White House Proposal To Withhold Back Pay From Federal Workers Is More Rhetoric Than Reform

The federal government shutdown is in its second week and shows no signs of ending soon. Whenever an agreement is reached to fund the government, thousands of federal employees could face an unwelcome surprise: They might not be paid for the time they were furloughed. On Tuesday, The New York Times reported that the White House Office of Management and Budget (OMB) has considered withholding back pay remuneration for furloughed federal workers—something they’ve been entitled to since the passage of the Government Employee Fair Treatment Act in 2019, signed into law by President Donald Trump following the longest federal government shutdown in U.S. history.

The October 3 memo, drafted by OMB General Counsel Mark Paoletta, argues that the 2019 law merely authorizes the appropriation of back pay rather than automatically requiring it. In Paoletta’s view, Congress would have to explicitly appropriate back pay funding in whatever legislation resolves the shutdown. Under this interpretation, only government employees deemed essential—namely military personnel and air traffic controllers—would remain unconditionally entitled to compensation following the shutdown, the Times reports.

The memo has sparked criticism from both Democrats and Republicans. Senate Majority Leader John Thune (R–S.D.) told The Washington Post that back pay for these workers was “a fairly standard practice.” Sen. Patty Murray (D–Wash.), meanwhile, called it a “baseless attempt to try and scare federal workers,” further adding that “the letter of the law is as plain as can be.” 

Several legal scholars seem to hold a similar view to Murray. Jeremy Dalrymple, associate director of the R Street Institute’s Governance Program, tells Reason that “OMB’s memo offers a novel and legally defensible reading of the statute, but one that departs from both congressional intent and settled administrative interpretation.” Dalrymple contends that while the statute initially left some ambiguity over how furloughed workers would be compensated, Congress amended the law days after it was passed by introducing the phrase “subject to the enactment of appropriations Acts.” He notes that this language is not intended to serve as a limitation, but as a timing safeguard to ensure that back pay would be issued once funding was restored. “OMB’s new reading reverses that understanding, treating the clarification as a restriction rather than a safeguard.”

Thomas Berry, a legal scholar at the Cato Institute, says the question of back pay only becomes complicated if Congress ends the shutdown without addressing it. If lawmakers clearly authorize those payments, he notes, there’s no room for disagreement. Given that members of Congress have, by and large, pushed against the OMB’s memo, Berry expects that “any bill eventually passed will simply explicitly authorize backpay to remove any doubt or uncertainty.”

While the legal debate may be concerned with matters of congressional intent, the effect—and perhaps even the purpose—of OMB’s reinterpretation could be to assert tighter executive control over the federal bureaucracy. OMB Director Russell Vought has hinted that the shutdown could be used to thin the federal workforce, and it appears that may already be happening. Making government employment less secure and appealing could be one way to accomplish this goal.

While an initiative like this does sound like a step in the right direction of reducing the size of the government—in 2023, about 10 percent of federal spending went to pay and benefits for federal employees—lawmakers have signaled that they’re not ready to shrink the federal workforce through layoffs. Meanwhile, in the unlikely event that Congress doesn’t explicitly authorize funding for back pay, the OMB would probably face legal challenges to implementing this plan. 

It seems like the OMB’s memo could be more of a rhetorical attack on federal workers than a well-structured plan. Like past efforts from the Trump administration to allegedly shrink the size of government, which have paid lip service to fiscal restraint while centralizing power, this one might reduce spending on the margins, but it doesn’t address the largest drivers of the federal deficit (entitlement programs, defense spending, and interest payments on the debt). In that sense, it captures the essence of Trump’s approach to the federal bureaucracy: not reform through reduction, but power consolidation through disruption.