A federal appeals court has reversed course and halted the Trump administration’s efforts to carry out mass layoffs at the Consumer Financial Protection Bureau (CFPB), deepening an ongoing legal battle over the agency’s future.
In a 2-1 decision issued Monday, the D.C. Circuit Court of Appeals ruled that the administration cannot proceed with plans to fire nearly 90% of the CFPB’s workforce. The decision comes after confusion created by an earlier ruling from the same panel, which the government had interpreted as a green light for the layoffs.
The controversy stems from a lawsuit filed by CFPB employees — supported by the National Treasury Employees Union — who argued that their firings were unlawful. Although the court had previously modified a lower court injunction to allow a limited “reduction in force” (RIF) based on a “particularized assessment” of each employee’s role, the Trump administration interpreted that language broadly and sought to terminate between 1,400 and 1,500 employees.
The move prompted swift intervention from U.S. District Judge Amy Berman Jackson, who blocked the layoffs, arguing that the government had not adhered to the original requirements. The administration then sought emergency clarification from the appeals court, which resulted in Monday’s ruling.
In its opinion, the court acknowledged that its earlier order had introduced ambiguity and said it was necessary to restore protections for CFPB employees until the full appeal is resolved. The court emphasized that any “particularized assessment” must ensure that each division of the CFPB could still perform its statutory duties without the employees slated for termination.
“Given these ongoing disputes, we think it best to restore the interim protection of paragraph (3) of the preliminary injunction,” the majority wrote, “which ensures that plaintiffs can receive meaningful final relief should the defendants not prevail in this appeal.”
The panel also stressed that the broader constitutional issues at stake — including separation-of-powers concerns — would be addressed soon, noting that oral arguments are scheduled within three weeks.
However, Circuit Judge Neomi Rao, a Trump appointee, sharply dissented, accusing the majority of overstepping its bounds and impeding the executive branch’s authority to manage federal agencies.
In her dissent, Rao criticized the majority’s decision to reinstate the injunction, arguing that it effectively requires the CFPB to obtain judicial approval before managing its workforce — a move she called a “preclearance regime” that undermines executive power.
“The district court overstepped our stay,” Rao wrote. “Today’s order hamstrings the Executive and prevents the CFPB from downsizing until the merits of the appeal are resolved.”
Rao further argued that the employees challenging the layoffs had not yet suffered actual harm, since they remained employed at the time of the lawsuit.
This latest development adds another layer of complexity to the high-stakes clash between Trump-era executive actions and judicial oversight, as questions about the scope of presidential power over federal agencies continue to loom large.