A federal judge has halted the planned layoffs of more than 1,500 employees at the Consumer Financial Protection Bureau (CFPB), pausing what would be one of the most significant workforce reductions in the agency’s history.
U.S. District Judge Amy Berman Jackson issued the order ahead of an April 28 hearing in response to a lawsuit brought by the National Treasury Employees Union and other groups. The judge’s decision freezes the layoffs and preserves staff access to computer systems while the court reviews the legality of the move.
Background on the DisputeÂ
The controversy began when the Trump administration announced a “reduction-in-force” plan aimed at restructuring the CFPB. Acting Director Russ Vought explained in a notice to employees that the layoffs were part of an effort to align the agency with its “priorities and mission.” The proposed cuts would eliminate about 90% of the bureau’s staff, reducing the workforce to just 200 employees.Â
This restructuring faced immediate legal challenges. The union, which represents CFPB employees, previously raised concerns over multiple actions by Vought’s leadership, including a stop-work order and terminations that the union claims violate prior court rulings.Â
Judge Jackson had already issued a preliminary injunction in March, warning that ongoing actions could effectively dismantle the agency. Her latest ruling reinforces that position by halting further layoffs and preserving the CFPB’s core consumer-facing functions, such as its phone line, website, and complaint database.Â
Judge: “We’re Not Going to Disburse 1,483 People into the Universe”Â
During court proceedings, Jackson emphasized the need for due process and questioned the suddenness of the layoffs. “We’re not going to disburse 1,483 people into the universe and have them be unable to communicate with the agency anymore until we have determined whether that is lawful or not,” she said.Â
The union argues the administration failed to conduct a proper assessment of which positions are essential, claiming that entire offices—some of them legally mandated—are at risk of being eliminated or reduced to a single person.Â
Government Response and Legal DevelopmentsÂ
In court filings, the administration maintains that the layoffs are justified and comply with legal procedures. CFPB Chief Legal Officer Mark Paoletta stated that agency leadership determined the CFPB could operate effectively with a reduced staff of 200. The administration has since appealed Jackson’s ruling, arguing that the court should not interfere with internal decisions regarding staffing.Â
Meanwhile, key figures—including Paoletta and Gavin Kliger from the Department of Government Efficiency—are scheduled to testify at the April 28 hearing.Â
Leadership in TransitionÂ
The legal dispute comes at a time of transition for the agency. The Senate is currently considering the nomination of Jonathan McKernan as the next CFPB director. His nomination passed the Senate Banking Committee by a narrow vote and is now awaiting a full Senate decision.Â
As the April hearing approaches, the outcome could have far-reaching implications for the CFPB’s structure, its mission, and how federal agencies manage internal workforce changes under legal scrutiny.Â
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Author:Â Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
