Congressman Suhas Subramanyam Introduces Bills to Protect Federal Workers and Contractors During Republican Government Shutdown
Washington D.C. – This week, Congressman Subramanyam introduced two bills to alleviate the damage of the Republican shutdown of the federal government on federal employees, contractors, and all those impacted.
The Shutdown Guidance for Financial Institutions Act protects federal employees, contractors, and others from the financial impacts of a government shutdown by providing and encouraging best practices for banks, credit unions, and other financial institutions to work flexibly with people impacted by shutdowns. The Emergency Relief for Federal Contractors Act would allow federal contractors affected by a government shutdown to withdraw funds from their retirement savings without being penalized.
“House Republicans would rather shut down the government and mass fire federal employees than come to the table to negotiate a bipartisan funding agreement that protects people’s health care and stops misguided cuts,” said Congressman Subramanyam. “Our constituents should not pay the price for Washington's dysfunction, and these bills offer financial relief to the federal workers and contractors who will be hurt the most by the Republican shutdown.”
Virginia’s 10th Congressional District is home to over 36,000 federal workers and thousands more government contractors. Congressman Subramanyam introduced these bills after listening to constituent stories of the impacts in previous shutdowns, such as the 35-day shutdown caused by President Trump in 2018 and 2019.
Shutdown Guidance for Financial Institutions Act
The Shutdown Guidance for Financial Institutions Act would protect federal workers and contractors from financial harm during government shutdowns. During previous shutdowns, these individuals have suffered financial hardship through no fault of their own. In addition to the stress of being furloughed or working without pay, federal workers and contractors found themselves in danger of being denied mortgage and loan applications, missing monthly payments, and having adverse information hurt their credit score, affecting both regular financial transactions and security clearance investigations.
Congressman Subramanyam’s bill, originally introduced and passed through the House of Representatives by Congresswoman Jennifer Wexton in 2019, would require federal financial regulators, such as the Federal Reserve, Consumer Financial Protection Bureau, and National Credit Union Association, to proactively issue guidance to financial institutions concerning government shutdowns within 180 days of enactment. This guidance would instruct these institutions to:
- Recognize that consumers and businesses affected by a shutdown may lose access to credit and face temporary hardship in making payments on debts such as mortgages, student loans, car loans, business loans, or credit cards
- Consider prudent efforts to modify terms on existing loans or extend new credit to help consumers and businesses affected by a shutdown, consistent with safe-and-sound lending practices
- Take steps to prevent adverse information being reported and utilized in any manner that harms consumers affected by a shutdown, including by preventing modified credit arrangements intended to help consumers fulfill their financial obligations from being reported to, and coded by, consumer reporting agencies on a consumer’s credit report in a manner that hurts the creditworthiness of the consumer
Regulators would be required to issue a joint press release to alert financial institutions, consumers, and businesses of the existence of this guidance no later than 24 hours after the start of a shutdown.
This legislation is cosponsored by Reps. Don Beyer (D-VA-08), Steven Horsford (D-NV-04), Ted Lieu (D-CA-36), Jennifer McClellan (D-VA-04), Eleanor Holmes Norton (D-DC), Jamie Raskin (D-MD-08), and James Walkinshaw (D-VA-11).
Emergency Relief for Federal Contractors Act
The Emergency Relief for Federal Contractors Act would allow federal contractors to make withdrawals from their retirement accounts without incurring the 10 percent early distribution penalty. Under current law, retirement savers who are age 59 ½ or younger may be subject to an additional 10 percent early withdrawal penalty for withdrawing funds from their retirement accounts. The bill waives the 10 percent fee for up to $30,000 in disbursements, providing emergency relief to contractors, many of whom are not paid during shutdowns and do not receive back pay afterwards.
In order to restore workers’ retirement savings after the shutdown ends, the Emergency Relief for Federal Contractors Act would allow government contractors who take a hardship distribution from their retirement plans or an early distribution from their IRAs during a shutdown to recontribute some or all of the distribution (up to $30,000) within a three-year period.
For government contractors who choose not to recontribute their qualified shutdown distribution, this bill would allow such individuals to include the amount of their qualified shutdown distributions ratably over a three-taxable-year period.
This legislation was also introduced in the U.S. Senate by Senator Catherine Cortez Masto (D-NV). The House bill is cosponsored by Reps. Don Beyer (D-VA-08), Sarah Elfreth (D-MD-03), Steven Horsford (D-NV-04), Jennifer McClellan (D-VA-04), Eleanor Holmes Norton (D-DC), Eric Swalwell (D-CA-14), James Walkinshaw (D-VA-11) and April McClain Delaney (D-MD-6) .
Congressman Subramanyam is also a co-sponsor of:
- The Fair Pay for Federal Contractors Act, requiring backpay for federal contractors
- The Emergency Relief for Federal Workers Act, allowing penalty free withdrawals from federal workers’ retirement accounts during a shutdown
- The No Pay for Congress During Default or Shutdown Act, to withhold member pay during government shutdowns.
- The Securing Assurance for Federal Employees (SAFE) Act, to prohibit RIFs during a shutdown.
- The Help FEDS Act, allowing federal employees to receive unemployment insurance during a government shutdown
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