Unemployment Insurance and the Government Shutdown: What Federal Workers and Contractors Need to Know

The government shutdown is hurting workers and families across the country—many of whom do not earn enough money to withstand this shutdown financially. Unemployment Insurance (UI) is an earned benefit that may provide some temporary financial help to workers and families, once they have carefully considered their options.

It’s important for federal workers and contractors to understand that they have a right to apply for UI—even if they believe they will get their jobs back. The UI program for federal workers (called Unemployment Compensation for Federal Employees, or UCFE) is a federal-state system in which eligibility and benefits are mostly determined by state law, and applications are filed with the state UI agency. The Office of Personnel Management has issued guidance for furloughed workers, and this information is generally applicable to contractors as well.

Unfortunately, workers deemed to be essential—who have to report to work without pay—are not eligible for unemployment compensation.

Furloughed workers can apply for UI but should understand that they will likely need to pay the money back, if they receive back pay retroactively after the shutdown is over. Here is a good place to start applying for benefits in your state. In some states, it may take up to three weeks from the date of application to receive payments, as claims take time to process and most states have implemented a mandatory one-week waiting period to receive benefits. While each benefit formula varies, workers can expect to receive a benefit of about one-third to one-half of their salary, up to a maximum benefit. A full table that includes minimum and maximum weekly benefits is at the U.S. Department of Labor’s Employment and Training Administration site.

It’s critical that workers understand that if they apply for and receive UI benefits, but then later receive back pay (as most federal employees, but not contractors, have after previous shutdowns), they will very likely be required to repay the UI benefits they received. However, that doesn’t mean that workers should not apply for benefits in the first place. Unemployment Insurance exists as a backstop of income support for workers who are not getting paid, through no fault of their own. UI not only helps mitigate financial hardship for workers and their families, but also helps sustain local economies as well.

While state laws vary, if a furloughed worker receives back pay after the shutdown ends, the worker will most likely be found to have a UI “overpayment”—which the state will then seek to recover. The state UI agency will issue a notice requesting repayment, and seek other means to recover the benefits if necessary. Thus, workers should immediately repay the state workforce agency as soon as they are awarded back pay, as the agency could still charge penalties for not repaying overpayments in a timely manner.

This shutdown hurts both workers in the direct federal workforce and people working for federal contractors. The federal workforce is in every state, and is more diverse than the general workforce. The entry-level pay scale, however, doesn’t exceed $15 per hour until a worker can grade in at level 6 or above. In addition, the federal government contracts out a number of services, including lower-paid work such as janitorial, clerical, food service, and maintenance. While in past government shutdowns, federal workers were eligible for back pay after the shutdown ended, that prospect is not at all certain for contractors. Furthermore, federal workers are generally not even able to apply for other work during a shutdown.

These are especially tough times for workers employed by the federal government and in contract positions. My colleagues and I at the National Employment Law Project join in solidarity with federal employees and contract workers.