The mass layoffs by the Department of General Employment (DOGE) could put an immense strain on the US unemployment system, especially as federal workers apply for unemployment insurance (UI). According to a new report from The Century Foundation, these layoffs have the potential to overwhelm the already fragile unemployment system, leaving thousands of workers in limbo. With these layoffs occurring at an unprecedented scale, federal workers may face significant delays in securing the benefits they need to sustain themselves.
The report highlights that the federal unemployment benefits system, especially under the Unemployment Compensation for Federal Employees (UCFE) program, was already under stress during the pandemic. Now, with the current wave of layoffs, including mass firings of probationary employees, the system could become even more inundated, leaving federal workers vulnerable. This could lead to a crisis where workers are unable to access critical benefits during a time of urgent need.
The complicated process for federal workers to claim benefits
The UCFE system requires that state unemployment agencies verify the wages and reasons for separation of federal employees through a form called the ES-931, which is sent to federal agencies. However, the system is not designed to handle the volume of claims that will arise from the current layoffs. If federal agencies do not respond to these forms within a prescribed time frame (12 days), federal regulations allow the state agencies to use alternative evidence, like workers’ pay stubs, to determine eligibility and begin payment.
Federal agencies have been slow to respond to these forms in the past due to resource constraints and high employee turnover. States are advised to be proactive and collect affidavits from workers immediately when they file claims. This is particularly important as a significant number of workers may be furloughed or terminated without proper documentation due to the ongoing layoffs.
Despite the risk of fraud, which could be exacerbated by affidavits, the report encourages states to take action to quickly process claims by deploying enhanced fraud prevention techniques such as identity verification systems. By doing so, states can balance efficiency with fraud protection while ensuring workers get timely support.
Potential consequences for probationary employees
One of the most vulnerable groups of federal employees affected by DOGE’s layoffs are probationary employees. Thousands of such workers have been terminated under unusual circumstances. The report emphasizes that most of these layoffs were not based on individual performance but instead reflect the broader economic and political decisions at DOGE.
These probationary employees are being laid off in mass quantities, making the process of determining eligibility for benefits complex. If state agencies mistakenly classify these layoffs as firings for misconduct, it will cause unnecessary delays in the processing of claims. State workers will need specific training to identify these cases correctly, especially as mass layoffs become more frequent and more urgent. With the number of affected employees growing rapidly, the urgency to prevent delays is even more critical.
State agencies must act quickly to ensure these employees receive their benefits promptly, particularly since probationary employees do not have the same protections as permanent staff.
The Fork in the Road buyout offer and its potential impact
Another key issue raised in the report is the impact of the “Fork in the Road” buyout offer extended to 75,000 federal workers. This buyout offer was designed to encourage workers to resign voluntarily, giving them full pay and benefits through September 30, 2025. However, workers who accept this offer may risk losing their eligibility for unemployment benefits.
If federal workers accept this buyout, they may be seen as resigning voluntarily, which could disqualify them from unemployment benefits. In some states, resignation for personal reasons or voluntary exit could trigger automatic disqualification. Workers who take the buyout could argue that they were forced to leave their jobs because of the impending layoffs and should thus be eligible for unemployment benefits, but this will likely require a case-by-case review.
This scenario presents a critical gap in the system, particularly for those who accepted the buyout offer but are still in vulnerable roles, such as those in probationary jobs, especially in climate-related positions. As a result, it is essential that state agencies be prepared for a surge in claims from these workers after September 30, 2025.
Fraud prevention and state-specific solutions
Given the rising number of claims and the potential for fraud, the report stresses the importance of state agencies deploying advanced fraud prevention systems. Affidavit-based claims, like those being used during this period, are particularly prone to abuse, but enhanced identity verification measures can help mitigate the risk.
States can also take proactive steps to facilitate the process. For example, they can request a census of employees from federal agencies with a large workforce in their state, which can help them cross-check incoming claims more efficiently. Several states, such as Maryland, Washington D.C., and Washington State, have already begun preparing for the surge in claims by publishing customized FAQs for federal employees and setting up dedicated call centers. These states could serve as models for others in how to streamline the claims process and reduce delays for federal workers.
State legislative actions and additional resources
Beyond improving administrative processes, the report suggests that state legislatures play a crucial role in helping ease the burden on federal workers. In the past, during emergencies like Hurricane Helene, North Carolina directed state-funded assistance to help workers in addition to their unemployment benefits. States could follow this example and provide additional resources for federal workers facing extended layoffs or those who are in transition after the end of remote work policies.
Legislators could also pass measures to speed up the job matching process, especially for federal workers who could be quickly connected to local and state government jobs. This support would not only ease the burden on the unemployment system but also help these workers transition into new employment opportunities without facing long-term financial strain.
Summary of the key challenges
Urgent need for action
The current wave of layoffs by DOGE has the potential to overwhelm the unemployment system and leave federal workers in a dire situation. The report underscores the urgency for state agencies to take immediate action to streamline the claims process, ensure correct classification of layoffs, and deploy enhanced fraud prevention measures. State legislatures, too, have a role to play in providing additional support and resources to federal workers, especially in light of the unprecedented scale of these layoffs.
Federal workers, many of whom were already facing economic hardship due to the pandemic, now find themselves in a crisis of uncertain unemployment claims and delayed benefits. It is crucial that both state and federal agencies act quickly and efficiently to ensure these workers are not left without the financial support they need during this turbulent time.
