Shutdown Survival: Key Facts for Federal Workers and Contractor

We know things are already starting to feel tough. Our team is fielding calls from people who are struggling to make ends meet and keep up with payments. As is often the case, many of us may be just one paycheck away from needing assistance. If you are a federal worker—or if your income is affected by the government shutdown, this guide provides important information and resources to help you navigate the days ahead. (Note: for more information on navigating bills, see our guide: Staying Steady in Uncertain Financial Times.)

Who’s Affected
Federal employees fall into two categories:

• Furloughed workers: do not work or get paid. May be eligible for unemployment insurance (UI) under the Unemployment Compensation for Federal Employees (UCFE) program.
• Essential (“excepted”) workers: must continue working without pay. They are guaranteed backpay once the shutdown ends but are not eligible for unemployment benefits while still required to work.
• Contractors are not guaranteed backpay after shutdowns, leaving them more financially vulnerable.

Shutdowns ripple outward, affecting local businesses, creditors, and the broader economy.

Unemployment Compensation for Federal Employees (UCFE)

• Apply through your state’s UI agency in the state where you work. Find your state’s unemployment office here: CareerOneStop Unemployment Office Locator.
• Proof of federal employment and wages is required, typically with Form SF-8 or Form SF-50.
• If those aren’t available, workers can file using the ES-935 affidavit plus pay stubs or W-2s.
• Benefits are typically ? to ½ of normal pay, subject to each state’s maximum. Review current amounts here: UI Benefit Amounts Table (Jan 2025).
• Most states have a one-week waiting period before benefits start, and payments usually arrive 14–21 days after filing.
• Benefits last up to 26 weeks depending on state law.

Repayment Rules

• If furloughed workers later receive backpay, they may have to repay unemployment benefits to the state (sometimes with penalties if repayment is delayed).

Layoffs and Voluntary Separation

• Laid-off workers should qualify for UCFE.
• Workers who resign voluntarily (including via incentive programs) may not qualify.

Key Takeaways 

1. Federal employees are guaranteed backpay after shutdowns; contractors are not.
2. Furloughed employees can usually apply for UCFE, but benefits may need to be repaid if backpay comes through.
3. Essential workers must work without pay but cannot access UI benefits during the shutdown.
4. State UI rules vary — apply promptly, gather proof of wages, and be prepared for delays.
5. Want practical steps to protect your finances during uncertain times? Check out our guide: Staying Steady in Uncertain Financial Times.

If you find yourself struggling financially during the shutdown, please remember you are not alone. Our certified counselors are here to listen, provide guidance, and connect you with resources that can help. Don’t wait until the stress becomes overwhelming—reach out to us today for confidential support and assistance.
 

Published Oct 6, 2025.