Last Updated: 10/17/2025
As the federal budget impasse continues, thousands of workers are missing their paychecks through no fault of their own. This situation is stressful for federal employees and their families, who rely on this pay to meet their everyday needs. The pain extends to the employees of federal contractors and their families. Unemployment compensation is available. Claimants must apply for unemployment insurance benefits in their state. A federal employee’s last official duty station determines the state in which the employee may submit an unemployment insurance application. Benefit amounts and duration vary by state.
Who Qualifies
Furloughed employees who are prevented from working may qualify for benefits but must repay them after they receive backpay (if and when their jobs resume after the government shutdown). As an example, furloughed federal employees receive unemployment benefits as a loan that must be repaid once backpay arrives.
Employees of federal contractors may be eligible for unemployment insurance benefits when they cease work. If you receive a W-2, you are an employee.
Who Does Not Qualify
“Essential” or “excepted” employees who must keep working do not qualify for unemployment benefits. Legislation to address employees in this situation has been proposed.
Independent contractors may not qualify either. If you receive an IRS Form-1099 reporting your earnings, you are probably an independent contractor.
Recommendations
- If you are not sure whether you qualify for unemployment benefits, go ahead and apply. If denied, you can still appeal.
- Consult your labor union for information during any major employment event.
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