The Trump administration threatened widespread layoffs as a bargaining chip to avoid a government shutdown last fall, and sent reduction in force notices to thousands of federal employees during the lapse in funding.  Andrew Harnik/Getty Images

The Trump administration is withdrawing its authorization of widespread layoffs across the federal workforce during a government shutdown. 

Federal employee unions reached a settlement with the administration on Friday, putting a pause on a lawsuit that challenged widespread layoffs carried out during a 43-day government shutdown last year. 

The lawsuit will be held in abeyance until the end of the year, giving unions the ability to reopen the case if another shutdown occurs, and if the administration uses the funding lapse to terminate more employees. 

The Trump administration threatened widespread layoffs as a bargaining chip to avoid a government shutdown last fall, and sent reduction in force notices to thousands of federal employees during the lapse in funding. 

RIF notices that agencies issued during last year’s 43-day government shutdown have been rescinded, and employees separated by RIFs issued during that period have been reinstated to their positions.

Congress passed a continuing resolution keeping the federal government funded through Dec. 11, postponing the threat of a government shutdown until after the midterm elections. 

As part of the settlement, the Office of Personnel Management and the Office of Management and Budget will have 30 days to notify agencies that earlier guidance making reductions in force a shutdown-exempt activity has been rescinded. 

Agencies will also be instructed to remove RIF authorization from their own shutdown contingency plans. 

“Within 30 days, Federal Agency Defendants will remove any language from their operative contingency plans for a lapse in appropriations 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 settlement agreement states. 

Under the settlement, agencies must give a 30-day notice to plaintiff unions if they plan to modify their plans to exempt initiating or administering RIFs during a future shutdown. Agencies will also have to publicly post those updated shutdown plans.  

About 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. 

A federal judge in San Francisco issued a preliminary injunction blocking agencies from issuing or enforcing those RIFs. A spending package Congress passed to end the shutdown further prohibited agencies from carrying out RIFs. A subsequent funding bill kept those layoff protections in place through mid-February 2026. 

Federal employee layoffs are not typical during a government shutdown. During most shutdowns, employees are either working — with or without being paid immediately — or are furloughed, meaning they are not working during the funding lapse.

OPM updated its guidance last year, exempting agency RIF procedures from the shutdown. Furloughed employees usually aren’t permitted to use their government-provided devices – including phones and computers – during a shutdown, but OPM said in its now-rescinded guidance that furloughed feds could use those devices to check for RIF notices or “additional RIF information.”

Just before the shutdown, OMB told agencies to draw up plans for RIFs in programs that wouldn’t have alternative funding sources during a lapse in appropriations, and that “are not consistent with the president’s priorities.”

In the early days of the shutdown, President Donald Trump posted an AI-generated video on Truth Social portraying OMB Director Russ Vought as the Grim Reaper targeting federal employees.

Everett Kelley, the national president of the American Federation of Government Employees said in a statement the Trump administration “tried to turn a shutdown into an excuse to fire the public servants who kept this country running without a paycheck on payday. 

“We fought back, we held the line, and they backed down,” Kelley said.