They keep working. They don't actually keep track of how many seconds are left, they just store the finish time (or start time) in the DB and calculate.
"Participation in PVP-related activities is so low on an hourly, daily, weekly, and monthly basis that we could in fact just completely take it out of STO and it would not impact the overall number of people [who] log in to the game and play in any significant way." -Gozer, Cryptic PvP Dev
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