Unemployment Benefits for Federal Excepted Employees

BULLETIN

Introduction

InformedFED has received hundreds of inquiries concerning the issue of whether furloughed federal excepted employees, those required to work without pay, can receive unemployment compensation. The answer is somewhat ironic.

A lapse in federal appropriations—a government shutdown— creates significant financial stress for the entire federal workforce. While many employees are placed on furlough (non-pay, non-duty status), a large portion are designated as excepted employees and required to work without pay. This situation raises critical questions about financial assistance: Can these working but unpaid employees collect unemployment benefits? And what happens when the shutdown ends and back pay is received? Complicating the issue is the recent, publicly stated position, of the Trump administration that it may withhold backpay from furloughed federal employees, even excepted employees, regardless of the law (he signed himself) requiring these employees receive full backpay and benefits. During a period of historic job losses, triggered by Trump's own economic policies, this position is unconscionable.

Navigating the rules for furlough and unemployment benefits can be complex, as eligibility is determined at the state level under the federal Unemployment Compensation for Federal Employees (UCFE) program. This guide breaks down the essential facts for excepted employees.

Definition of Excepted Employees

In the context of a federal government shutdown, employees generally fall into one of two categories:

• Furloughed Employees (Non-Excepted): These employees are placed in a mandatory non-pay, non-duty status. They are generally prohibited from working during the shutdown period.

• Excepted Employees: Often referred to as "essential" employees, these individuals are required to continue working because their duties involve protecting life and property, performing activities essential to national security, or are otherwise authorized by law. Crucially, while they work, they do not receive pay until the lapse in appropriations ends.

For example, 730,000 federal employees were estimated to have kept working (required) without pay during a previous shutdown, underscoring the scale of this issue. Though most of the public is familiary with Air Traffic Controllers being required to work without pay, there are many other occupations similarly situated.

Overview of Furloughs in Federal Employment

A furlough is the placement of an employee in a (allegedly) temporary non-pay, non-duty status due to a lack of work or funds. While there are different types, the kind associated with a lapse in appropriations is an emergency shutdown furlough.

The key federal law providing financial relief post-shutdown is the Government Employee Fair Treatment Act of 2019 (Public Law 116-1). This law mandates that all federal employees—both furloughed and excepted—who were affected by a lapse in appropriations MUST be paid retroactively for the period of the shutdown, receiving their standard rate of pay and benefits as soon as possible after operations resume. Most agencies typically prescribe a three day action plan for this purpose. However, many agencies are now keeping a "second set of books" (yes, just like the mob) to document who is excepted and who is not. This requirement was reportedly imposed by the Office of Personnel Management (OPM) to prepare for the possibility that only excepted employees would receive backpay. This may complicate matters in certain situations since the duty status of many excepted employees are likely coded erroneously in agency timekeeping systems (indicating furloughed when they are actually excepted). This would make it easy for the Trump administration to decide not to backpay any affected employees (excepted or not), or allowing them to only backpay excepted employees using the "second set of books" OPM required agencies to create.

Eligibility for Unemployment Benefits During a Furlough

Unemployment benefits for federal workers are handled through the UCFE program, but the rules of eligibility, benefit amounts, and payment duration are all determined by the state where the employee's last official duty station was located.

Can an Excepted Employee Working Full-Time Collect Benefits?

• General Rule: No.

  • Federal guidance from the U.S. Department of Labor (DOL) and various state agencies confirms that federal employees who are required to work full-time during a lapse in appropriations are not considered "unemployed" for Unemployment Compensation (UC) purposes.

  • Since they are still performing their job duties, even without pay, they are ineligible to receive UCFE benefits.

  • HOWEVER, we recommend excepted employees apply nonetheless and challenge any denial.

• A Historical Exception: There have been very specific, temporary programs enacted by Congress in the past (such as the UCFE-Excepted Employees Program in 1996) that temporarily deemed excepted employees as "totally separated" and eligible for benefits. However, this is not the current default rule. Regardless, InformedFED recommends all excepted federal employees apply for unemployment and initiate appeals if denied. Simply follow the application and appeal process prescribed by your state.

What About Reduced Hours or Part-Time Work?

• Possible Eligibility: If an excepted intermittent or part-time employee is working less than full-time, they maybe eligible for some or all of their benefits.

• State Law Governs: Eligibility depends entirely on the specific partial employment rules and wage limits of the state where the claim is filed. The employee must report all earnings to their state Unemployment Insurance (UI) office, even if the pay is delayed.

Key Takeaway: For a full-time, working excepted employee, the current federal and state guidance is that they are not eligible for UCFE benefits because they are not "unemployed."

Repayment of Unemployment Benefits: What to Know

The question of unemployment benefits repayment is crucial for employees who were furloughed (non-excepted) and did collect benefits.

The Mandatory Repayment Trigger

Due to the Government Employee Fair Treatment Act of 2019, all affected federal employees are guaranteed retroactive pay (back pay) once the shutdown ends. This is the current law, signed by Trump in 2019, that he now argues he does not have to follow.

• The Overpayment: When an employee receives a paycheck for the same period they collected unemployment benefits, they are considered to have received an "overpayment" of UI. This is because UI benefits are generally not payable for any week for which an individual receives wages.

• The Repayment Requirement: Yes, any unemployment benefits received for the same period covered by the retroactive back pay must be repaid.

The Repayment Process

1. Notification: The State UI agency will receive notification of the employee's back pay (wages) and will issue a formal Notice of Benefit Overpayment (similar to a "bill of collection" many that many federal employees are familiar with) to the employee.

2. Repayment Arrangements: The employee is responsible for arranging repayment with the appropriate state UI office.

3. State Coordination: While states determine the process, some may offer options such as:

   • Paying the full amount back.

   • Setting up a repayment plan.

Conclusion for Federal Excepted Employees

The rules surrounding unemployment benefits for federal employees during a lapse in appropriations are clear on two major points:

1. Excepted employees who are working full-time without pay are generally not eligible for Unemployment Compensation for Federal Employees (UCFE) benefits because they are still considered "employed."

2. Any furloughed employee who does collect UCFE benefits will be required to repay them once they receive their mandated retroactive back pay under the Government Employee Fair Treatment Act of 2019.

Understanding these federal furlough guidelines is essential for all members of the federal workforce to manage their finances during a shutdown.

Call to Action for Further Information or Resources

Seek guidance specific to your state!

Since state law governs the UCFE program, the most accurate information will come from your state's UI office.

• Contact Your State UI Office: Contact the unemployment office in the state of your last official duty station where you resided. This should match information on your SF-50.

• Review DOL Guidance: For general federal guidance on UCFE, refer to the resources provided by the U.S. Department of Labor (DOL).

Applying for unemployment compensation and appealing a denial is something any employee can do on their own. The procedures are clearly indicated in each state process. InformedFED does not accept clients for the purpose of assisting them in filing for these benefits.