Supreme Court Rules Federal Agencies Can Resume Workforce Cuts

The Supreme Court has cleared the way for the Trump administration to fulfill its plans for large-scale reorganizations and mass layoffs at 19 federal agencies and departments while litigation continues.  

The justices on July 8 lifted a lower-court order that temporarily blocked plans to lay off tens of thousands of federal workers amid a legal challenge. The justices said they were not ruling on the legality of the layoff plans but simply allowing the administration to launch the reorganizations while litigation continues. 

In a brief unsigned order, the majority said that “we express no view on the legality of any” agency plans for restructuring or shrinking of the workforce. “Because the government is likely to succeed on its argument — and because the other factors bearing on whether to grant a stay are satisfied — we grant the application,” the majority wrote.  

Only Justice Ketanji Brown Jackson dissented, warning of serious harm that could come from allowing the administration to dramatically remake the federal government before its actions are declared legal or not. The determination of the legality of the layoffs now goes back to the district court.  

The affected agencies include the departments of Agriculture, Energy, Health and Human Services, and Veterans Affairs, as well as the IRS, Small Business Administration, and Environmental Protection Agency.  

The Office of Personnel Management (OPM), the federal government’s HR department, is also expected to be affected, with reduction in force (RIF) notices sent to employees in its communications, human capital data management, and technology offices. 

While some agencies are preparing to implement RIFs, others are relying more on voluntary separations, attempting to get employees to leave voluntarily through a deferred resignation program and other separation and early retirement incentives. 

People + Strategy podcast: The Economic Impact of the Federal Worker Job Cuts

Background

In February, President Donald Trump ordered federal agencies to plan for and carry out mass layoffs and reorganizations as part of his effort to shrink the federal workforce. 

The nation’s largest union of federal workers, the American Federation of Government Employees — joined by 11 nonprofit organizations and six local governments — filed suit, arguing that the Trump administration must receive congressional approval for its reorganization plans. Trump circumvented that obligation by issuing an executive order calling for mass layoffs, the plaintiffs said.  

U.S. District Judge Susan Illston in San Francisco put the order on hold while the litigation proceeded, saying the administration must partner on any mass reorganization with Congress, which created and funds the agencies. The 9th U.S. Circuit Court of Appeals later denied the Trump administration’s request to lift that pause. 

Solicitor General D. John Sauer, the administration’s advocate at the Supreme Court, told the justices that the president does not need special permission from Congress to exercise a core presidential power of overseeing federal agencies. Sauer argued that Trump’s restructuring order is lawful because it directs agencies to ensure they do not eliminate any of the functions that are required by statutes passed by Congress. 

‘HR Will Be Very Busy’

Agencies that have already sent out RIF notices may now be able to finalize the offboarding of thousands of staff. Other agencies are now expected to quickly send out notices of their own. 

“HR will be very busy,” said Michael Fallings, managing partner at law firm Tully Rinckey in Austin, Texas. “RIFs in the federal context have specific policies and procedures that must be followed, including deciding which workers will be impacted by the layoffs. That requires looking at a number of factors, including performance evaluations and tenure.” 

It’s a crucial moment for HR when a RIF occurs, agreed Andrew Challenger, senior vice president at Challenger, Gray & Christmas, a global outplacement firm based in Chicago. “The cuts are usually generated from somewhere else, but HR must guide the process,” he said. “Talent management reviews may have been done, and the most talented people identified in case of layoffs. Sometimes the cuts must happen quickly, which can lead to a more chaotic process.”  

Fallings said that federal layoff notices earlier this year have contained incorrect information about affected employees, including service computation dates, which is one of the things used to determine who is included in a RIF.  

“HR will have to put in a lot of hours to ensure that the correct information is being disseminated,” he said. “This action would normally take months, but it seems that OPM is intending to move quickly. And done at such a rapid pace, that’s when errors are made.”  

Fallings said that after notices are sent out, HR will be spending a lot of time responding to questions and working through appeals. “Legal and the general counsel will surely assist, but HR will have to put in a lot of time and effort getting this right,” he said. 

How-To Guide: Conducting a Layoff or Reduction in Force   

HR will also be tasked with maintaining and restoring organizational culture during and after such a major disruption. That includes considering how roles are adjusted and duties reassigned in the wake of the layoffs, Fallings said. “The agency must still fulfill its mission,” he said.  

“There is a level of care that should be provided in these moments that helps the organization get through with the least amount of damage,” Challenger said. “It’s really important for HR to take care of the people on the way out and handle the layoffs with grace. There’s a focus today on maintaining the morale and productivity of the people who stay.”  

Challenger advised against dragging the layoffs out. “These RIFs are so large they may have to be done in rounds, but make sure the remaining staff know that the RIF is over, so people are not wondering if they are next,” he said.  

Experts recommend offering severance, benefits packages, and outplacement services to transitioning employees. “What will be difficult for these workers — where there is a move to reduce the overall federal payroll — is that they will have to likely search for their next role in the private sector, where there is a translation gap understanding how public-sector work experience relates to the private sector,” Challenger said. “Outplacement or career transition services can help those workers navigate that gap.”