Unemployed workers are at risk of not having salary arrears

Government shutdowns have always been a precarious time for federal workers, both those who are required to stay on the job without pay and those who are furloughed. This closure comes with additional financial uncertainty.

A draft White House memo, first reported by Axios and confirmed to NBC News by the White House, suggests that all furloughed federal workers are ineligible to receive back pay once the government reopens. Asked about back pay, President Donald Trump said Tuesday, “I would say it depends on who we’re talking to.”

“It really depends on who you talk to,” Trump said. “But for the most part, we’re going to take care of our people. There are some people who really don’t deserve to be taken care of, and we’ll take care of them in a different way.”

Trump also threatened mass layoffs if Democrats did not accept the Republican Party’s funding proposal.

The memo goes against a federal law that requires back pay for federal workers after a shutdown ends, and recent guidance from the Trump administration.

Congress passed the Fair Treatment of Government Employees Act of 2019, and Trump signed it after the latest government shutdown, which lasted a record 35 days.

“Each employee of the United States Government or a public employer in the District of Columbia furloughed as a result of a covered credit default will be paid for the period that credits are unavailable,” according to the law.

During previous shutdowns, Congress would pass a bill to provide federal workers with back pay.

The American Federation of Government Employees, the largest federal workers union, called the administration’s argument “frivolous” and a “clear misinterpretation of the law.”

“This is also inconsistent with the Trump administration’s own guidance from just days ago, which clearly and correctly states that furloughed employees will receive retroactive pay for the furlough period as quickly as possible once the shutdown ends,” Everett Kelley, AFGE national president, said in a statement.

The Office of Personnel Management, the government equivalent of a human resources department, issued guidance dated September 2025 stating that retroactive pay will be available to federal employees affected by an appropriations lapse “as soon as practicable after the expiration of the appropriations.”

“The federal government’s threat to not pay furloughed federal employees is both alarming and legally questionable,” said Tom Spiggle, a labor and employment lawyer and founder of the Spiggle Law Firm in Washington, DC.

If the administration doesn’t pay back wages, workers may have other legal options, he said, including filing suit under the Fair Labor Standards Act. They could also appeal to the Merit Systems Protection Board, an independent agency charged with protecting federal employees. A class action lawsuit may also be an option.

“Federal employees should document their losses and keep records of any payroll-related communications or threats,” Spiggle said. These legal avenues can take months or even years to resolve.

If you’re missing paychecks, here are some strategies for dealing with delays or lost income.

Start with careful accounting of expenses: “Three things you really need to focus on…cash flow, cash flow, and cash flow,” said Mary Clements Evans, certified financial planner and owner of Evans Wealth Strategies in Emmaus, Pennsylvania.

Many people don’t understand their monthly expenses beyond essential expenses such as rent or mortgage and car payments, she said. Automatic payments and debit or credit cards can also make it more difficult to assess discretionary spending.

“We’re in a world where we’re disconnected from our spending habits,” Evans said.

Once you have your expenses under control, plan for a reduction in your income. This may involve determining what savings to leverage and adjusting your budget.

“It seems like it’s a financial equation, but it’s not. It’s often emotional and psychological, because they feel like they’re losing their identity and their status,” said Evans, who is also the author of “Emotionally Invested.”

Contact your lenders. Financial institutions may offer payment deferrals, loan modifications, and other forms of hardship assistance. For example, Navy Federal Credit Union offers a Paycheck Assistance Program with zero-interest loans for eligible members impacted by the shutdown.

Unique to this shutdown is the Trump administration’s “reduction in force” plan, or RIF.

“It’s obviously a time of change in terms of this administration’s willingness to take fresh views on what has been considered before and which, on a simple reading, is considered clear law,” said John Hatton, staff vice president for policy and programs at the National Association of Active and Retired Federal Employees.

During a shutdown, the majority of employees of government agencies funded through the annual appropriations process are typically placed on furlough or unpaid leave, if the agency has not received funding. Those whose work is necessary to protect life or property, or to provide mandated benefits, are considered essential and required to work, according to the Office of Personnel Management.

“It’s always a difficult situation for federal employees,” Hatton said, “whether they’re working or furloughed or now, adding this new option of receiving a RIF notice, for possible permanent loss of their job.”

Two federal employee unions, AFGE and the American Federation of State, County and Municipal Employees, filed a lawsuit to block the Trump administration from moving forward with RIFs during the shutdown, calling the threat of RIFs illegal.

There are legal requirements for a RIF: Agencies must justify terminations, provide written notice to employees 60 days before a termination, and provide an appeals process. During a shutdown, only “essential” functions are supposed to be performed, and experts say it’s unclear whether mass layoffs fit that definition.

To prepare for possible layoff, federal employees should research unemployment benefits and determine when their health coverage might end.

Also research health insurance costs. Workers may be able to extend their federal workplace plan for up to 18 months with the Temporary Continuation of Coverage option, but they still must pay the full cost of premiums.

For now, a more affordable option might be marketplace coverage under the Affordable Care Act.

“You can go in and get insurance through them, and it’s based on your income,” Evans said.

However, the enhanced subsidies that have helped keep premiums low are set to expire at the end of the year unless Congress acts.

Subsidies are a major sticking point in the current debate over government funding. Democrats say they want to extend them as part of ongoing budget negotiations, while Republicans say they want to debate the policy only after avoiding a shutdown.

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