Appeals Court Blocks CFPB Layoffs Pending Court Battle on Downsizing

An appeals court ruled Monday (April 28) afternoon in a 2-to-1 decision that the Consumer Financial Protection Bureau (CFPB) cannot proceed with its mass layoffs until a court battle over the agency’s downsizing is completed.

Judges Cornelia Pillard and Gregory Katsas voted for that decision, while Judge Neomi Rao dissented, saying the ruling “hamstrings the Executive and prevents the CFPB from downsizing” until the appeal is decided, Reuters reported Tuesday (April 29).

The judges voting to block the layoffs cited “ongoing disputes” over whether the CFPB’s leaders had properly evaluated whether the agency could continue to perform its legally mandated tasks if the leaders did the downsizing they aim to do, The New York Times reported Monday.

The temporary ban on layoffs is set to remain in effect until at least May 16, when the appeals court will hear oral arguments on that issue, according to the report.

It was reported April 17 that the CFPB was laying off 1,500 employees, reducing its staff to 200.

Acting CFPB Director Russell Vought wrote in a notice to the affected employees that the cuts are “necessary to restructure the Bureau’s operations to better reflect the agency’s priorities and mission.”

National Treasury Employees Union (NTEU) President Doreen Greenwald said at the time in a statement: “For the CFPB to issue RIF [reduction in force] notices — in which we are already identifying mistakes — to a large group of employees less than four business days for the D.C. Circuit order’s issuance indicates that CFPF has likely not made the required particularized assessments.”

A federal judge blocked the CFPB’s plan to lay off 90% of the staff on the following day, April 18, saying she would determine whether that move violated her previous order that the agency could not conduct the RIF until it showed that employees who were laid off were not necessary for it to fulfill its statutory duties.

It was reported Sunday that newly released court records showed that employees of the CFPB warned their bosses via email and chat that firing so many workers at the same time would ruin the agency’s ability to function.