Federal unions settle case over shutdown layoffs with Trump administration

Public sector unions and the Trump administration reached a legal settlement that cancels a memo allowing federal agencies to dismiss workers during government shutdowns. The agreement follows an injunction and the reinstatement of employees who had received reduction-in-force notices after the 2025 shutdown. The president of the American Federation of Government Employees called the outcome a win for working people.

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The settlement, disclosed in a Friday court filing, cancels an Office of Management and Budget memo that had told agencies they could dismiss workers during shutdowns. Employees who received reduction-in-force notices in autumn 2025 were already back on the job, and the case will remain paused until year's end.

The dispute began in October 2025, roughly a week into a record-long federal shutdown, when OMB Director Russell Vought said reductions in force had