U.S. Government Shutdown: Potential Impacts on Mobility Programs

Employers should consider the impacts a U.S. government shutdown could have on their organizations and talent if funding is not enacted before 1 October. 

 As the U.S. Congress struggles to agree on a solution for funding the U.S. government past the end of the current fiscal year on 30 September, employers increasingly face the prospect of a government shutdown if an agreement is not reached. According to the U.S. Chamber of Commerce, the U.S. government has shut down five times since 1995, with the average duration of the three shutdowns lasting one week or longer being 24 days. The most recent shutdown, occurring from December 2018 through January 2019, was 35 days in length. If a shutdown occurs this year, it is unclear how long it would last but could likely exceed both the recent average and the 2018-2019 shutdown length. 

If a shutdown occurs, agency activities funded by Congressional appropriations that are not deemed by an agency to be “excepted” will be impacted. Excepted functions typically relate to required obligations under U.S. law that must continue (e.g., Social Security payments) or activities that the suspension of which could endanger human life and/or protection of property. With areas that are deemed excepted, many federal employees supporting these functions will likely do so without compensation until Congress appropriates funding that permits payment.  

For agencies that are funded in part or in whole by fees or other sources, activities are likely to be able to continue provided they can do so via their alternative funding. However, these agencies may still see impacts if they rely on activities that involve nonessential staff who are furloughed or collaboration with agencies that are affected by the shutdown. 

While an agreement for either stopgap or full fiscal year funding could still be reached prior to the end of the month, mobility professionals should begin contemplating what implications a shutdown could have on their organizations and programs. Potential impacts could include: 

Immigration impacts: A U.S. government shutdown would have numerous implications on immigration-related processes that would then impact employers. These include: 

• Department of Labor-related services: Immigration-related processes and services offered by the U.S. Department of Labor would be significantly impacted through the duration of a shutdown. This would include, but is not limited to, the suspension of processing labor condition applications, PERM labor certification applications, and prevailing wage requests. Mobility professionals with employees who will be needing these services soon should discuss the implications and courses of action with their immigration counsel/provider. 

• Department of State-related services: Because the U.S. Department of State (DOS) is partially funded by visa application and other service-related fees, this funding will enable DOS to continue providing U.S. citizen services, including passport issuance and visa processing during a shutdown. Despite this, employers should plan for delays in the processing of services due to the furlough of nonessential staff.
  A prolonged shutdown could lead to a shutdown of nonemergency services if the fee-related funds are exhausted prior to the appropriating of funds by Congress. It is not clear when, or if, this might occur as it would be based on how much fee-related funding is available for the agency to use. 

• United States Citizenship and Immigration Services (USCIS)-related services: As a fee-funded agency, USCIS and its operations will continue during a shutdown. However, it is likely that reduced staff capacity and delays with interagency information requests will result in processing delays.  

Employment verification impacts: The main E-Verify system would cease operations and would remain inoperable until funding resumed. All employers would still be required to meet I-9 employment verification obligations, and E-Verify employers could continue to use the new remote alternative verification procedures enacted earlier this year. 

Social Security impacts: Under contingency guidance issued last month by the Social Security Administration (SSA), the agency indicates that it will still issue new Social Security cards and numbers during a shutdown. However, it is anticipated that this process will be severely delayed throughout the duration of a shutdown, which would result in challenges for organizations that have employees needing the services. This would particularly impact foreign nationals working in the United States who need the number to establish a U.S. bank account or get set up on the U.S. payroll.  

Delays will likely also occur with the ability of SSA to engage in identity verification related to mortgages. The SSA contingency guidance does not specifically outline what will occur in this area, but in past shutdowns, the Consent Based Social Security Number Verification Service was unavailable until funding was restored. If this occurs this year, it would delay the ability of lenders and other parties to complete parts of the mortgage process involving this system.  

The SSA estimates that it will likely furlough approximately 8,500 employees during the shutdown, which would significantly impact agency services.  

FHA and VA loan impacts: Processing of FHA and VA loans is likely to continue during a shutdown, but staffing reductions at the Department of Housing and Urban Development and Department of Veterans Affairs may significantly impact processing times. 

Tax impacts: The U.S. Internal Revenue Service has indicated that it would remain open in the event of a shutdown by utilizing funds from the Inflation Reduction Act. The IRS has not indicated that a shutdown would have any impact on the 16 October extension deadline for 2023 filings, so employers should plan on meeting current filing deadlines. 

Government relocation impacts: If a shutdown occurs, it could delay transfer orders and/or civilian-related relocations by U.S. government entities. Organizations that support U.S. government-related relocations could also experience delays in agencies processing payments for items related to nonessential services.  

Other impacts: Depending on the length of a shutdown, flight-related delays could occur if furloughs and/or noncompensation of employees at the Transportation Security Administration impact staffing levels. Additionally, federal employees who are not receiving compensation during the shutdown may engage with lenders about their options related to forbearance or modification of payment terms. 

Worldwide ERC® and its policy forums will continue to monitor developments and provide updates as appropriate in the coming weeks. 

Michael T. Jackson is the vice president of member engagement and public policy at Worldwide ERC. Additionally, 13 members of Worldwide ERC’s global immigration, global tax, global compliance, and North American real estate and mortgage public policy forums advised on the impacts of a shutdown.