Administration Withdraws Shutdown-Related Layoff Policy Under Settlement

The Trump administration reached a settlement with a coalition of federal employee unions, formally withdrawing its policy of using the 2025 government shutdown as grounds for conducting reductions in force (RIFs).

Under the settlement, the administration confirmed that an Office of Management and Budget (OMB) memo and related Office of Personnel Management (OPM) guidance authorizing shutdown-related layoffs “have been rescinded in full and are no longer operative.” The OMB memo also ordered agencies to keep the minimum number of employees once funding was restored.

Under the settlement, agencies were given 30 days to remove shutdown RIF guidance from their websites and contingency plans. They must provide 30 days advance notice if they plan to revise shutdown-related RIF plans.

Lawsuit Could Be Reopened as Funding Fight Looms

The lawsuit is not over but is instead being held in abeyance until the end of the year. That means unions can seek to reopen the case if another shutdown occurs and the administration attempts to use the shutdown to lay off more employees.

The timing is significant: the continuing resolution funding the government expires on December 11. Congress has limited time to deal with the funding issue once it returns from recess following the midterm elections.  

During the 43-day shutdown last year, approximately 4,200 RIF notices were sent to employees at the departments of Commerce, Education, Health and Human Services, Homeland Security, Housing and Urban Development, and Treasury, as well as the Environmental Protection Agency. 

Federal Judge Susan Illston issued a preliminary injunction blocking agencies from issuing or implementing shutdown-related RIFs. The spending legislation that ended the shutdown subsequently required agencies to rescind the notices and reinstate affected employees.