As the federal government enters its third week of a shutdown, a legal and political dispute has emerged over whether furloughed federal employees are guaranteed to receive back pay once funding is restored.
A new memorandum from the White House Office of Management and Budget (OMB) has challenged what many lawmakers, unions, and legal analysts long considered settled law under the Government Employee Fair Treatment Act of 2019 (GEFTA).
Why It Matters
At the heart of the latest government shutdown lies a dispute that could redefine how federal workers are treated—and how far executive authority can reach during funding lapses. A new White House budget memo challenges the long-standing guarantee that furloughed employees will receive back pay once appropriations are restored, upending what had been a bipartisan consensus since 2019.
The fight now stretches beyond missed paychecks—it raises questions about whether the executive branch can reinterpret congressional protections for federal employees and, in doing so, reshape the balance of power that governs how the government itself shuts down and reopens.
What To Know
At issue is the Government Employee Fair Treatment Act of 2019 (GEFTA), a bipartisan measure sponsored by Senators Ben Cardin (D-Md.) and Susan Collins (R-Maine) and signed during his first term by President Donald Trump.
The law was enacted after a record 35-day shutdown to ensure that federal workers “shall be paid for the period of the lapse in appropriations” once government funding is restored, something with significant implications for roughly 750,000 federal workers who have been furloughed or are working without pay.
It also tests the boundaries of executive authority during lapses in appropriations—and could set precedent for future shutdowns.
OMB’s Revised Interpretation
The OMB’s latest interpretation, laid out in internal guidance circulated on September 30 and updated on October 3, has created widespread uncertainty.
The OMB memo, first reported by Axios and reflected in internal documents dated September 30 and updated October 3, 2025, argues that back pay for furloughed employees is not automatically guaranteed after a lapse in appropriations.
The guidance relies on language in GEFTA stating that employees “shall be paid for the period of the lapse in appropriations … subject to the enactment of appropriations Acts ending the lapse.”
OMB officials contend that the phrase requires Congress to explicitly appropriate funds before any back pay can be disbursed.
In the words of one senior administration official quoted in the memo, “Does this law cover all these furloughed employees automatically? The conventional wisdom is: Yes, it does. Our view is: No, it doesn’t.”
The official added that “OMB is in charge,” signaling that the agency’s interpretation would govern executive branch policy during the current shutdown.
OMB’s position contrasts with the Council of Economic Advisers and the Office of Personnel Management (OPM), both of which had earlier issued guidance indicating that workers would be paid automatically once appropriations resumed.
The new analysis also departs from previous interpretations issued under the Trump administration following the 2018—2019 shutdown, when GEFTA was enacted to ensure automatic back pay.
The 2019 Law and Its Intent
The 2019 Government Employee Fair Treatment Act—cosponsored by Senator Ben Cardin (D-Md.) and Senator Susan Collins (R-Maine) and signed by President Donald Trump—amended the Antideficiency Act to guarantee that “each employee of the United States Government or of a District of Columbia public employer furloughed as a result of a lapse in appropriations shall be paid for the period of the lapse” once the shutdown ends.
According to OPM’s Guidance for Shutdown Furloughs, updated in September 2025, the Act requires “retroactive pay for Federal employees affected by a lapse in appropriations as soon as possible after the lapse … regardless of scheduled pay dates.”
The agency emphasized that this directive applies automatically, “subject to the enactment of appropriations Acts ending the lapse,” meaning after Congress passes a measure to reopen the government.
Organizational Views
Newsweek approached a number of organizations for their interpretation of the OMB’s argument and whether this represents a significant departure from the current understanding.
Sam Berger, a senior fellow at the Center for American Progress and a former OMB official, said in an exclusive interview: “It was very clear what Congress intended here. The Trump administration signed it into law. They also knew what was intended. That’s why when they put out guidance it says everybody gets paid at the end of a shutdown.” Berger added that he expects courts would uphold the law’s guarantee of payment: “It’s hard to imagine a court not reading this plain language for what it says.”
The American Federation of Government Employees (AFGE), which represents more than 750,000 federal workers, denounced the memo as “frivolous” and a “misinterpretation of the law.”
AFGE National President Dr. Everett Kelley told Newsweek the administration’s stance “would devastate families living paycheck to paycheck” and confirmed that the union was reviewing options for legal action.
The AFGE is already a plaintiff in a federal lawsuit filed September 30 in the U.S. District Court for the Northern District of California, joined by the American Federation of State, County and Municipal Employees (AFSCME) and local affiliates. The complaint accuses the administration of violating the Administrative Procedure Act by threatening “mass firings of federal employees” during the shutdown.
It asserts that directing agencies to consider reductions in force (RIFs) for unfunded programs is “contrary to law and arbitrary and capricious,” and argues that “carrying out RIFs is plainly not a permitted (or ‘excepted’) function that can lawfully continue during a shutdown.”
Historical Context
Past shutdowns have varied in duration and impact. According to a Congressional Research Service (CRS) report updated in December 2024, the longest lasted 35 days between December 2018 and January 2019.
CRS notes that the “relevant laws that govern shutdowns have remained relatively constant in recent decades,” but that agencies “may exercise some discretion in how they interpret the laws” and that each event “may differ over time” depending on circumstances.
Under long-standing Department of Justice and OMB guidance, as restated in OMB’s Frequently Asked Questions During a Lapse in Appropriations (September 30 and October 3, 2025), agencies may continue operations only in “excepted” situations.
The documents reaffirm that “the Antideficiency Act prohibits agencies from incurring obligations that are in advance of, or that exceed, an appropriation, with certain limited exceptions.”
Competing Interpretations
Newsweek asked several employment law attorneys to if there was any basis for the Trump administration’s argument that furloughed federal workers aren’t guaranteed back pay
Courtney J. Mickman, Senior Counsel at Alan Lescht and Associates, and a former administrative judge in the Hearings Unit of the U.S. Equal Employment Opportunity Commission (EEOC) Washington Field Office, said that OMB’s reading has little legal basis.
“I don’t believe there is a basis to not pay employees who are furloughed due to the shutdown when the government reopens,” Mickman told Newsweek, pointing to both statutory language and legislative intent. “Employees shall be paid for that time,” she said, referring to GEFTA’s plain text.
Kevin R. Kosar, a senior fellow at the American Enterprise Institute, also questioned the administration’s interpretation, noting that while back pay typically cannot be issued until appropriations are enacted, once Congress funds an agency, denying pay would “fly in the face of the plain language of the 2019 GEFTA law.”
These include “express statutory authorizations,” “emergency circumstances,” or activities “necessary to the discharge of the president’s constitutional duties.”
Kosar added, “There’s no federal law saying the government can renege on paying federal employees the salaries owed to them because Congress failed to pass a spending bill.”
Broader Implications
The administration’s position could affect not only this shutdown but the future balance between Congress and the executive branch in interpreting spending laws.
The OMB’s assertion that its legal interpretation supersedes prior agency guidance underscores an expanding use of executive discretion during funding lapses.
The agency’s October 3 FAQ explicitly notes that while the Government Accountability Office (GAO) has issued contrary opinions, “the Executive Branch is not bound by the views of Legislative Branch agencies. Instead, agencies are required to follow DOJ opinions on this issue.”
For now, both furloughed and “excepted” employees continue to face uncertainty. As federal workers await paychecks and the courts consider pending challenges, the outcome of the backpay dispute could determine whether GEFTA remains the ironclad guarantee Congress intended—or a precedent for broader executive reinterpretation of federal labor protections.
What People Are Saying
Nekeisha Campbell, labor attorney, Alan Lescht & Associates October 7, 2025, said: “There is no legal authority to support that interpretation of the statute. When the language of a statute is plain, courts must apply it except in the rare circumstance when there is a clearly expressed legislative intent to the contrary, or when a literal application would frustrate the statute’s purpose or lead to an absurd result.”
Everett Kelley, National President, American Federation of Government Employees (AFGE) said: “The memo’s interpretation is frivolous and a misinterpretation of the law,” he said, warning that withholding pay “would devastate families living paycheck to paycheck.”
Senator Patty Murray (D-Wash.) responding to the OMB’s position that Congress must specifically reauthorize back pay, said: “This is another baseless attempt to try and scare federal workers.”
What Happens Next
The next steps in the dispute over federal worker backpay will likely play out in both the courts and Congress. A lawsuit filed by the American Federation of Government Employees and AFSCME seeks to block the White House’s interpretation that furloughed workers are not automatically entitled to compensation once the shutdown ends, arguing the move violates federal law.
At the same time, lawmakers are considering legislation to reaffirm the 2019 guarantee of retroactive pay. If Congress passes a new funding bill, the Office of Management and Budget’s stance will determine whether those payments proceed immediately or face further delay.
Until then, hundreds of thousands of federal employees remain in limbo, awaiting clarity from either a judge or the political branches.
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