What a Federal Government Shutdown Means for Screening New Hires

Updated November 17, 2023
President Joe Biden has signed the stopgap spending bill, successfully averting the federal government shutdown. This provides temporary relief for employers, ensuring continuity in federal services crucial for background screenings of new hires and rescreening of existing employees. However, with the funding now extended only until early next year, it remains essential for employers to remain proactive as the possibility of a shutdown could re-emerge in 2024, potentially impacting hiring processes.

Employers May Face Delays in Receiving Background Screening Reports

News reports continue to describe significant gridlock in the House of Representatives, which if not resolved, will lead to a federal government shut down. As the House Republican majority debates federal spending measures ahead of the September 30th deadline, employers need to be aware that gaps in federal spending have the potential to cause delays and gaps in employment screening reports. The longest government shut down to date lasted 35 days, between 2018-2019 but the length of any potential shut down is unknown. 

A refresher on the federal budgeting process

The Constitution requires the federal appropriations process to begin in Congress, because it grants the legislative branch the “power of the purse.” Historically, appropriations bills (e.g., the authorization for the various federal agencies and departments to spend money) start in the House and once passed, they go to the Senate for consideration. The House and Senate negotiate until they agree on and pass identical bills and then final versions go to the President for signature.

Typically, the federal government appropriates or spends money on a 12-month cycle, with the federal fiscal year beginning October 1 and ending September 30. When the House, Senate and President can’t agree on a full 12-month spending bill, they can choose to pass a Continuing Resolution, which allows spending to persist at its current amount for a period of time.

When nothing passes or the President vetoes the bill(s) that pass, part or all of the federal government effectively shuts down. This means only “essential” federal employees and contractors continue to do their jobs.

How a federal government shutdown might impact employers

Because no one knows which, if any, spending bills will become law before September 30^th, this is a forecast of which systems and data may be unavailable, delayed or incomplete in nature. This forecast is based on past practice by previous Presidential Administrations but may be subject to change under the Biden Administration’s direction.

• E-Verify – This system verifies an individual's right to work in the United States by confirming information submitted on the I-9 form. E-Verify is funded by appropriations, which means it likely immediately stops functioning the day a funding gap begins and its workers are typically furloughed during a federal government shutdown. Employers who cannot use the E-Verify system as required to conduct remote I-9 document review may need to make arrangements for new employees to provide documents in-person to a representative. Employers who are required to demonstrate completion of the E-Verify process may have to delay employee start dates until the system is up and running.
• Public Access to Court Electronic Records (PACER) – This system provides data used in background screening reports about federal court cases. During a government shutdown, no new cases will be entered into the system and current cases will not be updated, although federal courts will continue to conduct some essential functions, such as trials already in progress.
• FMCSA Drug and Alcohol Clearinghouse – Run by a division of the US Department of Transportation, the Clearinghouse is the national database of drug and alcohol violations by individuals who hold a commercial driver’s license or permit. During previous shutdowns, FMCSA employees largely stayed on the job because funding comes from gas taxes and other dedicated sources and not entirely through the federal appropriation process. However, that doesn’t mean the Clearinghouse will not be impacted. While employers and Third–Party Administrators (TPAs) may still be able to update data, federal system updates, audits and validations made by federal employees may slow or cease if key IT staff are furloughed.
• FMCSA Pre-employment Screening Portal (PSP) – similar to the Clearinghouse, the PSP provides data on accidents and other serious safety violations by individuals who hold a Commercial Driver’s License or Permit. Like the Clearinghouse, impacts are expected to be limited due to FMCSA funding sources that allow these federal workers to stay on the job, but the longer a shutdown occurs the greater the risk due to non-essential tasks being delayed.
• FAA Pilot Record Database (PRD) – Unlike FMCSA, the Federal Aviation Administration, a division of the US Department of Transportation was heavily impacted by previous shutdowns and is likely to be seriously impacted again. Because its funding is discretionary and must be appropriated by Congress, non-essential employees are likely to be furloughed. The PRD is the federal database designed to facilitate sharing of pilot employment and safety records between carriers and operators. During a shutdown, expect delays in federal pilot certifications, updates to the PRD records, and/or responses to inquiries that require more than a standard query of the PRD. Since employers enter the vast majority of the PRD data, there should be little impact to overall data timeliness and volume, however Freedom of Information Act (FOIA) requests submitted to FAA are expected to wait for the government to resume operations. 

Other federal data sources that may be impacted or not up to date during a government shutdown:

• US Department of Health & Human Services National Practitioner Data Bank
• US Department of Education Database of Accredited Postsecondary Institutions and Programs
• US Department of Labor FLAG, BALCA and PERM systems, which are necessary as part of US Immigrations and Customs Enforcement work with foreign worker visa applications
• US Department of Defense and Department of Veterans Affairs military records checks and Freedom of Information Act (FOIA) requests

Vault: Your Trusted Partner in Navigating Government Shutdown-Related Screening Delays 

In times of uncertainty, having a trusted partner like Vault can make all the difference for employers. With our expertise in background screening and verification services, we understand the importance of maintaining a seamless hiring process. During a federal government shutdown, we work diligently to minimize disruptions to your screening needs. Our team stays informed about the latest developments and passes on that information, and we can recommend alternative sources, when feasible, to speed completion of the background screening process.  

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The information and opinions expressed are for educational purposes only and are based on current practice, industry related knowledge and business expertise. The information provided shall not be construed as legal advice, express or implied. Consult with legal counsel before any action is taken or not taken in relation to information disseminated in this resource.