What legal exceptions allow some federal employees or services to continue during a funding lapse?

1. How the law creates the exception framework — “life, property and constitutional functions”

Federal practice rests on a legal framework and long‑standing guidance that treats activities tied to the safety of human life or the protection of property as categorically excepted during a lapse in appropriations; the doctrine also covers activities necessary to carry out constitutional functions such as certain law enforcement and immigration duties ^{[1] [2]}. Legal guidance and agency contingency plans use that “life and property” standard to decide who is “excepted” and must work despite a funding lapse ^{[1] [5]}.

2. Who keeps working and who does not — excepted, exempt and furloughed employees

Agencies generally classify employees into three groups: those paid from non‑appropriated or continuing funding who keep working and being paid; “excepted” employees who must continue essential duties but typically work without pay until appropriations resume; and furloughed employees who stop working until funding is restored ^{[3] [6] [7]}. The Government Employee Fair Treatment Act of 2019 guarantees back pay to both furloughed and excepted employees once the shutdown ends, but agencies still may require excepted staff to perform duties without immediate compensation ^{[6] [8] [3]}.

3. Money matters — funding sources that allow continuity

Some federal activities continue because they are financed by authorities beyond the annual appropriations process: prior‑year unexpired appropriations, no‑year or multiyear funds, user fees, working capital funds, and other exempt sources. Contracts and programs already fully funded before a lapse generally can proceed; new obligations normally cannot be incurred unless they directly support excepted work or are explicitly authorized by other law ^{[2] [4]}. Agencies’ legal guidance instructs that all obligations chargeable to lapsed appropriations must cease unless a statutory exception applies ^[5].

4. Contracts, grants and contractors — partial continuity, big limits

Contract work already funded on a no‑year or multiyear basis may continue; incrementally funded vehicles, new task orders, and modifications are typically suspended unless they support an excepted function or are funded by exempt sources. Agencies can continue administering and paying some pre‑existing obligations, but they generally cannot award new contracts or make new funding commitments during a lapse ^{[4] [5]}. Notably, federal contractors themselves are not covered by the back‑pay guarantee that applies to federal employees ^[8].

5. Executive discretion and accountability — room for disagreement

While statute and OMB guidance set the legal contours, agencies and administrations retain discretion in applying the exceptions, which has led to disputes and litigation in past shutdowns over whether particular activities were properly excepted. Analysts warn that the executive branch’s determinations can be contested and that an Administration does not gain extra authority simply because of a shutdown ^[8]. Reporting of recent shutdowns shows both routine exceptioning (air traffic control, prison guards, some medical staff) and contentious choices about which personnel and programs to continue ^{[1] [9]}.

6. Practical consequences for services and workers

Even when work continues under an exception, funding constraints matter: employees who work as excepted staff typically receive IOUs until Congress provides appropriations and must wait for retroactive pay; agencies may limit travel, training, leave, and overtime for excepted staff and must reassess staffing tied to non‑appropriated revenue streams ^{[8] [10] [5]}. Job notices, furlough decisions and stop‑work orders have practical implications for agency operations and contractor compliance during a lapse ^{[11] [12]}.

Limitations: reporting and legal summaries in these sources describe the legal doctrines and agency practices but do not list every statute, regulation, or agency contingency memo; for specific agency decisions or individual employment questions, the agencies’ own shutdown contingency plans and legal counsel are the primary authorities ^{[5] [6]}.