As the U.S. federal government enters its first full week of shutdown, the spotlight has turned squarely to Capitol Hill, where legislative efforts to break the stalemate remain stalled. The federal government officially shutdown at 12:01 a.m. EDT on October 1, after Congress failed to pass appropriations legislation for the 2026 fiscal year. In the lead-up to the shutdown, the House passed a Republican-backed continuing resolution (CR) to extend funding through November 21, but Senate Democrats blocked it due to objections over health care subsidies and proposed Medicaid cuts. Though Republicans control both chambers, they lack the 60 votes needed in the Senate to overcome a filibuster or pass a stopgap funding measure without Democratic support.
Roughly 900,000 federal employees have been furloughed, and another 700,000 continue to work without pay. Essential services such as Medicare, Medicaid, Social Security, and transportation security continue to operate, but many agencies are operating at reduced capacity.
In Congress, both parties have floated competing funding proposals. House Republicans continue to press for a “clean” continuing resolution (CR) — a pure funding extension without policy changes — arguing that the government should be reopened before negotiations over ACA subsidies or other contested issues proceed. Senate Democrats, by contrast, insist that any funding bill must include extensions of expiring ACA tax credits or protections for vulnerable programs. Over the past several days, multiple funding proposals have failed in the Senate, as Democrats withheld their votes in protest of what they see as Republicans’ refusal to negotiate in good faith.
Legislative action has been slowed not only by these partisan disagreements but also because the House of Representatives is not currently in session, leaving the Senate to navigate proposals without the possibility of immediate House approval. House Speaker Mike Johnson (R-LA) has announced that the House will not return to Washington, D.C. until the Senate advances a bill to reopen the government.
With progress on funding the federal government stalled in the Senate, the chamber is working towards approving numerous of President Trump’s nominees. On October 3, the Senate advanced more than 100 nominees including those for key positions within the Occupational Safety and Health Administration (OSHA), Equal Employment Opportunity Commission (EEOC), and the Department of Labor’s Wage and Hour Division. Additionally, the Senate Health, Education, Labor and Pensions (HELP) Committee is scheduled to vote on the nominations of Scott Mayer and James Murphy for the NLRB on October 9. With the House out of session and no compromise yet in sight, the shutdown shows no clear path toward resolution.
DOL Clarifies Overtime Rules for Joint Employers
The U.S. Department of Labor has issued a new opinion letter clarifying how overtime must be calculated when employees work for two related businesses that qualify as joint employers under the Fair Labor Standards Act (FLSA). In Opinion Letter FLSA-2025-05, released on September 30, 2025, the DOL determined that when businesses are sufficiently connected—such as sharing management, facilities, or scheduling—an employee’s hours across both must be combined for overtime purposes.
In the case reviewed, an employee worked at both a hotel restaurant and a members-only club operated under separate business names but located in the same building. Although the restaurant and club were technically separate entities, the DOL found that they operated as joint employers due to overlapping ownership, supervision, and operations.
The agency emphasized that formal corporate separation does not automatically shield employers from joint liability. Instead, the DOL will look at the “economic realities” of the relationship—whether the businesses share control over employees, coordinate schedules, or jointly determine pay rates. If so, both entities can be held responsible for ensuring compliance with wage and hour laws. This latest guidance reinforces the DOL’s broad interpretation of joint employment, signaling continued scrutiny of arrangements where workers divide their time between closely affiliated businesses.
Carney, Trump Meet in Washington to Discuss USMCA
Canadian Prime Minister Mark Carney is meeting with U.S. President Donald Trump in Washington this week to discuss North American trade relations and the upcoming six-year review of the United States-Mexico-Canada Agreement (USMCA). The visit comes as all three countries prepare for the first formal assessment of the pact, set for July 2026, which will determine whether the trade deal continues in its current form or is renegotiated.
At the center of the discussions will be the joint review of the USMCA. Canadian officials and U.S. counterparts began consultations in September to prepare for that review, with hopes of addressing outstanding trade irritants and revising certain provisions. Talks are also expected to focus on forging a “new economic and security relationship” and addressing outstanding sectoral tariffs—particularly on steel, aluminum, and autos.
Under the USMCA review process, each government must consult domestic stakeholders and submit positions on the agreement’s operation and future direction. In recent months, the U.S. Trade Representative and Global Affairs Canada have begun gathering input from industry groups, including manufacturers, to shape their review priorities. USTR is currently accepting comments on how the deal has been implemented to date, areas that may warrant revision, and priorities the United States should bring to the table in negotiations with Canada and Mexico. Comments must be submitted by November 3, 2025, with a public hearing scheduled for November 17 in Washington, D.C.
New Vessel Fees Take Effect October 14
Starting October 14, 2025, the U.S. will implement new Section 301 vessel fees targeting Chinese-owned, -operated, and -built vessels, as well as certain foreign-built vehicle carriers. These fees are part of efforts to support domestic shipbuilding and address concerns over China’s maritime practices.
The fee structure was first unveiled by the Office of the U.S. Trade Representative (USTR) on April 17, 2025. It follows a year-long investigation under Section 301 of the Trade Act of 1974, which found that China’s shipbuilding policies and practices are “unreasonable” and impose a burden on U.S. commerce. USTR recommended these countermeasures, which include tonnage-based fees on vessels owned or operated by Chinese entities, levies on ships constructed in China, and charges on certain foreign-built car carriers, to mitigate harm to the U.S. maritime and manufacturing sectors.
Under the new rules, Chinese-owned or operated vessels will pay $50 per net ton, rising annually to $140 per net ton by 2028, with fees charged up to five times per vessel each year. Chinese-built vessels will pay the higher of $18 per net ton or $120 per container discharged, also increasing annually. Certain exemptions apply, including vessels carrying U.S. government cargo. Foreign-built vehicle carriers face a $14 per net ton fee, which may be suspended if a U.S.-built vessel of equal or greater capacity is delivered.
Updated guidance released by U.S. Customs and Border Protection (CBP) emphasizes that the “burden for determining if a vessel owes the fee is on the operator, NOT CBP.”
The new fee structure reflects a broader strategy by the administration to confront China’s industrial overcapacity and protect U.S. strategic sectors from foreign subsidization and market distortion.