Help FEDS Act: Essential Federal Workers Can Claim Unemployment During Shutdowns Starting in 2026

The “Help Federal Employees During Shutdowns Act,” or the Help FEDS Act, is straightforward: it creates a financial safety net for essential federal employees—the ones designated as “excepted” workers—who are forced to work without pay during a government shutdown. Starting in fiscal year 2026 (and continuing through 2027), this bill requires state unemployment systems to let these essential federal workers apply for and receive unemployment compensation for the weeks they are working without their regular paycheck, provided a shutdown is causing the lapse in funding (SEC. 2).

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When the government shuts down, essential workers—think TSA agents, air traffic controllers, or certain public safety personnel—are required to show up even if their paychecks stop. This bill directly addresses the financial precarity that hits these families hard. For example, a Border Patrol agent working a 12-hour shift during a shutdown could apply for unemployment benefits to cover groceries or the mortgage payment that week, essentially using the state unemployment system as a short-term, interest-free loan (SEC. 2).

The Repayment Catch

Here’s the catch, and it’s a big one for personal finance management: Federal employees who get this unemployment money must pay it back if and when Congress eventually passes a bill granting them retroactive pay for the shutdown period. Since Congress almost always grants back pay after a shutdown, this repayment is practically guaranteed. If an employee receives $2,500 in unemployment benefits during a shutdown and then gets a lump sum federal paycheck that includes that same period, they are required to repay that $2,500 to the state’s unemployment fund. If they don’t, the state treats it like any other overpayment and will pursue collection (SEC. 2).

This means that while the benefit provides immediate relief, the employee must be ready to hand over a chunk of their eventual back pay. For busy people juggling bills, this requires careful budgeting to ensure that lump sum repayment doesn't cause a new financial headache when the back pay finally arrives.

Who Pays for the Safety Net?

States are required to disburse these benefits, but the federal government promises to cover 100% of the cost. The Secretary of the Treasury is mandated to reimburse states for all the unemployment compensation they pay out to these federal workers, plus any administrative costs the state incurs processing these specific claims. This money won’t come from general taxpayer funds; it will be drawn directly from the federal Unemployment Trust Fund (SEC. 2). This mechanism ensures that state unemployment systems don't take a financial hit, but it does place the burden squarely on the federal Unemployment Trust Fund, which is designed to support state unemployment programs generally. Essentially, the bill shifts the immediate financial burden of a shutdown away from individual essential workers and onto the federal unemployment insurance system.