The Trump administration policy instructing federal agencies to conduct layoffs during a government shutdown has been withdrawn under a new court settlement reached with AFSCME and other unions that represent federal workers. The settlement brings to a close the litigation, which had previously resulted in an injunction that led to the rescission of thousands of layoffs and blocked countless more.  

It also orders federal agencies to remove any authorization for a reduction-in-force from their current shutdown plans, and to provide 30 days notice if those plans change before the end of 2026.   

“We brought this case forward in defense of our nation’s federal workers – including the highly skilled, nonpartisan professionals AFSCME represents who have dedicated their careers to keeping our communities safe and healthy,” said AFSCME President Patrick Moran.  

“But this billionaire-run administration continues to put politics between these essential workers and their public service, at great expense to our communities. We’re glad this settlement places limits on their ability to use federal workers as bargaining chips to push their extreme agenda during the next government shutdown, but the fight is far from over.” 

Moran said AFSCME will continue to stand up to this administration’s attacks on federal workers and to organize.  

The settlement agreement was announced in a court filing by a coalition of unions and the U.S. Department of Justice.  

AFSCME and the coalition of unions sued after the administration issued layoff notices to thousands of federal workers during the record 43-day government shutdown last year. A federal judge blocked the layoffs from being implemented, and federal employees fired have been reinstated. 

The case was brought by the American Federation of Government Employees (AFGE) and the American Federation of State, County and Municipal Employees (AFSCME) on September 30, 2025 and later expanded to include employees represented by the National Federation of Federal Employees (NFFE), the National Association of Government Employees (NAGE), the Service Employees International Union (SEIU), the National Treasury Employees Union (NTEU), the American Federation of Teachers (AFT), and the International Federation of Professional and Technical Engineers (IFPTE).  

The unions are represented by Altshuler Berzon LLP, Democracy Forward, and Democracy Defenders Fund. 

The settlement can be read here.