules before implementing workforce adjustments.