Government shutdown and federal contractors: your job and pay

Do federal contractors keep working during a shutdown?

Some do and some don't. It depends on how the contract is paid for and where the work happens:

• Already fully funded: if the agency set aside the money for the contract before the shutdown, the work can often continue.
• Needs new money: contracts paid for in installments, or that depend on the next round of funding, usually stop once the money already set aside runs out.
• Inside a closed federal building: even a funded contract can stop if the workers need a federal office, lab or base that is closed, or furloughed federal staff to supervise them.
• Protects life or property: contract work the agency treats as essential, such as security or emergency support, can be kept going.

The final decision comes from the agency, through its contracting officer. Until you hear from them in writing, the contract's normal terms still apply.

What is a stop-work order?

A stop-work order is a written instruction from the agency's contracting officer to pause some or all of the work on a contract. Under the standard federal contract clause, it can last up to 90 days, or longer if both sides agree.

Once the order arrives, the company must stop the covered work right away and keep its costs as low as it reasonably can. The contract is not canceled. When the shutdown ends, the agency lifts the order and work resumes.

Do contractor employees get paid?

Only if their employer keeps paying them. The 2019 Government Employee Fair Treatment Act guarantees back pay to federal employees, both those sent home and those who work through a shutdown. It does not mention contractors, so their workers have no legal right to be paid for the lost time.

During a shutdown, contractor employees usually end up in one of these situations:

• Still working and paid, because the contract is funded or the work is essential.
• Moved to other work by the company, on a different contract or internal project.
• Using paid leave, if the company allows or requires it.
• Sent home without pay, which hits hourly workers hardest, such as custodial, food service and security staff at federal buildings.

Lawmakers have proposed back pay for contractor workers several times, most recently in the Fair Pay for Federal Contractors Act of 2025. It was sent to committee and has not become law.

Unemployment benefits for contractor workers

If you are sent home without pay, you may qualify for unemployment benefits. Contractor employees apply to their state unemployment office like any other private-sector worker; the special federal program is only for federal employees. Each state has its own rules on eligibility, waiting weeks and benefit amounts.

If you later receive pay for the same weeks, for example if your employer or a new law covers them, you may have to repay the benefits.

Can contractor companies recover their costs?

Sometimes. When an agency issues a stop-work order, the company can ask for an "equitable adjustment" to the contract price or schedule. Under the standard clause, the request must be made within 30 days after the work stoppage ends. It can cover costs such as keeping staff on standby, shutting work down and starting it again.

Nothing is automatic. The company has to show the costs were caused by the stoppage, so careful records made during the shutdown matter.

What to do if you work for a contractor

• Ask your employer in writing whether your contract is affected and whether you will be paid, reassigned or asked to use leave.
• Check your state unemployment rules and apply quickly if you are sent home without pay.
• Talk to lenders early. Many banks and credit unions offer hardship options or low-cost loans during a shutdown, but usually only if you ask.
• Keep records of hours lost and any messages from your employer, in case back pay is offered later.

What contractor companies should do

• Review each contract for funding status and clauses on stop-work orders, availability of funds and limitation of funds.
• Act only on written direction from the contracting officer, not on informal instructions.
• Track shutdown costs separately from the first day, to support any claim later.
• Tell employees early what will happen to their work, pay and leave.
• Plan for slower payments, since invoices can take longer to process when agency staff are furloughed.

Stop-work orders are most likely at the start of a shutdown, so keep an eye on the next funding deadline and on which agencies would close, as described in what shuts down in a government shutdown. Our U.S. government shutdown tracker shows the live status.

Frequently asked questions