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Unions settle with the Trump administration over shutdown layoff policy

San Francisco, CaliforniaPublished 27 Sep 2026

The Phillip Burton Federal Building and U.S. Courthouse in San Francisco.
The Phillip Burton Federal Building and U.S. Courthouse in San Francisco.

Sam Wheeler / Wikimedia Commons, CC BY-SA 3.0 · source

The deal pulls back guidance that let agencies fire workers in a funding lapse. Unions call it a retreat. The San Francisco case stays on hold through the end of the year.

On Friday the Trump administration settled a union lawsuit over mass layoffs ordered during the 2025 government shutdown. The deal rescinds guidance that told agencies they could fire employees when funding lapses, and it requires notice before shutdown plans are changed to allow those firings again. A San Francisco judge had already blocked the notices. The case stays paused through the end of 2026.

Shared facts

AFGE and AFSCME sued on Sept. 30, 2025, and other federal-employee unions later joined the case.

Before the 2025 shutdown, the Office of Management and Budget told agencies to draft layoff plans for programs that lacked other funding and did not match the president’s priorities.

Office of Personnel Management guidance allowed agencies to work on layoffs during the shutdown.

Reports put the shutdown layoff notices at about 4,000 to 4,200 employees.

The notices went to employees at Commerce, Education, Health and Human Services, Homeland Security, HUD, Treasury, and the EPA.

The administration directed the layoffs at programs it treated as inconsistent with President Trump’s priorities.

The 2025 shutdown lasted 43 days and was the longest in U.S. history.

A federal judge issued a preliminary injunction blocking the shutdown layoff notices.

U.S. District Judge Susan Illston, in the Northern District of California, issued the injunction.

The law that ended the shutdown barred agencies from carrying out the layoff notices.

The shutdown layoff notices were rescinded, and employees separated under them were reinstated.

On Friday, the unions and the administration announced a settlement in the shutdown-layoff case.

The settlement rescinds guidance that authorized laying off federal employees during a shutdown.

The settlement pauses the lawsuit.

Agencies must remove layoff authorization from their shutdown contingency plans.

OMB and OPM have 30 days to tell agencies that the earlier shutdown-layoff guidance is rescinded.

An agency that later changes its shutdown plan to allow layoffs must give the plaintiff unions 30 days’ notice.

Revised shutdown plans must be posted publicly.

The case stays on hold until the end of 2026.

The unions can reopen the case if the government again uses a shutdown to fire federal workers.

Shared opinions

Everett Kelley said the administration used the shutdown as an excuse to fire public servants and then backed down.

Everett Kelley said working people won.

Everett Kelley said the targeted workers care for veterans, airports, and Social Security, and were used as pawns.

Patrick Moran called the administration billionaire-run and said it puts politics between workers and public service.

Patrick Moran said the settlement limits the use of federal workers as bargaining chips, but the fight is not over.

Randy Erwin said using the shutdown to fire public servants was a new low, shameful, and illegal.

Randy Erwin said the courts sided with the unions.

Doreen Greenwald said the administration tried to use the shutdown to eliminate jobs and hollow out agencies.

Doreen Greenwald said the result protects federal employees and a government that works for the public.

Randi Weingarten said only an administration that wanted to hurt workers and help billionaires would use a shutdown to fire employees.

Randi Weingarten called the firings illegal attacks on the people who keep the country running.

Randi Weingarten said unions will answer another attempt in court and in the streets.

GOV.UK

Shutdown mass-layoff policy rescinded as part of settlement with unions

Jory Heckman

Published 25 Sep 2026 accessed 27 Sep 2026

Facts

The Trump administration sent reduction-in-force notices to thousands of federal employees during the funding lapse.

Within 30 days, the settlement requires agencies to strip plan language that starts layoffs during a lapse or treats layoff work as excepted unless a statute allows it.

Congress passed a continuing resolution that funds the government through Dec. 11, after the midterms.

A later funding bill kept those layoff protections in place through mid-February 2026.

Federal employee layoffs are not typical during a government shutdown.

Early in the shutdown, President Trump posted an AI-generated video portraying Russ Vought as the Grim Reaper targeting federal employees.

Furloughed employees usually cannot use government phones and computers during a shutdown.

Opinion

Government Executive described the layoff threat as a bargaining chip to avoid a shutdown.

Federal News Network

Trump administration settles with unions over shutdown RIF challenge

Drew Friedman

Published 25 Sep 2026 accessed 27 Sep 2026

Facts

Under the settlement, the Trump administration agreed to tell agencies that remaining shutdown-related RIF plans have been abandoned.

Agencies have 30 days to remove references to the shutdown RIF guidance from their websites and contingency plans.

The lawsuit said an OMB directive and agency RIF plans violated the Antideficiency Act and the Administrative Procedure Act.

The lawsuit said the plans laid off employees during the shutdown, used the shutdown as the reason, and required employees to do RIF work during the lapse.

Federal News Network asked OMB and the Justice Department for comment.

The preliminary injunction was expanded in December 2025 to cover more employees.

Opinion

No opinion marked.

Courthouse News Service

Unions, Trump administration reach deal: No mass firings during government shutdowns

Hillel Aron

Published 25 Sep 2026 accessed 27 Sep 2026

Facts

In October 2025, about a week into the shutdown, Russell Vought posted that the RIFs had begun.

Their complaint said the actions were contrary to law and arbitrary and capricious.

The government argued that the RIF notices had been long planned.

Susan Illston is a Bill Clinton appointee.

The plaintiffs argued that Congress had prohibited the RIFs.

A Justice Department spokesperson did not return an email seeking comment on the agreement.

Opinion

Courthouse News said the notices were widely seen as part of a policy to shrink the federal government in line with DOGE.

Brad Rosenberg said the administration was merely carrying out its policy objectives.

China Daily

‘Working People Won’: Unions Score Deal to Shield Federal Workers From Government Shutdown Firings

Published 25 Sep 2026 accessed 27 Sep 2026

Facts

Russell Vought co-authored the policy portion of Project 2025.

Opinion

Common Dreams called the settlement a significant setback for the administration’s effort, led by Russell Vought, to remake the federal workforce.

Common Dreams described Project 2025 as a blueprint to cut public programs and gut agencies.

AFSCME

Unions Win Withdrawal of Shutdown Mass Firing Orders

AFSCME

Published 25 Sep 2026 accessed 27 Sep 2026

Facts

Altshuler Berzon, Democracy Forward, and Democracy Defenders Fund represent the unions.

The case caption begins American Federation of Government Employees et al. v.

Norm Eisen is co-founder and executive chair of Democracy Defenders Fund.

Democracy Forward’s team includes Elena Goldstein, Jennie Kneedler, and Webb Lyons.

Opinion

Patrick Moran said AFSCME brought the case to defend federal workers.

Patrick Moran said the union will stay vigilant and keep organizing for contract protections.

David Holway said federal employees should not have to fear that a shutdown will cost them a paycheck and a career.

Everett Kelley said AFGE will keep standing up for federal workers in court and in Congress.

David Holway said the federal workforce is not a political pawn and deserves due process.

Doreen Greenwald said cutting the federal workforce hurts the public.

Randy Erwin said NFFE will keep standing up for public servants.

Matt Biggs said the Justice Department accepted that it lacks legal authority to fire federal workers during a lapse in appropriated funding.

David Holway said a shutdown already creates financial uncertainty for workers and families.

David Holway said threatening those jobs on top of a shutdown is unacceptable.

David Holway said NAGE will fight what he called illegal attacks on workers.

April Verrett said the settlement is a victory because workers refused to be treated as disposable.

April Verrett said public servants deserve pay, power over decisions that shape their lives, and respect.

Skye Perryman said the settlement stops an effort to use the shutdown to dismantle the government.

Matt Biggs said the layoff plan was an illegal attempt to dismantle the civil service.

Doreen Greenwald said NTEU will keep fighting for federal workers.

April Verrett said federal workers keep the country running and serve communities every day.

Robin Tholin said the union coalition fought back and won.

Matt Biggs said IFPTE will keep fighting in court and in Congress to restore the jobs and the services.

April Verrett said workers get those things when they stand together.

Robin Tholin said the administration used the shutdown as an excuse for mass firings for political advantage.

Robin Tholin said the settlement guards against using mass firings as a tactic in the next budget fight.

Norm Eisen said President Trump used federal workers and public services as leverage in the budget fight.

Norm Eisen said the settlement unraveled what he called an assault on the civil service.

Norm Eisen said the result sets safeguards against repeating those abuses in the next budget fight.

Skye Perryman said civil servants keep people safe, healthy, and democracy functioning.

Skye Perryman said Democracy Forward was honored to work with the unions to stop the firings.