HHS Suspends Severance Payments During Shutdown

A new internal HHS alert titled “Severance Payment Suspension During Appropriations Lapse” confirms that the agency has suspended all severance payments to former employees while the government remains shut down. The notice, circulating across HHS components this week, states the freeze is due to the current lapse in appropriations.

For federal employees who recently separated under RIFs, settlements, or terminations, this pause is deeply unsettling—but it may not be illegal. Let’s unpack what’s really happening.

Why the Suspension Happened

Under the Antideficiency Act, agencies cannot legally disburse funds when Congress has not authorized spending. That means even payments already approved—like severance—must pause until new appropriations are enacted. In most cases, this is a delay, not a cancellation. Once funding resumes, the law generally requires agencies to issue retroactive payments to cover the lapse period.

What Should Not Happen

While a temporary freeze is legally defensible, selective enforcement is not. Reports suggest DFAS and other payroll offices have instructed agencies to apply the pause uniformly. If some employees continue receiving severance while others don’t, that discrepancy raises potential fairness and compliance concerns. Any targeted suspension could expose the agency to claims of unequal treatment or retaliation.

Possible Exceptions

There are limited exceptions. Severance payments drawn from no-year or working-capital funds—which do not lapse with annual appropriations—may continue. Similarly, payments ordered by the Merit Systems Protection Board, EEOC, or a federal court may proceed through the Judgment Fund, which operates outside the shutdown’s constraints. Employees unsure of their funding source should ask HR or payroll directly.

What You Should Do Now

• Document everything. Save any agency notice about severance suspensions and your most recent pay stub.

• Ask one precise question: What account funds my severance—an annual appropriation or a no-year account?

• If you have a settlement or MSPB/EEO order, notify your attorney and payroll office. Such orders may alter payment timing or source.

• Plan for the gap. Budget for the interruption and update HR with your current contact details to ensure you receive back pay once appropriations resume.

Federal employees navigating this uncertainty deserve clarity, not chaos. This situation underscores why understanding your pay source—and asserting your rights under law—matters long before the next shutdown begins.

Legal Disclaimer: The information provided in this article is for informational purposes only and should not be construed as legal advice. While I am a federal employment attorney, this post does not create an attorney-client relationship. Every situation is unique, and legal outcomes depend on specific facts and circumstances.