I figured this was just a bluff when they didn't do it immediately at the start of the shutdown.

From what I understand, this will only really work if the shutdown lasts another 30 days, which is the minimum required layoff notification. Otherwise, all of those employees will still be entitled to backpay.

The scheme exploits technical wording in the backpay law that specifies any temporarily furloughed employees are guaranteed backpay, but this administration is contending that a laid off employee was not temporarily furloughed.

@Cje95 mentioned elsewhere that even this interpretation may not hold up because congress made the interpretation of it's bill clear in another document.