S. 3165 — True Shutdown Fairness Act

This section appropriates, for FY2026, such sums as necessary to provide standard pay, allowances, differentials, benefits, and other regular payments to covered individuals—including agency employees (without regard to furlough or excepted status), contract employees (i.e., service employees under 41 U.S.C. §6701, laborers or mechanics subject to the Davis-Bacon Act [40 U.S.C. §3142, which requires prevailing wages on federal construction contracts exceeding $2,000], and certain other contractor employees), and military personnel—during a covered lapse in appropriations from October 1, 2025, until new appropriations are enacted for the agency. It further requires agencies to adjust prices of affected contracts to reimburse contractors for reasonable costs incurred during the lapse, including compensation at standard rates to furloughed, idled, or reduced-hour employees and restoration of paid leave used due to the lapse (with evidence required). Funds are available until the lapse ends, charged to future appropriations, and effective retroactively as of September 30, 2025.

This section prohibits agencies from using appropriated funds during a covered lapse in appropriations to (1) propose or implement a reduction in force, or any similar effort, to permanently reduce the number of agency employees; or (2) place any agency employee on administrative leave for more than 10 workdays in any calendar year. This section states that the prohibitions do not affect voluntary separation incentive payments under 5 U.S.C. 3523 (i.e., lump-sum payments of up to $25,000 to eligible employees who voluntarily separate by retirement or resignation).