The FED Weekly

The FED Weekly 31 May - 6 Jun 2026 (Episode 53)
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[00:00:00] Weekly Briefing Intro
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Welcome to The FED Weekly for 31 May to 6 June 2026, your essential weekly briefing on the policies and proposals shaping your career, your benefits, and your retirement. Whether you’re a current federal employee navigating changes in the civil service, or a retiree keeping a close watch on your hard-earned pension and healthcare, this is your source for the latest news from Capitol Hill and the executive branch.

Each week, we cut through the noise to bring you the critical updates on budget negotiations, pay raises, workforce policies, and the legislative battles that directly impact the federal community. Let's get you up to speed on what happened this past week.

[00:00:44]  Issues That Affect Current and Retired Federal Workers
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Issues That Affect Current and Retired Federal Workers

We begin with a major executive action that has fundamentally transformed the structural framework of the federal civil service. On Wednesday, 3 June 2026, President Donald Trump signed a [00:01:00] landmark executive order transferring approximately 8,000 career federal positions into a newly established employment category designated as "Schedule Policy/Career". This reclassification moves high-ranking, policy-influencing roles from the competitive service to the excepted service, effectively converting these positions into at-will roles.

The executive order builds on OPM's final rule published in the Federal Register on 6 February 2026, which officially went into effect on 8 March 2026, establishing the Schedule Policy/Career framework under Executive Order 14171. Although initial administrative projections estimated that up to 50,000 federal employees would ultimately be transferred, the President decided to scale back the initial implementation to approximately 8,000 positions, focusing strictly on the most senior career policy [00:02:00] officials across the executive branch.

According to administrative details, approximately 97 percent of the affected positions are classified at the General Schedule 15 grade or designated as Senior Level positions. A small fraction of affected roles includes General Schedule 13 and General Schedule 14 positions, primarily concentrated within the Office of Management and Budget. The specific positions targeted for this transition include agency office and division heads, chief information officers, regional officers, deputies, chiefs of staff, program managers, regulatory writers, policy advisors, senior human resources officials, attorneys involved in crafting agency policies, and officials responsible for major federal grantmaking decisions.

Under this new classification, employees lose critical, long-standing civil service protections. Most notably, affected workers are stripped of their right to appeal adverse [00:03:00] personnel actions, such as demotions, suspensions, or terminations, before the Merit Systems Protection Board. Furthermore, whistleblower complaints filed by Schedule Policy/Career employees will no longer be routed to the independent Office of Special Counsel; instead, they will be investigated internally by the employee’s own agency.

OPM Director Scott Kupor defended the executive order during a press briefing on Wednesday, 3 June 2026, emphasizing that the change is centered on workplace accountability. Kupor argued that to implement the policy priorities of the administration, the executive branch must have senior policy-making officials who are willing and capable of carrying out presidential directives. He clarified that if personal political views interfere with executing lawful orders, agencies now possess the mechanism to remove those individuals at will. However, Kupor also specified that this is not a tool [00:04:00] designed for mass layoffs or significant reductions in force, and that employees will still be evaluated based on their individual merit.

[00:04:08] Backlash and Civil Service Fight
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This justification has done little to ease the intense backlash from federal labor organizations and congressional leaders. American Federation of Government Employees National President Everett Kelley condemned the executive order, calling it a blatant attempt to corrupt the federal government by stripping civil servants of due process. Kelley warned that the practical implications are highly dangerous, as workers who previously felt secure reporting waste, fraud, abuse, and mismanagement will now remain silent out of fear of immediate termination.

The National Treasury Employees Union also issued a statement on Thursday, 4 June 2026, promising to aggressively pursue ongoing litigation against the administration’s initiative to protect the integrity of a merit-based civil service. [00:05:00] National Active and Retired Federal Employees Association National President William Shackelford echoed these concerns on 4 June 2026, stating that the order paves the way for expanding political cronyism and replacing highly competent, nonpartisan career professionals with political loyalists.

In Congress, the co-chairs of the Federal Workforce Caucus—Representatives James Walkinshaw of Virginia, Steny Hoyer of Maryland, and Senator Chris Van Hollen of Maryland—released a joint statement on Wednesday, 3 June 2026, denouncing the administration's policy. They continue to urge the passage of the Saving the Civil Service Act, introduced as H.R. 492 in the House and S. 134 in the Senate, to permanently outlaw the implementation of Schedule Policy/Career.

[00:05:50] Whistleblower Protections Bill
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To address the perceived erosion of civil service protections, legislative efforts have intensified around targeted whistleblower safeguards. Prior to the [00:06:00] implementation of the executive order, on Thursday, 21 May 2026, the Senate passed Senate Bill 4631, officially titled "A bill to ensure that whistleblowers, including contractors, are protected from retaliation when a Federal employee orders a reprisal, and for other purposes".

Introduced by Senator Gary Peters, this bipartisan bill seeks to close gaps in current statutes by ensuring that both federal employees and government contractors receive robust protection from retaliation, particularly when a federal official orders a reprisal against them. Following its passage in the Senate, the bill was sent to the House of Representatives, where it was held at the desk, serving as a primary legislative focal point for advocates seeking to defend the integrity of public disclosures amidst the rollback of standard civil service protections.

[00:06:54] Disability Retirement Court Win
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Concurrently, a major judicial development occurred on Monday, 1 June [00:07:00] 2026, that redefines the burden of proof required for federal disability retirement. In the case of Garland v. Office of Personnel Management, the United States Court of Appeals for the Federal Circuit reversed a previous ruling by the Merit Systems Protection Board that had denied disability retirement benefits to former federal employee Tracey Garland. Garland had been terminated from her position at OPM after diagnosed mental health conditions, including major depressive disorder, anxiety, and insomnia, prevented her from performing her essential duties.

Following her termination, Garland applied for disability retirement, but OPM denied her claim on the grounds that she had failed to provide sufficient "objective" medical evidence to support her application. In reversing the MSPB's affirmation of OPM's denial, the Federal Circuit Court cited the landmark 1993 case, Bruner v. Office of Personnel Management, which [00:08:00] establishes that there is a "presumption of disability" when an employee is removed from federal service for medical reasons.

The court ruled that OPM cannot dismiss subjective medical evidence or clinical observations simply because they lack physical, objective testing, which is often limited in mental health cases. Instead, when a medical termination occurs, the burden shifts to OPM to present clear evidence demonstrating that the employee is not disabled. This decision provides critical protection for both active employees transitioning to retirement and retirees defending their disability benefits.

[00:08:37] FERS Disability Rules Explained
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Under the Federal Employees Retirement System, applying for disability retirement requires a highly structured process, governed by strict timelines and offsets. To qualify, a federal worker must have completed at least 18 months of federal civilian service and suffer from a condition that is expected to last at least one year. Applicants must submit form [00:09:00] SF 3107, the Application for Immediate Retirement, and form SF 3112, the Documentation in Support of Disability Retirement, directly to OPM within one year of their separation from service.

Critically, FERS applicants are legally required to apply for Social Security Disability Insurance benefits as well. If an applicant withdraws their SSDI application, OPM is authorized to dismiss the federal disability retirement claim.

The financial payout for FERS disability retirement is heavily dependent on a structured, age-based offset formula designed to prevent "double-dipping" with Social Security benefits. During the first 12 months of disability retirement, the retiree receives a base annuity equal to 60 percent of their "High-3" average salary, which is then offset by 100 percent of any SSDI payments received during that same month. From the thirteenth month until the retiree reaches age 62, [00:10:00] the benefit drops to 40 percent of their "High-3" average salary, offset by 60 percent of their monthly SSDI payment.

Upon reaching age 62, OPM automatically recalculates the disability annuity to match a standard FERS retirement benefit. This recalculation credits the retiree with the years spent on the disability roll as active service, ensuring that their long-term retirement security is not permanently diminished by their health condition. To retain health insurance through the Federal Employees Health Benefits program and life insurance through the Federal Employees' Group Life Insurance program during retirement, disabled employees must have been continuously enrolled in these programs for the five years immediately preceding their retirement or from their first opportunity to enroll.

Furthermore, retirees are permitted to work in the private sector while receiving benefits, provided their [00:11:00] earnings do not exceed 80 percent of the current rate of pay for their former federal position and their new duties do not replicate those they were unable to perform in public service.

[00:11:12] Pacific Northwest FEHB Network
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In healthcare news, federal employees and retirees in the Pacific Northwest received a critical reprieve regarding their health insurance networks. The MultiCare Health System and Premera Blue Cross had been locked in contract negotiations, with MultiCare initially planning to leave the Blue Cross Blue Shield Benefit Plan Preferred network on Monday, 1 June 2026, due to financial misalignment.

However, on 1 June 2026, both parties agreed to extend the contract expiration date to Tuesday, 30 June 2026. This extension ensures that thousands of federal enrollees can continue to receive in-network care while negotiations continue, preventing sudden disruptions to patient care and avoiding high out-of-network [00:12:00] costs.

[00:12:00] Social Security 2026 Updates
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[00:12:00]  Issues That Affect Retired Federal Workers
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Issues That Affect Retired Federal Workers

The broadcast now transitions to critical developments that apply exclusively to retired federal employees, starting with the updated financial parameters governing Social Security for the 2026 calendar year. Following the Cost-of-Living Adjustment implemented in January 2026, which raised Social Security benefits by 2.8 percent based on the annual consumer price index adjustments, retired federal workers must navigate several updated thresholds to optimize their financial planning.

The maximum taxable wage base subject to the Social Security payroll tax is capped at $184,500 in 2026, representing an increase from the previous year. For early retirees who have claimed Social Security benefits but continue to earn income, the 2026 earnings limit is established at $24,480 for those [00:13:00] below their Full Retirement Age, and $65,160 for those reaching their Full Retirement Age within the year.

The maximum monthly benefit available to retirees claiming benefits in 2026 varies significantly based on the age at which they file. For those claiming early at age 62, the monthly maximum is $2,969. Retiring at the Full Retirement Age of 67 yields a maximum monthly benefit of $4,152, while delaying retirement to age 70 maximizes the benefit at $5,181 per month.

These benefits are calculated using a progressive Primary Insurance Amount formula based on the retiree's Average Indexed Monthly Earnings. For individuals first becoming eligible for benefits in 2026, the formula divides the monthly earnings into three brackets using designated "bend points" set at $1,286 and $7,749. The 2026 formula awards [00:14:00] 90 percent of monthly earnings up to the first bend point of $1,286, 32 percent of earnings between $1,286 and $7,749, and 15 percent of any amount exceeding the second bend point of $7,749.

Retirees must also account for the federal taxation of their Social Security benefits based on their combined income. For single filers, a combined income between $25,000 and $34,000 may subject up to 50 percent of their benefits to federal income tax, rising to 85 percent for incomes exceeding $34,000. For joint filers, the 50 percent tax bracket applies to incomes between $32,000 and $44,000, with up to 85 percent of benefits subject to taxation for joint incomes exceeding $44,000.

[00:14:53] Taxes Roth and WEP GPO
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The financial security of retired federal workers remains heavily impacted by the Windfall Elimination [00:15:00] Provision and the Government Pension Offset. Bipartisan efforts to repeal these offsets have gained renewed attention under proposed legislative frameworks, such as the "AAA Plan for Seniors," which advocates for the full repeal of both WEP and GPO to restore full earned benefits and spousal survivor benefits to public sector retirees.

In the interim, financial specialists emphasize that retirees must proactively manage their tax brackets. Because the Tax Cuts and Jobs Act rates are permanent under the OBBBA, or One, Big, Beautiful Bill Act, retirees have a predictable window to execute traditional-to-Roth conversions within the Thrift Savings Plan or individual retirement accounts.

In 2026, the 22 percent tax bracket ceiling for married couples filing jointly is set at $214,000, allowing retirees to convert traditional tax-deferred assets into tax-free Roth accounts before Required Minimum Distributions begin at [00:16:00] age 73. Strategic conversions are highly recommended for those who delay Social Security to age 67 or 70, as doing so minimizes taxable income, shields future distributions from high tax rates, and avoids triggering costly Medicare Income-Related Monthly Adjustment Amount surcharges.

[00:16:19] TSP May 2026 Performance
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In market news, the Thrift Savings Plan experienced strong growth throughout the month of May 2026, providing a significant boost to retiree portfolios as reported in early June 2026. Each of the primary investment funds finished the month of May in the black, marking the second consecutive month of gains.

The Common Stock Index Fund, or C Fund, led all performers with a monthly gain of 5.26 percent, bringing its year-to-date growth in 2026 to 11.26 percent. The International Stock Index Fund, or I Fund, finished second, increasing by 4.90 percent in May and posting a stellar [00:17:00] 16.56 percent growth since January. The Small Capitalization Stock Index Fund, or S Fund, gained 4.49 percent, raising its year-to-date performance to 13.48 percent.

The Fixed Income Index Fund, or F Fund, grew by 0.33 percent in May, bringing its year-to-date growth to 0.49 percent, while the Government Securities Investment Fund, or G Fund, increased by its statutorily mandated rate of 0.39 percent, totaling 1.80 percent growth in 2026.

The lifecycle funds, which are designed to shift toward more conservative investments as participants near or enter retirement, also posted positive returns. The L Income Fund, designed specifically for retirees who have already begun making systematic withdrawals, gained 1.66 percent in May, bringing its year-to-date performance to 4.93 percent. The remaining lifecycle funds, ranging from L 2030 to [00:18:00] L 2075, recorded gains ranging from 2.95 percent up to 5.00 percent for the month of May, providing critical buffer capacity for retirees managing systematic withdrawal plans.

[00:18:13] NDA Proposal and Surveillance
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[00:18:13]  Issues That Affect Current Federal Workers
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Issues That Affect Current Federal Workers

The final segment of the broadcast focuses exclusively on issues impacting active federal employees, starting with a controversial regulatory proposal regarding workplace confidentiality and employee surveillance. On Tuesday, 26 May 2026, the OPM proposed a new draft regulation that would require federal employees to sign mandatory nondisclosure agreements. This draft NDA, which faced mounting resistance from employee unions and whistleblower protection groups during the week of 31 May 2026, is designed to crack down on unauthorized disclosures of sensitive, confidential information to the media.

Under the provisions of the draft agreement, the [00:19:00] administration can pursue civil and criminal penalties against employees who violate the terms. Additionally, the federal government would be legally entitled to seize all royalties and financial compensation received by employees who disclose unauthorized information.

Crucially, the draft agreement mandates that former federal employees must obtain written permission from an authorized agency official prior to speaking to journalists about information deemed "confidential" by the administration. OPM spokesperson McLaurine Pinover defended the draft, stating that unauthorized leaks disrupt agency operations and erode public trust.

However, federal labor organizations have aggressively opposed the measure. AFGE National President Everett Kelley labeled the proposed agreement an unconstitutional attempt to purge the civil service of nonpartisan workers and suppress first amendment rights. Legal experts, including federal union [00:20:00] leaders, have publicly noted that these NDAs do not supersede federal statutes or the Constitution, and that federal employees retain protected rights to communicate directly with Congress, inspectors general, and the press regarding government misconduct, waste, and fraud.

Compounding these privacy concerns, reports on Wednesday, 3 June 2026, revealed that the administration has awarded a $3.9 million contract to Palantir to monitor and analyze employee digital activity, sparking intense debates regarding workplace surveillance and civil liberties.

[00:20:36] Telework Rollbacks and Lawsuits
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Active federal employees are also navigating severe rollbacks to telework policies and forced geographic reorganizations. On Monday, 1 June 2026, the Consumer Financial Protection Bureau officially terminated its employee telework program, requiring approximately 1,100 employees to report to work five days a week at the bureau's new Washington, [00:21:00] D.C. headquarters. This mandate also involves terminating the leases on all four of the CFPB's regional offices, affecting 450 employees who reside outside the Washington, D.C. area.

According to a transition memo issued by Chief Operating Officer Adam Martinez, senior agency leadership and supervisors are required to report to the new headquarters on Monday, 6 July 2026, followed by D.C.-area staff on Monday, 13 July 2026, and all national staff by Monday, 31 August 2026. Exceptions will be reserved strictly for hard-to-fill roles.

The NTEU has challenged these actions in court, arguing that the telework rollback and regional office closures represent an unauthorized, de facto dismantling of the agency in violation of congressional mandates. However, a divided three-judge panel of the D.C. Circuit reversed a previous preliminary injunction, ruling that the employment dispute [00:22:00] must proceed through the Civil Service Reform Act's administrative framework.

In a related development, a federal lawsuit filed on Wednesday, 3 June 2026, alleges that the Department of Justice is actively retaliating against employees with disabilities by strictly scrutinizing and denying telework requests made as reasonable accommodations, illustrating a broader systemic effort to restrict remote work.

[00:22:26] USDA Relocations Staffing Crisis
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At the Department of Agriculture, forced relocations are driving a massive staffing crisis within the Food and Nutrition Service. The USDA announced a reorganization plan that closes several regional offices and its Washington, D.C. headquarters, requiring FNS employees to relocate across the country.

An internal poll conducted by NTEU Chapter 226, representing FNS workers, and released on Friday, 5 June 2026, revealed that more than 80 percent of surveyed staff will refuse to relocate to keep their jobs due to [00:23:00] family commitments and spousal careers. The survey indicated that 90 percent of WIC employees, 81 percent of SNAP employees, and 78 percent of child nutrition employees will resign rather than move.

Union officials warn that these resignations will cause the critical food assistance programs to collapse, particularly since FNS has already lost 30 percent of its workforce under the current administration. This matches historical trends; following similar relocations at the Economic Research Service and the National Institute of Food and Agriculture in 2019, both agencies lost over half of their staff, suffering severe productivity declines that took years to recover.

[00:23:44] Civil Service Shrink and Safety
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These targeted disruptions are part of a broader contraction of the civil service. A report published on Tuesday, 2 June 2026, by the Partnership for Public Service found that the overall federal civil service shrank by 12.3 [00:24:00] percent between September 2024 and February 2026. Federal science agencies bore the brunt of these reductions, losing a combined 118,000 employees. Notably, the Substance Abuse and Mental Health Services Administration lost 41.7 percent of its staff, while public sector employees in Alaska experienced the largest state-level reduction at 36.7 percent.

Current federal workers are also facing severe environmental safety crises in their physical workplaces. On Friday, 5 June 2026, the NTEU issued an urgent call for the IRS to immediately close its Atlanta Campus located in Chamblee, Georgia. Employees at the facility are reportedly being forced to work in an environment infested with rats and cockroaches, with work areas and desks covered in rat urine and feces.

The union criticized agency management for a slow, dismissive response, prompting [00:25:00] several employees to contact the Occupational Safety and Health Administration and the Department of Labor. The NTEU is demanding the immediate restoration of full telework for the Atlanta Campus to ensure employees can perform their duties in a safe and sanitary environment.

[00:25:17] Pay Promotion and Labor Ruling
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On a positive note, OPM has proposed critical regulatory reforms designed to modernize pay and promotions. On Tuesday, 2 June 2026, OPM proposed a rule that would give the OPM Director delegated authority to approve agency requests for "critical pay" positions. Currently vested solely in the President under the Federal Employee Pay Comparability Act of 1991, this change would allow OPM to quickly approve salaries equivalent to the Vice President's salary to recruit top-tier talent for up to 800 critical positions governmentwide.

Additionally, OPM has proposed the complete abolition of the long-standing, one-year time-in-grade [00:26:00] waiting period for General Schedule promotions. This reform would allow agencies to promote high-performing civil servants faster based on demonstrated capability rather than rigid, formulaic timelines.

Finally, active employees should note a significant decision issued on Monday, 1 June 2026, by the Federal Labor Relations Authority in the case of National Treasury Employees Union and the Federal Trade Commission, Case Number 0-NG-3732. The FLRA, led by Chairman Colleen Duffy Kiko and Members Anne Wagner and Charles O. Arrington, issued a ruling on negotiability issues stemming from the FTC’s disapproval of an interim collective bargaining agreement.

FTC Chairman Ferguson had disapproved the agreement on 17 February 2026 because it was executed by former Chair Lina Khan on 19 January 2025, just one day prior to the presidential inauguration. Ferguson argued that a [00:27:00] Presidential Memorandum required disapproval of late-executed agreements.

The union challenged the disapproval, arguing that Khan’s signature had successfully concluded the agency-head review under 5 U.S.C. 7114(c). The FLRA evaluated the strict 30-day statutory timeline for agency-head review and the procedural rules governing the timely filing of statements of position. This decision highlights the complex legal boundaries governing labor negotiations and contract approvals during executive transitions.

[00:27:33] Closing and Next Week
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And that’s a wrap on this week’s Federal Workforce Roundup. The landscape for federal employees and retirees is constantly shifting, with major decisions being made about everything from pay and job security to retirement benefits and the very structure of the civil service. Staying informed is your best tool. Be sure to subscribe wherever you get your podcasts, so you never miss an update.

Thanks for tuning [00:28:00] in. We’ll be back next week to track the latest developments and what they mean for you. Until then, stay engaged and be well.