Fair Pay for Federal Contractors Act of 2025
Fair Pay for Federal Contractors Act of 2025
Plain Language Summary
# Fair Pay for Federal Contractors Act of 2025 — Summary **What It Does** This bill would compensate federal contractors for back pay they give to employees affected by a government shutdown in fiscal year 2026. If a shutdown occurs, federal agencies would be allowed to increase contract prices to reimburse contractors for the costs of paying workers who were furloughed (temporarily laid off), had reduced hours, or lost pay during the shutdown. The bill also covers restoring paid leave that employees used during the shutdown period. **Who It Affects** The bill primarily affects employees of federal contractors and the contractors themselves. Workers who lose income during government shutdowns would receive back pay from their employers, and those employers would be reimbursed by the federal government through higher contract payments.
Taxpayers would indirectly be affected, as agencies would spend additional funds to cover these contract adjustments. **Current Status** The bill (S. 2963) was introduced by Senator Tina Smith (D-Minnesota) and is currently in committee, meaning it has not yet been debated or voted on by the full Senate. It remains in early stages of the legislative process.
CRS Official Summary
Fair Pay for Federal Contractors Act of 2025This bill provides back pay to employees of federal contractors who lost pay due to a lapse in appropriations (i.e., government shutdown) in FY2026.Specifically, the bill provides appropriations for federal agencies that are subject to a lapse in appropriations in FY2026 to adjust the price of contracts to compensate federal contractors for providing back pay to employees who were affected by the lapse in appropriations. The agencies must adjust the price of any contract for which the contractor stopped, suspended, delayed, or interrupted all or part of the work under the contract due to the lapse in appropriations. The price adjustment must compensate the contractor for reasonable costs incurred to (1) compensate employees who were furloughed or laid off, were not working, or experienced a reduction of hours or compensation due to the lapse in appropriations; or (2) restore paid leave taken by employees during the lapse in appropriations if the contractor required or permitted employees to use paid leave as a result of the lapse in appropriations.The maximum amount of weekly compensation of an employee for which an adjustment may be made under this bill may not exceed the lesser of (1) the employee's actual weekly compensation, or (2) $1,442 (or a lesser amount pro-rated for an employee who works less than 40 hours per week).The bill also requires the Office of Federal Procurement Policy to submit a report to Congress on the adjustments made under this bill.
Latest Action
Read twice and referred to the Committee on Homeland Security and Governmental Affairs.