The federal government’s new deferred resignation offer, providing up to eight months of salary for employees who voluntarily resign, has left many workers facing a tough decision. While the offer may seem like an attractive financial incentive, accepting it could come with long-term consequences—both financially and professionally.
Before making a decision, federal employees should carefully weigh:
- The financial implications of taking the deferred resignation.
- Potential legal risks and loss of employment protections.
- Alternatives to resigning, including legal challenges and career strategies.
Understanding the Federal Deferred Resignation Offer
Federal Voluntary Separation Incentive Payments (VSIPs) are designed to encourage employees to resign, allowing agencies to downsize their workforce without forced layoffs. This particular deferred resignation program is unprecedented in its speed and scale, requiring employees to opt in within a short timeframe.
Key Features of the Deferred Resignation Offer
✔️ Incentive Amount: Up to eight months of salary, depending on tenure and other factors.
✔️ Eligibility: While specifics may vary by agency, most federal employees appear to qualify.
✔️ Resignation Deadline: Employees must decide quickly, often within several days.
✔️ Post-Resignation Benefits: Employees retain certain federal benefits temporarily but lose their job protections.
At first glance, the offer may seem like a lifeline for employees considering a career change or early retirement, but the decision to resign should not be made lightly.
The Deferred Resignation Offer can be read in full here.
Pros and Cons of Accepting the Deferred Resignation
✅ Potential Benefits of Accepting the Deferred Resignation
✔️ Short-Term Financial Gain: Receiving eight months of salary could provide a financial cushion for employees planning retirement or transitioning to the private sector.
✔️ Voluntary Exit vs. Forced Layoffs: Accepting a deferred resignation may be preferable to facing an involuntary layoff in the future, especially if further downsizing is expected.
✔️ Freedom to Transition: Employees who are considering a career change, consulting work, or starting their own business may find the deferred resignation an opportunity to move on with financial security.
✔️ Temporary Exemption from In-Person Work: Employees who accept the deferred resignation will not be required to return to their physical office under new return-to-work policies until the deferred resignation period ends.
❌ Risks and Downsides of Accepting the Deferred Resignation
⚠️ Loss of Job Protections: Once an employee resigns, there is no option to return if they later regret the decision. Employees should consider whether their agency will offer future employment opportunities.
⚠️ Limited Unemployment Benefits: Employees who voluntarily resign may not qualify for unemployment benefits, depending on their state’s laws.
⚠️ No Guarantee of New Employment: If transitioning to a private-sector job, employees should ensure they have job prospects lined up before resigning. Many private employers may hesitate to hire former federal employees due to security clearance transfer issues or lack of private-sector experience.
⚠️ Impact on Retirement and Benefits:
- Federal pensions: Employees who resign before meeting retirement eligibility lose access to certain pension benefits that may be crucial for long-term financial security.
- Health insurance: Federal health benefits may continue for a short time but will eventually expire unless the employee qualifies for retirement.
⚠️ Tax Implications: The lump-sum nature of the deferred resignation could result in higher tax liabilities, pushing employees into a higher tax bracket for the year.
Legal Risks and Considerations Before Resigning
- Is This a Forced Resignation?
✔️ Potential for Coercion: If employees feel pressured to resign due to political motivations, ideological differences, or fear of reclassification, this could be grounds for legal challenges related to wrongful termination.
✔️ Schedule Career/Policy Reclassifications: Employees should review whether their position may be reclassified under the new “Schedule Career/Policy” order, which could change their job security. If their classification is not yet determined, resigning could be premature.
- Is the Deferred Resignation Offer Enforceable?
✔️ Contractual Obligations: Employees should carefully review the terms of the deferred resignation agreement to determine whether there are any hidden conditions that could impact their ability to work in the private sector, rejoin the government, or access future benefits.
✔️ Waiver of Legal Claims: Some deferred resignation agreements require employees to waive legal rights, including the ability to file future lawsuits for wrongful termination or discrimination. Employees should consult an attorney before signing.
- Does Accepting the Deferred Resignation Impact Whistleblower Protections?
✔️ If an employee is considering reporting misconduct, fraud, or retaliation, resigning under this program could affect their ability to claim whistleblower protections under federal law.
✔️ Legal Recourse May Be Limited Post-Resignation: Once an employee voluntarily resigns, their ability to challenge adverse employment actions or seek whistleblower protections may be weakened.
Alternatives to Resigning: What Other Options Do Federal Employees Have?
For those uncertain about accepting the deferred resignation, there are alternative strategies that may offer better long-term outcomes.
- Explore Legal Challenges to the Deferred Resignation
✔️ Employees who believe the deferred resignation is being used to target certain groups for political or ideological reasons may be able to challenge it through federal employment laws or union protections.
✔️ The Office of Special Counsel (OSC) investigates politically motivated personnel actions and could be a resource for those concerned about unfair treatment.
✔️ Consulting a federal employment attorney can help employees understand their legal options before making an irreversible decision.
- Consider Transferring to Another Federal Position
✔️ Some federal employees may qualify for transfers to other agencies or roles within the government, preserving job security, benefits, and retirement eligibility.
✔️ Requesting a Reassignment: Employees facing downsizing or reclassification may be able to negotiate alternative roles within their agency instead of resigning outright.
✔️ Union Protections: Employees covered by federal unions should consult their representatives to explore grievance procedures or legal avenues for protecting their positions.
- Delay Resignation and Monitor Future Changes
✔️ Employees who are undecided may hold off on making a decision and monitor whether additional benefits, protections, or alternative job placements become available.
✔️ If the deferred resignation deadline is extended, employees may have additional time to weigh their options.
✔️ If widespread resignations cause operational failures, agencies may revise their policies or offer better incentives to retain key employees.
Final Thoughts: Protect Your Career Before You Resign
The federal deferred resignation program is a major shift in government employment, but resigning without fully understanding the legal and financial consequences can have lasting effects on your career and benefits. Before making a decision, get expert legal guidance.
🔹 Considering the deferred resignation? Understand how it impacts your pension, benefits, and future job prospects.
🔹 Feeling pressured to resign? Learn your legal options and protections before signing anything.
🔹 Planning to stay? Prepare for potential reclassification, policy changes, or job security risks.
Book a Strategy Session with Our Attorneys
💼 One-hour legal strategy session – $750
✔️ Get personalized legal advice on the deferred resignation and its implications.
✔️ Understand the risks and alternatives before making your decision.
✔️ Explore legal protections and strategies tailored to your situation.
📞 Call us today to schedule your session: 202-600-4996
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