New 'Help FEDS Act' Allows Essential Federal Workers to Claim Unemployment During Shutdowns Starting in 2026

When the government shuts down, we all know the drill: essential federal workers—the ones keeping air traffic control running or our national parks minimally staffed—are required to show up but don't get a paycheck. The Help Federal Employees During Shutdowns Act (or Help FEDS Act) aims to fix that financial squeeze, at least temporarily, starting with any shutdowns that occur during fiscal years 2026 and 2027.

This bill introduces a significant change: it allows these "excepted Federal employees" to apply for and receive state unemployment benefits for the weeks they work without pay during a lapse in appropriations. Essentially, if you’re required to work but the money hasn't been appropriated, you can access unemployment benefits to cover bills while you wait for Congress to pass a budget.

The 'Excepted' Worker Lifeline

The core of the bill is defining who gets this new benefit. An "excepted Federal employee" is someone deemed essential under existing law (31 U.S.C. § 1341(c)(1)) who is not currently receiving a paycheck because funding has lapsed. Think of the TSA agent, the Border Patrol officer, or the federal law enforcement agent who has to show up regardless of the budget drama. This provision ensures they have a financial bridge during the shutdown, a relief that’s long overdue for people who are literally working without compensation.

The Repayment Catch: Avoiding Double Dipping

While the bill offers immediate help, it’s not free money. The legislation includes a critical safeguard against double payments. If an excepted federal employee receives unemployment benefits during the shutdown, they are required to pay that money back to the state once they receive their federal back pay. This is crucial because federal employees are typically guaranteed back pay (under 31 U.S.C. § 1341(c)(2)) once the government reopens. The bill treats this repayment obligation seriously: if the employee fails to pay the state back, the state treats it just like any other unemployment overpayment, which they are authorized to recover.

For the employee, this means the unemployment benefit is more like a short-term, interest-free loan that must be settled immediately upon receiving the lump-sum back pay check. It solves the immediate problem of making rent but requires careful budgeting when the back pay arrives.

Who Pays the Tab?

This bill also clarifies who covers the cost, which is a win for state unemployment systems. The federal government, specifically the Secretary of the Treasury, is required to reimburse states for the unemployment compensation they paid out to these federal workers, plus any administrative costs the state incurred processing these claims. This money comes out of the Unemployment Trust Fund.

This mechanism ensures that the financial burden of a federal budget failure doesn't fall on state unemployment funds, which are designed to help unemployed state residents, not employed but unpaid federal workers. It makes the federal government ultimately responsible for the financial fallout of its own shutdowns, which is a sensible approach for managing fiscal crises.