Trump administration agrees to pull shutdown layoff authority from agency plans

The Trump administration has agreed to remove shutdown layoff authority from federal agency contingency plans, a retreat from the guidance behind roughly 4,200 reduction-in-force notices sent during the 43-day shutdown. The concession is procedural rather than absolute. Agencies can restore the authority if they give the unions 30 days' notice and publicly post revised plans, according to Government Executive's account of the agreement.

The deal was filed Friday in federal court in San Francisco and abandons the guidance that made layoffs a shutdown-exempt activity, according to Reuters and Government Executive. The Office of Personnel Management and the Office of Management and Budget have 30 days to tell agencies the guidance is rescinded. Agencies have the same 30 days to rewrite their own contingency plans. As quoted by Government Executive, the agreement requires them to remove any language that "(1) provides for initiation of RIFs during a lapse in appropriations, or (2) authorizes employees to perform work necessary to administer a RIF process during a lapse in appropriations as an excepted activity, unless performing such work during a lapse in appropriations is expressly authorized by statute."

The lawsuit is paused, not dismissed. It will be held in abeyance until the end of the year, and the unions can reopen it if the administration uses another funding lapse to fire employees. Congress has funded the government only through Dec. 11 under a continuing resolution, Government Executive reported, so the next shutdown deadline falls inside that window.

"We're glad this settlement places limits on their ability to use federal workers as bargaining chips to push their extreme agenda during the next government shutdown, but the fight is far from over," said Patrick Moran, president of the American Federation of State, County and Municipal Employees, in a statement released by the unions' co-counsel. AFSCME and the American Federation of Government Employees brought the suit. Six more unions joined later, among them the National Treasury Employees Union, the Service Employees International Union and the American Federation of Teachers.

Layoffs are not a normal feature of shutdowns. Federal employees ordinarily either keep working or are furloughed until funding returns, Government Executive noted. Just before the October 2025 lapse, OMB told agencies to draw up layoff plans for programs that lacked alternative funding and that "are not consistent with the president's priorities." OPM rewrote its furlough guidance to exempt layoff procedures from the shutdown. The rewrite went as far as letting furloughed employees, normally barred from government phones and computers, use those devices to check for layoff notices.

About a week into the shutdown, OMB Director Russell Vought posted on social media: "The RIFs have begun." Notices went to employees at the departments of Commerce, Education, Health and Human Services, Homeland Security, Housing and Urban Development and Treasury, and at the Environmental Protection Agency, according to Government Executive.

The administration's legal theory was broad. Vought argued that the funding lapse freed the administration from following Congress's spending directions, an argument that did not survive court scrutiny, Bloomberg Law reported. In court, the government maintained the notices had been long planned. "This is merely the administration trying to carry out its policy objectives," Justice Department attorney Brad Rosenberg told the judge at a hearing, according to Courthouse News Service.

U.S. District Judge Susan Illston issued a preliminary injunction blocking agencies from issuing or enforcing the notices. Congress then wrote the prohibition into law. The spending package that ended the shutdown barred agencies from carrying out layoffs, and a later funding bill kept those protections in place through mid-February 2026. Even so, the unions accused the administration of firing workers after the shutdown ended despite that language, Bloomberg Law reported. The notices issued during the shutdown have since been rescinded and the employees separated under them reinstated, according to Government Executive.

The agreement reaches only layoffs carried out during a funding lapse. The broader downsizing has run on other tracks: mass layoffs and buyouts shrank the civilian federal workforce by 12% between September 2024 and January 2026, according to Reuters. AFGE, AFSCME and other plaintiffs are still before the same judge in a separate case challenging mass layoffs at nearly two dozen agencies. On Sept. 2, Illston refused to let them fold the Agriculture Department's reorganization into that case. The USDA plan moves operations out of Washington to five regional hubs and relocates 2,500 employees. Illston told the plaintiffs they could challenge it in a new lawsuit.