Last Updated: September 27, 2026 Reading Time: 10 min

The headlines from September 25 said shutdown mass layoffs are "off the table." That is true, with two qualifiers the headlines left out. The settlement in AFGE v. OMB, signed September 23 and filed with the court September 25, requires every one of 41 agencies to remove RIF authority from its shutdown plan, but the obligation covers only plans in force through December 31, 2026. Funding runs out December 11. The protection outlasts the funding cliff by 20 days. The two documents, read paragraph by paragraph, and what to do before December 11, follow.

What the Settlement Says, Paragraph by Paragraph

Six outlets covered the settlement on September 25. All six worked from the same joint press release. None published the terms against the document. FedTools read both primaries: the executed Settlement Agreement, dated September 23, and Document 198, the joint motion the parties filed September 25 asking Judge Susan Illston to vacate all deadlines and hold the case in abeyance.

What the headline said What the document says What it means for you
"Shutdown mass-layoff policy rescinded" Para 1(a): the OMB lapse memorandum and OPM's guidance "have been rescinded in full and are no longer operative." OPM's own page dates the rescission of its Special Instructions to November 13, 2025. The settlement records a rescission that already happened. It does not create a new legal ban.
"Employees fired during the 2025 shutdown reinstated" Para 1(b): all RIF notices from October 1 to November 12, 2025 "have previously been rescinded," and separated employees "were subsequently reinstated to their positions." Past tense, already done, under the December 17, 2025 injunction and Section 116 of the November 2025 funding law.
"OPM must notify agencies" Para 2(a): OPM and OMB, "within 30 days, will provide notice… via a published Memorandum, to all Agency Heads, Chief Human Capitol Officers (CHCOs) and Deputy CHCOs." A public CHCO memo is due around October 23, 2026. Watch for it.
"Agencies must scrub their plans" Para 2(c): within 30 days, agencies remove language that "provides for initiation of RIFs during a lapse" or "authorizes employees to perform work necessary to administer a RIF process during a lapse… as an excepted activity," unless a statute expressly allows it. The highest-value line in the deal. HR cannot be excepted to run a RIF while you are furloughed.
"No more shutdown layoffs" Para 2(c), next sentence: plaintiffs "acknowledge that such operative contingency plans can change," and any change "shall only take effect 30 days after the agencies provide notice of the change to Plaintiffs and publish the proposed change publicly." Agencies can put the language back. You would get 30 days' public warning first.
(not reported) Para 2(c), last sentence: "This paragraph shall continue to apply only to contingency plans operative through December 31, 2026." The protection has an expiration date, and it is 20 days after funding runs out.
"Case on hold" Para 2(e) and Document 198: abeyance until the earlier of December 31, 2026 or enactment of FY2027 appropriations for all agency defendants, then dismissal with prejudice (as requested in the joint motion; the court's order on it is what puts the schedule in force). The motion says the abeyance "will last at most through December 31, 2026." Full-year appropriations for all agency defendants trigger the dismissal stipulation; paragraph 2(c) still covers plans operative through December 31.
"Unions can go back to court if the government tries again" Document 198: "Plaintiffs may only file a motion to lift this abeyance if Defendants provide notice of intent to authorize RIFs during a lapse in appropriations." A shutdown by itself reopens nothing. Only an agency's advance notice does.
"A win for federal employees" Preamble and para 2(f): reached "without any admission of fact or law," each side pays its own fees. No precedent, no fee award, no court order. A contract that expires with the calendar year.

FedTools 2026 settlement-term audit. Sources: Settlement Agreement, AFGE et al. v. OMB et al., No. 3

(N.D. Cal.), executed September 23, 2026, as posted by plaintiffs' counsel; Document 198, joint motion filed September 25, 2026, from the RECAP archive. Paragraph numbers refer to the agreement.

The 20-Day Gap Between the Funding Cliff and the Protection

The continuing resolution enacted September 2 (Division A of Public Law 119-103) makes funds available only until "December 11, 2026." A lapse would begin December 12. That date comes from the funding law, not from the settlement, which never mentions it.

The settlement's plan obligation expires December 31. Count the days and the protection covers a December lapse for exactly 20 days.

The 2025 shutdown lasted 43 days. A lapse of the same length starting December 12, 2026 would run to January 23, 2027, and 23 of those days would fall outside the settlement window. Paragraph 2(c) applies only to contingency plans operative through December 31, 2026, so its 30-day notice-and-publication rule does not carry into January. On January 1 an agency could re-insert RIF language without the settlement's notice period. What still stands after that date is the ordinary Part 351 machinery, including written notice before any release: ordinarily 60 full days, or an OPM-approved shortened period of at least 30 days.

There is a second way the protection ends early. If Congress enacts full-year FY2027 appropriations for every agency defendant before December 31, the parties' stipulation calls for dismissal with prejudice at that point. The removal obligation is written to cover plans operative through December 31 regardless, and a plan change noticed before dismissal lets the plaintiffs move to lift the abeyance. The good outcome and the early end of the case are the same event.

Neither scenario is a reason to panic. It is a reason to know the dates.

Why "Rescinded" Is Not "Prohibited"

The statutory ban on shutdown RIFs is already gone. Section 120 of the November 12, 2025 funding law barred federal funds for starting, noticing or carrying out a RIF, but only through January 30, 2026. OPM's own November 13, 2025 memo to agencies describes that window. When it closed, the only thing standing between agencies and a repeat was the preliminary injunctions in this case, and now the settlement.

So the current protection rests on a contract between the parties, enforceable through December 31, plus a 30-day early-warning system. It does not rest on a law, a regulation or a court order. The parties filed a joint motion and a proposed order; the court did not approve the agreement or enter a consent decree, and the agreement itself was not attached to the filing.

One more thing the agreement allows: agencies may keep archival copies of the rescinded memo on their websites under the Freedom of Information Act's reading-room rule. Finding the old OMB guidance in an agency archive is not evidence the policy is back.

If a Lapse Begins December 12: What the Law Guarantees

The Government Employee Fair Treatment Act of 2019, now 31 U.S.C. 1341(c), covers every lapse beginning on or after December 22, 2018. Its guarantee reads: each furloughed employee "shall be paid for the period of the lapse in appropriations, and each excepted employee who is required to perform work during a covered lapse in appropriations shall be paid for such work, at the employee's standard rate of pay, at the earliest date possible after the lapse in appropriations ends, regardless of scheduled pay dates, and subject to the enactment of appropriations Acts ending the lapse."

Read the last clause carefully. The entitlement is automatic. The timing is not. Back pay arrives when Congress passes the appropriations that end the lapse, whenever that is.

The same subsection settles a myth about excepted employees. Section 1341(c)(3) entitles excepted employees required to work "to use leave under chapter 63 of title 5," with the pay for it arriving after the lapse ends. If you are excepted and need a day off in the third week of a shutdown, you can request it like any other leave: the statute preserves the right, your agency's normal approval rules still apply, and the pay arrives after the lapse ends.

For the paycheck mechanics of a December lapse, including which pay period gets shorted first, the October 2026 shutdown tracker carries the calendar and the DHS back-pay mechanics post walks through how the retroactive payment actually lands.

If an Agency Issues a RIF Notice Anyway: Three Routes at Once

The settlement makes a shutdown RIF unlikely through December 31. It does not make one impossible after that, and the rules below apply to any RIF, lapse or no lapse.

Your union hears the same day you do. Under 5 CFR 351.801(a)(2), "at the same time an agency issues a notice to an employee, it must give a written notice to the exclusive representative(s)… of each affected employee." Call the local before you do anything else. If your unit is one of the ten plaintiff organizations, that call is also how the settlement's tripwire gets pulled.

Sixty full days before release. Section 351.801(a)(1) entitles every competing employee selected for release to "a specific written notice at least 60 full days before the effective date of release." A notice issued December 12 could not take effect before roughly February 10, 2027, unless OPM approves a shortened notice period, which can be as little as 30 days in the circumstances the regulation names (even that cannot separate anyone inside a short lapse). A short shutdown cannot separate anyone inside it, though a notice issued during one still starts the clock.

Appeal to OPM, not the MSPB, for a December notice. OPM's revised 5 CFR part 351 (effective September 2, 2026) moved RIF appeals from the Merit Systems Protection Board to OPM for any RIF whose specific notice was issued on or after that date, so a notice issued during a December lapse goes to OPM under subpart I (351.901 through 351.909). You may appeal if you were separated, demoted, or furloughed for more than 30 calendar days (or more than 22 workdays on a discontinuous basis), and you must show the agency broke a statute or OPM regulation in a way that changed your outcome. The deadline is 30 calendar days after the effective date of the action. An OPM appeal is the exclusive administrative remedy: a covered RIF action cannot be grieved or arbitrated, though EEOC, OSC and IG matters keep their own jurisdiction. Notices issued before September 2, 2026 still follow the old MSPB route. Note the 30-day furlough threshold: a Part 351 furlough that crosses 30 days is itself appealable, separate from any separation.

Your placement rights after a RIF, including CTAP and ICTAP, are in the CTAP and ICTAP rights guide.

Who the Settlement Covers

The plaintiffs are ten labor organizations: AFGE and two of its locals, AFSCME, NFFE, SEIU, NAGE, NTEU, IFPTE, AFT and AFSA. The inclusion of the American Foreign Service Association means Foreign Service employees at State are covered.

The defendants are OMB, OPM, 41 named agencies and each agency head in an official capacity. The list includes the Departments of Defense, Homeland Security, Veterans Affairs and State, the Social Security Administration, EPA, NASA, GSA, SBA and the MSPB itself.

Of those 41 agencies, the agreement names only three as having separated employees during the 2025 lapse and then paid them everything they were owed: State, GSA and SBA. The agreement says those three provided "all pay to which they otherwise would have been entitled in the absence of receiving such notice, including backpay." Press accounts put the number of employees targeted in October 2025 at more than 4,000; the settlement gives no headcount, so treat that figure as reported rather than verified.

What to Do Before December 11

  1. Mark October 23. That is roughly 30 days from September 23, the date the OPM and OMB memorandum to agency heads and CHCOs is due, and the date your agency's website links to the old guidance should be gone.
  2. Pull your agency's lapse plan after October 23. Agencies post contingency plans publicly. Search yours for "reduction in force" and for excepted-activity language covering RIF administration. If it is still there in November, your union has a settlement violation to raise.
  3. Size one missed paycheck. A December 12 lapse shorts the pay period that closes in mid-December first. If you are on the General Schedule, the Federal Take-Home Pay Calculator shows your net pay per period by grade, step and locality; that is the number to have in savings by December 11.
  4. Know what a RIF would pay. The settlement's value is easier to judge when you know the alternative. The Severance Pay Calculator takes your salary, years of service and age and returns the severance a RIF separation would produce.
  5. Watch December 31 and the appropriations calendar together. Full-year FY2027 appropriations end the settlement early. A long lapse outlives it. Either way, the 30-day notice rule is your warning system, and a published change to a contingency plan is the signal to act.

The shutdown financial prep checklist covers the savings, bills and TSP loan questions in order, and the lawsuits tracker will carry the settlement's status through dismissal.

Calculate What a RIF Would Pay

Use the free Severance Pay Calculator to see the severance a RIF separation would produce from your salary, years of service and age, so you know the downside the settlement is holding off. Try it now.

Frequently Asked Questions

Can I be laid off during a government shutdown now?

Not under the lapse plans the settlement reaches. The September 23, 2026 settlement in AFGE v. OMB requires all 41 agency defendants to remove language that provides for starting a RIF during a lapse in appropriations from their operative contingency plans within 30 days, unless a statute expressly authorizes that work. That obligation covers plans in force through December 31, 2026, and a plan can be changed back only after 30 days' notice to the plaintiffs and public publication.

Is the shutdown-RIF ban permanent?

No. Paragraph 2(c) of the agreement applies only to contingency plans operative through December 31, 2026, and the court filing says the abeyance will last at most through that date. Plans can be changed back, but only after 30 days' notice to the unions and public publication of the change.

What got rescinded?

The OMB lapse memorandum and the associated OPM guidance and instructions. Paragraph 1(a) of the agreement says they have been rescinded in full and are no longer operative, and OPM's own page dates the rescission of its Special Instructions to November 13, 2025. The settlement records the rescission; it did not create it.

Were employees RIF'd during the 2025 shutdown reinstated and paid?

Yes, before this settlement was signed. Paragraph 1(b) states that all RIF notices issued between October 1 and November 12, 2025 have previously been rescinded and that separated employees were subsequently reinstated. The agreement names State, GSA and SBA as having paid those employees all pay they would have received, including back pay.

When does funding run out, and what happens to my paycheck?

The continuing resolution funds the government only through December 11, 2026, so a lapse would begin December 12. If you are furloughed, 31 U.S.C. 1341(c)(2) guarantees pay for the lapse period at your standard rate at the earliest date possible after the lapse ends. The entitlement is automatic; the timing depends on Congress enacting appropriations that end the lapse.

I'm an excepted employee. Do I get paid, and can I take leave during a lapse?

You are paid for work performed once the lapse ends, and you can take leave. 31 U.S.C. 1341(c)(3) entitles excepted employees required to work to use leave under 5 U.S.C. chapter 63, with the pay for it arriving after the lapse ends. The belief that leave is off the table during a shutdown is wrong.

What if my agency issues a RIF notice during a lapse anyway?

Three routes run at once. Your union must receive written notice the same day you do under 5 CFR 351.801(a)(2). You are entitled to at least 60 full days' written notice before release under 351.801(a)(1) (OPM can approve a shortened period of no less than 30 days), so a notice issued during a short shutdown cannot separate you inside it. And separation, demotion or a furlough of more than 30 days by RIF is appealable, but to OPM rather than the MSPB for any RIF notice issued on or after September 2, 2026 (revised 5 CFR part 351, subpart I), within 30 calendar days of the effective date.

Can the unions reopen the lawsuit if a shutdown hits?

Not on a shutdown alone. The September 25 filing says plaintiffs may only move to lift the abeyance if the government gives notice of intent to authorize RIFs during a lapse. The trigger is an agency's advance notice, which is why the 30-day publication requirement matters.

Does the settlement bind a future administration or block a new OMB memo?

No. It was reached without any admission of fact or law, so it sets no precedent. The parties have asked the court to hold the case in abeyance and then dismiss it with prejudice at the earlier of December 31, 2026 or enactment of full-year FY2027 appropriations for all the agency defendants; the contingency-plan obligation itself is written to cover plans operative through December 31, 2026, and a notice of a plan change before dismissal lets the plaintiffs ask the court to lift the abeyance. A new memo after that date would have to be fought fresh.

What should I do in the next few weeks?

Watch for the OPM and OMB memorandum to agency heads and CHCOs, due within 30 days of signing, which lands around October 23. After that date, pull your agency's lapse contingency plan and confirm the RIF language is gone. Then size the downside: run one missed paycheck through the Federal Take-Home Pay Calculator and a hypothetical separation through the Severance Pay Calculator.

Sources