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How the U.S. Supreme Court Decision on Workforce Cuts Could Impact Federal Employees

The U.S. Supreme Court on July 8 ruled that the Trump Administration can implement its plans to drastically reduce the federal workforce and dismantle federal agencies. The decision could result in job losses for tens of thousands of federal employees at federal agencies. NPR has reported that U.S. Labor Department statistics indicate that the federal government has already shed 59,000 jobs since January 2025, and 22,000 just in May.

In the recent 8-1 ruling, the justices overrode lower court orders that temporarily paused cuts that were led by the Department of Government Efficiency (DOGE), paving the way for thousands more federal employees to be left without jobs. The decision in Trump v. American Federation of Government Employees (AFGE) marks a significant legal victory for the administration, allowing it to proceed with large-scale reductions in force, known as RIFs, and agency reorganizations across the executive branch.

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What Federal Employees Need to Know

In its majority decision, the Court did not comment on the administration’s specific reorganization and RIF plans related to specific, individual agencies. However, Trump’s plan to downsize the federal workforce has been in place for months, outlined in an  Executive Order (EO) and accompanying fact sheet in February 2025, which provided a glimpse into what federal employees might expect, including large-scale employee reductions and elimination of or combined agency components. The EO states that it will “significantly reduce the size of government,” and that President Trump is “committed to reducing the size and scope of the federal government.”

Options for Impacted Federal Employees

The Supreme Court’s decision sends a clear signal that the Trump Administration now has wide latitude to move forward with large-scale layoffs, however federal employees still retain the right to challenge terminations.

There’s still processes in place to do so, and this ruling certainly helps the administration, but the implications for federal operations could be serious if duties are not reassigned quickly.

If your position is impacted by a RIF, your agency may offer certain options: reassignment, relocation, or transition into another federal role.

In other cases, the agency may offer early retirement opportunities including VERA (Voluntary Early Retirement Authority) or VSIP (Voluntary Separation Incentive Payment), which is essentially a buyout.

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Early Retirement

When a federal employee is offered VERA, they may have the option to retire early without penalty under one of two conditions. The federal employee:

  • is any age with at least 25 years of service, or
  • at least 50 years old with 20 years of service.

Retiring under VERA provides a federal employee with their full (unreduced) pension immediately, although certain benefits may be delayed or subject to certain limitations.

VSIP

A VSIP is generally a lump-sum payment offered as an incentive to encourage voluntary separation. Federal employees may be eligible for a VSIP if:

  • they qualify for an immediate unreduced retirement, or
  • they meet the qualifications for a VERA.

Federal Employees Retirement System

Federal employees should remember that if they have been in the Federal Employees Retirement System (FERS) and have at least five years of creditable service, they remain entitled to their pension, which only can be taken away in the event that they are terminated for illegal conduct.

Federal employees’ separation as a result of a RIF, reorganization, and resignation will not negate eligibility. Further, certain parts of FERS (Social Security and the Thrift Savings Plan (TSP)) can go with you to your next job if you leave the federal government before retirement. Additionally, if a federal employee has contributed to their TSP for at least one year, they are fully vested in the agency match.

Legal Action

Federal employees may also have the option to take legal action. The Trump Administration’s attempts to dramatically reduce the federal workforce have already triggered numerous lawsuits from federal employee unions, environmental organizations, Democratic-led states and local school systems, all of which say that their employees  have been or will be unfairly impacted by federal staffing reductions.

In light of the RIFs occurring throughout the federal workforce, it is advisable for federal employees impacted to consult with their agency’s human resources department or a retirement specialist familiar with federal benefits, and most importantly, to consult with a federal employment attorney who will aim to prioritize their best interests.

If you are an employee in the federal workplace who is facing potential job elimination, consulting with an experienced Tully Rinckey federal employment attorney can make all the difference. A skilled attorney can fight to get you the best possible outcome in your case. Call 8885294543 or contact us online today for a consultation and get an advocate who will fight for your rights and help secure your career and your future.

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