Shutdown Layoff Guidance Rescinded: What OMB Memo M-27-01 Means for Federal Employees

The shutdown layoff guidance that triggered thousands of federal layoff notices last fall has now been rescinded in writing. With federal funding set to run out on December 11, here is what OMB Memo M-27-01 does, what it does not do, and how federal employees can prepare.

What the Memo Says

OMB/OPM Memorandum M-27-01, “Status of Documents Addressing RIFs During a Lapse,” was signed on October 23, 2026 by Russ Vought and Scott Kupor. It covers the three documents behind last fall’s shutdown layoffs: OMB’s email and two OPM guidance documents. The memo says they “have since been rescinded in full and are no longer operative.”

Why the Government Put It in Writing

The memo was not voluntary. It was required by the September 23, 2026 settlement in AFGE v. OMB, No. 3:25-cv-08302-SI (N.D. Cal.), the unions’ lawsuit over the shutdown layoffs. The settlement gave the government 30 days to issue the memo, and it was issued on day 30. Under the settlement, the guidance is “rescinded in full,” every shutdown RIF notice was rescinded, and everyone who was separated was reinstated. The unions in the case included AFGE, AFSCME, NTEU, NFFE, NAGE, SEIU, IFPTE, AFT, and AFSA, represented by Altshuler Berzon, Democracy Forward, and Democracy Defenders Fund.

Background: What Happened Last Fall

Last fall, OMB told agencies to “consider” layoff notices if funding lapsed, and OPM let agencies call people in to process layoffs mid-shutdown. About 4,000 federal employees received notices before a federal judge stepped in and halted them as likely to violate the law.

Could It Happen Again in December?

Not without warning. The settlement required agencies to remove layoffs from their shutdown plans. Putting them back now takes 30 days’ public notice to the unions, and the unions can go back to court. If agencies follow the law, that is a meaningful protection.

What the Settlement Does Not Do

• The protection ends December 31, 2026. If a December shutdown runs into January, it no longer applies.
• It does not stop furloughs, or RIFs for reasons other than a shutdown.
• It is a settlement, not a final ruling, and the government admitted nothing.
• Funding runs out December 11. Whether there is another shutdown is not known right now, and that depends in part on Congress. Judge Susan Illston has a status conference set for December 11 at 3 p.m., the same day funding runs out.

Practical Steps to Take Now

You cannot control what Congress does, but you can control your plan. If you are able, set aside what you can now, even a little. Call your lender or credit union early to ask about hardship options. And find out whether your job is considered excepted, so you are not guessing in December.

Legal Disclaimer: This content is for general informational purposes only and does not constitute legal advice. Federal employment situations are fact-specific and time-sensitive. Please consult a qualified federal employment attorney about your specific situation. You can contact Southworth PC at attorneysforfederalemployees.com.