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onedigital.com 1 Overview The White House Oce of Management and Budget (OMB) issued a January 27, 2025 memo (M-25-13 Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs) direcng all federal agencies to pause spending on grants, loans, and other federal nancial assistance. The purpose was to review agency programs to see if they t with the Administraon’s priories. Following legal challenges and widespread confusion, the memo was rescinded on January 29, 2025, but the Administraon maintained that the rescission of the memo did not rescind the federal funding freeze. The following Q & A provides guidance on top employer quesons related to the connuing uncertainty around federal funding for programs and organizaons that rely on it. The informaon provided is current at the me of publicaon, but because the government’s posion and legal challenges are constantly evolving, the informaon provided may quickly become outdated. Connue to check the What to Watch Hub for updates. C O N T E N T SStatus of OMB Memo M-25-13 ............................................................................................................................................... 2 Furloughs, Layos, and RIFs .................................................................................................................................................... 3 Wages and Hour Consideraons ............................................................................................................................................. 4 Unemployment Insurance....................................................................................................................................................... 4 Vacaon Payout ....................................................................................................................................................................... 4 Federal Funding Impacts: Top Employer Questions Answered

F E D E R A L F U N D I N G I M P A C T S : T O P E M P L O Y E R Q U E S T I O N S A N S W E R E D onedigital.com 2 Status of OMB Memo M-25-13 1. What did the memo do? The memo directly requires all federal agencies to take several acons to assess their federal nancial assistance to programs and organizaons to determine whether the assistance aligned with the priories of the Administraon. Primarily, agencies were to temporarily pause all acvies related to obligaon or disbursement of all federal nancial assistance. The pause applied to all form of assistance listed in 2 C.F.R. § 200.1 of the OMB’s Uniform Administrave Requirements, Cost Principles, and Audit Requirements for Federal Awards that recipients receive or administer: (1) grants; (2) cooperave agreements; (3) non-cash contribuons or donaons of property (including donated surplus property); (4) direct appropriaons; (5) food commodies; (6) other nancial assistance; (7) loans; (8) loan guarantees; (9) interest subsidies; and (10) insurance. The pause was to be in eect unl the OMB reviewed and provided guidance to agencies based on informaon submied regarding their programs and acvies. 2. What is the current status of the memo? The OMB rescinded the memo on January 29, 2025. On January 31, 2025, the U.S. District Court for the District of Rhode Island issued a temporary restraining order (TRO) prohibing the pause on federal nancial assistance. On February 3, 2025, the U.S. District Court for the District of Columbia also granted a TRO. Despite the OMB’s recission of the memo, the courts found several recipients were unable to access their federal funding. On February 10, 2025, the U.S. District Court for the District of Rhode Island found the Administraon in violaon of the TRO and ordered the immediate restoraon of frozen funding and the ending of any federal funding pause. A moon for enforcement of the TRO was granted to restore funds already allocated in the Inaon Reducon Act and Infrastructure Improvement and Jobs Act as well as funding to instutes and agencies. 3. Can federal assistance recipients currently access their funding? Several organizaons and enes connue to report an inability to access their federal funding through the government portal. In addion, several federal agencies responded to the TRO by issuing a Noce of Court Order stang that agencies may sll exercise their own authority to pause awards or obligaons provided they do so on their own discreon and not pursuant to the rescinded memo. 4. What can a federal funding recipient do to access their funding? Review contracts funded by federal grants or loans with legal counsel to determine if they address the unavailability of funds or terminaon for convenience. Awards or contracts currently in negoaons should include such clauses. Connue to monitor for announcements from the agency overseeing the funding for updates. 5. Could there be addional pauses or cuts to federal funding? It is impossible to predict the next decisions from the Administraon and the OMB. However, based on already disclosed priories to reduce the federal budget, organizaons and enes should plan for connued disrupon. Impacted enes should reassess their sources of funding and have conngent plans in the event of loss of federal funding. This includes evaluang program changes, placing the workforce on leaves, restructuring, layos, etc. The conngency planning is similar to what employers had to do to adjust business operaons during the COVID-19 pandemic.

F E D E R A L F U N D I N G I M P A C T S : T O P E M P L O Y E R Q U E S T I O N S A N S W E R E D onedigital.com 3 Furloughs, Layos, and RIFs 1. What is the dierence between furloughs, layos, and RIFs?A furlough is a temporary unpaid leave of absence while employees remain in employed status. A layo is when employees are terminated from their posion. Typically, employers may reconsider these employees for rehire when the company has work available again. A reducon in force (RIF) is terminaon of two or more employees, usually involving eliminaon of their posions. 2. How long can I furlough my employees?States have dierent rules on how long an employer may furlough employees. For example, a Ninth Circuit Court of Appeal case in 2023 said that California employees must receive their nal pay, including vacaon payout, at the me of a temporary layo or furlough. Employers should review the rules for their state(s) of operaon. 3. What informaon do I need to provide to employees when doing furloughs, layos, and RIFs?Generally, employees should be noed as soon as possible of the plan to furlough or terminate. Employers must provide whatever unemployment benets pamphlets and noces are required in their state. There may also be federal and state WARN Act consideraons (typically requiring 60-days’ advance noce, except under limited and/or emergency situaons). If conducng a furlough, idenfy the end period of the furlough and that the work situaon will be reviewed again at that me. If conducng a layo, communicate whether employees will be eligible for rehire once work becomes available. Keep in mind that employers must comply with state nal pay requirements when terminang employees. 4. When do the federal WARN Act and state mini-WARN Act rules apply to employers?The federal WARN Act requires employers with 100 or more employees to give at least 60 days’ advance noce when conducng a furlough, reducon in force, layo, or relocaon of 50 or more employees. States with mini-WARN Acts have varying requirements, and varying excepons that may be dierent from what is stated in the federal version. Employers must be sure to comply with both federal and state requirements. 5. What are some things employers should consider when returning employees to work following furlough orlayo?Following a furlough, provide employees advance noce of the end date of the furlough and the date they will be expected to return to work. They would typically be reinstated to their posions, wages, and benets. If any of those are ancipated to change, review with legal counsel rst. If employers need to reinstate employees in phases to match business demand following a furlough or layo, employers should have a strategy in place on how this will be accomplished, using objecve criteria for the order of reinstatement (e.g., seniority). 6. Are there alternaves to furloughs or layos?Workshare or short-me compensaon programs allow businesses experiencing a temporary decline in business to reduce and equally divide the hours available for employees to work rather than implement furloughs or layos. Employees whose hours have been reduced may be eligible to receive paral unemployment insurance benets based on the reducon in weekly hours. These programs require an applicaon and approval to parcipate. Be sure to check the individual requirements in each state.

F E D E R A L F U N D I N G I M P A C T S : T O P E M P L O Y E R Q U E S T I O N S A N S W E R E D onedigital.com 4 Wages and Hour Consideraons 1. Can employers reduce their employees’ pay to account for reduced business demand?Employers may reduce salaries and hourly rates for at-will employees, provided that nonexempt employees are paid at least the applicable minimum hourly wage, and exempt employees meet the salary basis requirement applicable in their state of employment. Keep in mind that exempt employees’ pay cannot be ed to the quanty of their work, or they may risk losing their exempt status. Exempt employees get paid their salary regardless of whether they work over or under 40 hours in a workweek. Any reducon in pay for exempt employees should remain in place for a sucient period of me to maintain exempt status. Selecve reducons should be done in a nondiscriminatory manner and based on objecve criteria. 2. Can employers determine when an employee can or cannot use paid sick leave or vacaon me?It depends on what type of me o the employee is seeking to use. Generally, states permit employers to determine when an employee may take vacaon or paid me o (PTO). Employers must be consistent in following their own vacaon/PTO policies. However, paid sick leave that is mandated by a state or local authority must be provided when the employee qualies for it and has accrued, unused me available; otherwise, the employer may be subject to penales for refusing to allow the employee to use the paid sick leave benet. Unemployment Insurance 1. Are employees eligible for unemployment insurance if there is a reducon in their hours?Employees experiencing a reducon in hours are allowed to collect a percentage of their unemployment compensaon benets to replace a poron of their lost wages. The reducon in hours typically must be due to a lack of work. Be sure to check the individual requirements in each state. Vacaon Payout 1. Are employees eligible to receive compensaon for their accrued but unused vacaon me?Employers are not required to provide employees with vacation. However, if they do offer vacation, they are expected to follow state laws regarding the payout of accrued but unused vacation upon separation of employment. Be sure to check the individual requirements in each state.Stay Informed . Stay Co mpliant . Stay Ah ead. Workplace regulations are evolving, and the decisions made in Washington could directly impact your business. OneDigital’s team of HR, insurance and workforce compliance consultants are tracking key legislative and regulatory developments so you don’t have to. Get the latest insights on pending changes in healthcare, benefits, HR compliance, and workforce policies—so you can plan with confidence. Visit the OneDigital Hub: 2025 Federal Updates for Employers for more, or connect directly with our team of HR and workforce consultants.