Unemployment Insurance and the Government Shutdown: What Federal Workers and Contractors Need to Know

This blog updates one originally authored by Michele Evermore in January 2019.

This past year has been extremely difficult for federal civil servants. Their jobs and their livelihoods have been devalued and treated as political fodder by the Trump administration, which has created an increasingly hostile work environment for them. Many workers have been challenged with constant shifts in their employment status, confusing termination offers (like the “fork in the road” buy-out, also known as the Deferred Resignation Program) or unclear statuses of being rehired, and arduous legal fights for their rightful reemployment. Now, further compounding the stress and confusion, federal workers and contractors are caught in the middle of the government shutdown. On top of this, the president’s administration is using the fate of federal workers and the ability of the federal government to function as a cruel bargaining chip by threatening to terminate federal workers over the shutdown.

This shutdown hurts both workers in the direct federal workforce and people working for federal contractors. The federal workforce is in every state and is more diverse than the general workforce. Already, recent reporting from the New York Times reveals Black women are the hardest hit by the attacks on federal workers. In addition, the federal government contracts out a number of services, including lower and under-paid work such as janitorial, clerical, food service, and maintenance. Federal workers are guaranteed backpay during shutdowns, but those employed by  contractors are not.

The government shutdown is hurting workers, families, and communities across the country, many of whom do not earn enough money to withstand this shutdown financially. Unemployment Insurance (UI) is an earned benefit that may provide some temporary financial help to federal workers and their families. As workers endure this chaotic and stressful environment, NELP and many other organizations aim to help. There are a few key pieces of information federal workers and contractors should know and steps they could take.

Furloughed vs. Essential Federal Civil Servants

Federal civil servants will typically fall into two main categories during a shutdown. Furloughed employees will neither work nor receive pay. Essential employees are required to work, but do not receive pay.

• Unfortunately, federal civil servants deemed essential are required to work without pay and are currently not eligible for UI. However, a new federal bill aims to change this. The Help FEDS (Federal Employees During a Shutdown) Act, introduced by U.S. Senator Angela Alsobrooks (D-MD), advocates for federal employees who are required to work during a government shutdown to be eligible for UI benefits. Essential employees are already eligible for backpay, but UI could help tide them over, particularly if a shutdown is lengthy.
• Federal civil servants who are furloughed may be eligible for UI. The UI program for federal civil servants is called Unemployment Compensation for Federal Employees (UCFE). The Office of Personnel Management has previously issued guidancefor furloughed workers, and this information is generally applicable to federal contractor employees as well.

How Furloughed Workers Can Apply for UCFE

• UCFE is administered by the states. Workers must apply for UCFE in the state where their duty station is. Workers can find the corresponding state UI agency and application here.
• States will verify a worker’s federal employment and earnings with the worker’s employing agency. Normally, states will verify this information using two forms that workers or the state receive from the worker’s employer: Standard Form-8 (SF-8) or the Standard Form-50 (SF-50). However, many workers may not have received these forms during the shutdown. Likewise, the U.S. Department of Labor (DOL) cautioned that there may be delays in federal agencies’ verification of workers’ employment.
• Workers can still apply without agency forms or verification. Workers can support their applications with an ES-395 affidavit, “Claimant’s Affidavit of Federal Civilian Service, Wages and Reason for Separation”—available through their state agency—or they can use the form here. This is a form that a worker completes to indicate that they worked for the federal government and to provide proof of their earnings (such as through paystubs or W-2 forms). If, after a worker receives benefits, the federal agency provides information that conflicts with the worker’s ES-395 the worker may have to repay the benefits.
• State eligibility criteria, benefit amounts, and processing speeds vary. Most states have implemented a mandatory one-week waiting period to receive benefits. While each benefit formula varies, workers can expect to receive a benefit of about one-third to one-half of their salary, up to a maximum benefit. A full table of the minimum and maximum weekly benefits is available here, and includes the information as of January 2025.
• If a worker has difficulty applying for or receiving benefits, they should contact the corresponding state UI agency, their union, or UI advocates in the state where they are claiming benefits.

Be Advised: Backpay and Repayment of Benefits

Furloughed employees will likely have to repay the UCFE benefits if and when their jobs resume after the shutdown. Under Public Law 116-1, “‘Each employee of the United States Government or of a District of Columbia public employer furloughed as a result of a covered lapse in appropriations shall be paid for the period of the lapse in appropriations” (emphasis added). Thus, in TEN 02-25, the DOL reiterated guidance that furloughed federal workers who receive UCFE during a government shut down may need to repay benefits received after receipt of backpay.

While state laws vary, if a furloughed worker receives back pay after the shutdown ends, the worker will most likely be found to have a UI “overpayment” which the state will then seek to recover. The state UI agency will issue a notice requesting repayment and seek other means to recover the benefits if necessary. Thus, workers should repay the state workforce agency as soon as they are awarded back pay, as the agency could charge penalties for not repaying overpayments in a timely manner.

Layoffs and UCFE

In retaliation against the current government shutdown, President Trump has threatened to start mass firing more federal civil servants. Laid off federal civil servants may be entitled to UCFE. Workers should be cautioned that if they receive Voluntary Separation Incentive Payments (VSIP) or take part in a Deferred Resignation Program (DRP) or similar programs, they may not qualify if their separation is determined to be a voluntary resignation without good cause. A worker can apply for UI in the state where they were stationed, and the UI agency will evaluate the worker’s entitlement to benefits based on the specific facts of the worker’s separation.

Conclusion

According to a Trump administration official, this year will end with 300,000 fewer federal workers. The reduction would be the largest single-year decline in civilian federal employment since World War II, as the New York Times reports. This figure includes the 100,000 federal workers who participated (arguably under duress) in the DRP. Their last day on the payroll was Tuesday, September 30. Many of these workers are soon to enter an abysmal job market, although the numbers are uncertain as the Bureau of Labor Statistics did not release the September jobs report amidst the shutdown (see NELP’s statement here). These are tough times for workers. Unions and pro-worker organizations like NELP have banded together to serve as a resource for workers and continue to fight. Already, federal workers’ unions have launched yet another lawsuit arguing the administration is again violating federal law. As the attacks on our federal civil servants and the very function of government reach new worrisome heights, one must wonder when the alarm bell will ring—although perhaps there may be no one left to ring it.