# Federal Government Rescinds Shutdown Layoff Policy

The federal government has rescinded its policy authorizing mass layoffs of federal employees during government shutdowns following a settlement with federal employee unions. Reduction in force (RIF) notices issued during the 43-day 2025 shutdown have been withdrawn, and affected employees reinstated. Agencies are now required to remove RIF provisions from their shutdown contingency plans and notify unions of any future changes. This settlement pauses related litigation until the end of 2026 and maintains protections against layoffs during funding lapses, directly impacting federal workforce management and operational continuity during government funding gaps.

- Agencies including OPM, OMB, and departments such as Commerce, Education, and HHS must revise shutdown contingency plans to exclude mass layoff provisions, affecting workforce planning and contract staffing strategies.
- Procurement professionals should anticipate stable federal workforce levels during shutdowns, which may influence contract performance expectations and resource allocations.
- Contractors supporting federal agencies should evaluate how this policy change affects labor availability and contract continuity during potential future shutdowns.
- Organizations involved in federal workforce management and labor relations may find opportunities to advise agencies on compliance with the new settlement terms and contingency planning adjustments.

**Jurisdictions:** federal
**Industries:** Professional Services
**Topics:** Policy
**Published:** September 25, 2026

### Government Entities
- Office of Personnel Management (OPM)
- Office of Management and Budget (OMB)
- Department of Commerce
- Department of Education
- Department of Health and Human Services (HHS)

### Key Quotes
> We fought back, we held the line, and they backed down.
> — Everett Kelley, National President, American Federation of Government Employees

### Sources
- [Shutdown mass-layoff policy rescinded as part of settlement with unions - Government Executive](https://www.govexec.com/management/2026/09/shutdown-mass-firing-policy-rescinded-part-settlement-unions/416249) - GovExec.com