Federal agencies picked up new authority this month over who survives a staff cut and who does not, and the deciding factor is no longer mostly a matter of who was hired first. A rule finalized by the Office of Personnel Management rewrites the ranking system used in a reduction in force, moving each employee’s most recent performance rating to the top of that ranking instead of tenure. The federal government’s civilian workforce numbered roughly two million people this year, a scale confirmed by OPM’s own federal civilian employment reporting, so a change to how layoffs get decided reaches into paychecks, health coverage, and retirement timelines across a workforce that size the moment any agency actually orders one.
How the Retention Order Now Works
Under the older reduction-in-force rules, an agency built a retention register that ranked competing employees first by tenure group — permanent career employees ahead of term or temporary ones — then by veterans’ preference, then by length of federal service measured from a service computation date. A performance rating mattered only as a last-resort tiebreaker among employees who were otherwise identical on paper. The rule OPM finalized in the Federal Register flips that order: performance credit, augmented by any veterans’ preference an employee holds, now sits at the top of the ranking, while tenure subgroup and service computation date step in only to break ties between employees who land in the same performance tier.
The practical effect cuts against decades of assumption inside the civil service. A newer hire with a strong recent rating can now outrank a employee with twenty years on the job if that longer-tenured worker’s rating lands lower, a result the old tenure-first register would not have produced. For an older federal workforce where many employees built their retirement planning around the protection that seniority used to provide, that reversal changes the calculus of how much job security a long tenure actually buys.
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Which Employees No Longer Compete for the Same Spot
The same rule also narrows who gets placed into competition in the first place. Employees still serving an initial probationary or trial period, workers holding an appointment of one year or less, and Schedule C or Schedule G political appointees are excluded from reduction-in-force competition entirely under the amended regulations. Removing those categories shrinks the competing pool down toward employees with an established performance history, so the ranking comparison increasingly plays out among career employees whose recent ratings can be measured against each other on similar terms, rather than being diluted by short-term or politically appointed positions that previously occupied competing-level slots.
That narrower pool raises the stakes of a single rating cycle for the employees who remain in it. A retiree-age worker eyeing a pension a few years out no longer gets to assume that simply outlasting newer colleagues protects a position; the rating earned in the most recent appraisal cycle now carries the weight that years of service once did.
Veterans’ Preference Still Counts, and OPM Corrected a Clerical Error
Veterans’ preference has not disappeared from the calculation — it still adds to an employee’s standing — but it now functions as an augmentation to the performance-based ranking rather than as an independent, higher-order factor the way it worked under the old tenure-first register. OPM published the final rule on August 3, 2026, amending parts of Title 5 of the Code of Federal Regulations that govern federal hiring, RIF procedures, and related transitions, and weeks later issued a formal correction fixing typographical and amendatory-instruction errors that had appeared in the original published text. The correction did not change the substance of the rule or push back its effective date.
What Notice a Worker Still Gets Before a Layoff Takes Effect
The new ranking system changes who gets selected for a reduction in force; it does not change how much warning follows once that selection is made. An employee chosen for release from a competitive level is still entitled to a specific written notice at least 60 full days before the release takes effect under the regulation governing RIF notice periods, a window that can be shortened to as few as 30 days only when OPM approves an agency’s request tied to genuinely unforeseeable circumstances. The final rule took effect September 2, 2026, and any agency that had already issued a reduction-in-force notice before that date must finish processing it under the regulations that applied when the notice went out — meaning two employees at the same agency, notified just weeks apart, could end up ranked under two different systems depending on the calendar.
This article was produced with the assistance of AI and reviewed by The Financial Wire editorial team.
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David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
