A shutdown furlough happens when there is a lapse in annual appropriations — funding approved by Congress. Shutdown furloughs can happen at the beginning of a fiscal year if no funds have been appropriated, or after expiration of a continuing resolution (CR), if Congress has not passed a new CR or appropriations law.

In a shutdown furlough, the affected agency has to stop any activities funded by annual appropriations that are not excepted by law. Employees paid by other non-lapsed sources of funding may be exempt from a shutdown furlough.

Shutdown furloughs generally are triggered by the Antideficiency Act. This law prohibits agencies from accepting voluntary services and employing people during a funding lapse, "except for emergencies involving the safety of human life or the protection of property."

The Government Employee Fair Treatment Act requires retroactive pay for furloughed employees after the end of a lapse in appropriations. Excepted employees — those whose duties meet the emergency criteria — must keep working without pay during the lapse.