Judge Moves to Reverse Federal Layoffs — Will Trump Fight Back?

A federal judge has ordered the Trump administration to reinstate approximately 680 federal employees whose jobs were terminated during the recent government shutdown. The move sets the stage for a potential legal showdown over congressional authority and the scope of executive power.

Judge Susan Illston of the US District Court for the Northern District of California ruled on 17 December that agencies must rescind layoffs executed between 1 October and 12 November, when Congress mandated that all reductions-in-force have 'no force or effect'. The ruling effectively overturns the layoffs carried out during that period, demanding that affected employees be returned to their previous positions with full back pay.

The Trump administration, however, disputes the interpretation, arguing that the law only applies to layoffs that were officially noticed during the shutdown period—not those that had been planned or announced earlier. Agencies are given a deadline of 23 December to comply with the order, although the government has indicated it may appeal.

Workers Caught in Administrative Limbo

The legal battle has plunged federal employees into a state of chaos. Employees at the Small Business Administration (SBA) believed they had been saved when, on 17 November, they received letters indicating their terminations had been reversed. Yet, just 24 hours later, another letter arrived: never mind, you're still fired.

At the State Department, the situation was even more chaotic. Staff stationed overseas—including foreign service officers who are usually entitled to 120 days' notice before dismissal—received emails in early December informing them they would be terminated that coming Friday. Several faced separation dates just four days away.

According to reports from the hearing, union attorney Danielle Leonard told the court that employees are facing 'eviction notices and unpaid bills', while agencies are exploiting the confusion to 'keep them in the dark'. One State Department employee, whose September separation was extended due to medical reasons, received notice on 20 October that his termination was effective the day before. That worker remains out of a job.

The Dispute Over Congressional Intent

The root of the confusion lies in conflicting interpretations of what Congress intended. The statute passed on 12 November ended the 43-day shutdown—the longest in US history. Section 120 states that 'any reduction in force executed or implemented' between 1 October and 12 November 'shall have no force or effect'. All affected employees are to be restored to their 30 September status, with full back pay.

The Trump administration's view differs. Reports indicate that the Office of Management and Budget (OMB) issued guidance arguing the law only halts layoffs that were announced during the shutdown period—not those that were planned or initiated earlier but executed during those 43 days. Under this interpretation, an agency could have fired someone in October if the termination notice was sent in July.

Judge Illston rejected this narrow reading. 'Defendants must do what the continuing resolution says,' she wrote. 'If a layoff happened between 1 October and 12 November, it must be reversed—full stop. Agencies cannot proceed with any terminations through 30 January 2026, regardless of when the RIF notice was first issued.'

Government Resists 'Logistically Big Lift'

During the hearing, Justice Department attorney Brad Rosenberg warned that rescinding the layoffs would be 'logistically a big lift' for agencies—particularly if an appeals court later allows them to proceed. 'Government agencies would presumably have to start all over again, and it would be awfully hard to unscramble that egg,' he argued.

Judge Illston acknowledged these concerns and incorporated a five-day delay into her order to give the administration time to decide whether to appeal. The order currently affects approximately 250 Foreign Service officers at the State Department, 200 workers at the General Services Administration, 247 at the Education Department's Office for Civil Rights, and 73 at the Small Business Administration.

A Reprieve, Not a Resolution

Agencies are required to comply with the order by 23 December. However, this reprieve is temporary. Section 120's ban on layoffs expires on 30 January 2026—just six weeks away. After that date, affected workers could face termination again.

If the government appeals and succeeds, agencies could restart layoffs immediately, creating the 'whiplash' that Judge Illston warned about during the hearing. An appeals court could stay or overturn her ruling, plunging workers back into limbo.

Everett Kelley, president of the American Federation of Government Employees, described the ruling as 'another victory for federal employees and for the rule of law,' but he also criticised the administration's 'continued defiance', which he sees as part of a 'troubling pattern'.

This case raises broader questions about the extent to which courts will enforce congressional mandates on spending and employment, especially when the executive branch claims narrow interpretations can be used to circumvent legislative intent. The legal battle is far from over, and the outcome could have lasting implications for federal employment rights and the separation of powers.