H.R. 7322 — True Shutdown Fairness Act

This section establishes, for fiscal year 2026, emergency appropriations from the Treasury of such sums as necessary to pay standard employee compensation (i.e., basic pay, allowances, differentials, benefits, and other regular payments) to covered employees of all federal agencies—including furloughed employees, excepted employees, members of the Armed Forces on active duty, and reserve component members performing duty—during any lapse in regular appropriations for the agency, defined as any period without interim or full-year FY2026 appropriations. It further directs agencies to make such payments on regular pay dates (or within seven days of enactment for any ongoing lapse) and appropriates funds to contractors solely for standard compensation to their contract employees (i.e., service employees, laborers, mechanics, and others under relevant service or supply contracts) affected by the lapse. Additionally, the section requires agencies to adjust affected contract prices to reimburse contractors for reasonable costs incurred due to any lapse—including payments to furloughed or reduced-hours contract employees and restoration of paid leave—regardless of contract terms prohibiting such costs.

This section prohibits agencies, during any lapse in regular appropriations for FY2026 (i.e., any period when interim or full-year FY2026 appropriations are not in effect), from using funds to (1) propose or implement a reduction in force or similar effort to permanently reduce the number of agency employees; or (2) place any employee on administrative leave for more than 10 work days in any calendar year. It defines applicable agencies to include authorities of the executive, legislative, and judicial branches and certain District of Columbia public employers. It clarifies that nothing in the section affects voluntary separation incentive payments under 5 U.S.C. §3523 (i.e., lump-sum payments of up to $25,000 to employees who voluntarily separate by retirement or resignation).