Legal experts question legality of HHS mass layoffs

The U.S. Department of Health and Human Services (HHS) mass layoffs have not only caused confusion and stress among employees, but according to lawyers and federal employment experts, the action may also be illegal.

Healthcare Dive interviewed more than a dozen current and former HHS employees, who all noted that multiple aspects of the reduction in force (RIF) deviated from standard procedures. A former government official likened the formal RIF process to a "lost art," describing it as complex, burdensome, and rare. All interviewees requested anonymity to avoid retaliation.

Potential Violations

Potential issues include closing entire offices (some of which are legally required to be retained), inconsistent criteria used by HHS to determine who was laid off, erroneous information in termination notices, and a lack of transparency with department heads and unions. Several legal experts believe some of these issues could constitute grounds for lawsuits. Unions and employment law firms have already begun paying attention and have contacted affected employees to gather information.

On April 8, a virtual town hall hosted by the law firm Gilbert Employment Law for HHS employees was so well-attended that Zoom's capacity limits temporarily removed participants. Another law firm, Federal Practice Group, told Healthcare Dive it plans to file appeals with the board that protects government employees from unlawful termination.

Meanwhile, the National Treasury Employees Union (NTEU), which represents employees at several HHS agencies, has filed an agency grievance, initiating an internal complaint process that could ultimately go before an arbitrator, according to union emails shared with Healthcare Dive.

Chaotic Layoff Process

Two weeks have passed since HHS began sending RIF notices to employees on April 1, yet it remains unclear how the RIF is being implemented, who is primarily responsible, and how layoff targets are being selected from HHS's more than 80,000 employees. The layoffs will cut approximately 10,000 employees, leaving everyone from top management to rank-and-file staff confused. HHS Secretary Robert F. Kennedy Jr. even admitted he doesn't know the full scope of the layoffs, telling CBS News that up to 20% of affected employees might be reinstated, a claim denied by other HHS officials.

"This operation is so sloppy and careless," said one unaffected long-time National Institutes of Health (NIH) employee. "The incompetence shocks me."

Legal Questions Abound

In a government RIF, agency officials typically identify an area they wish to streamline, such as a specific geographic region or office; these parameters are known as "competitive areas." Agencies may also designate affected job types and then determine the number or percentage of layoffs. Subsequently, agencies score all employees within the competitive area based on hire date, veteran status, performance ratings, and whether they are career or probationary employees, using a "retention register" to decide who stays and who goes. Agencies can also use a "bump and retreat" process to move higher-performing employees into lower positions to retain talent.

Ron Sanders, a government official who long handled RIFs at the Department of Defense, described government layoffs as essentially a "game of musical chairs" where "the RIF decides who gets a chair." The entire process, if strictly followed, can take months and is highly labor-intensive. But HHS did not do this; instead, it chose to close entire offices outright, allowing it to move faster and bypass ranking requirements. Experts note this approach is highly unusual but may not be illegal, depending on how HHS defines its competitive areas. If HHS defines an entire office as a competitive area and closes it entirely, no ranking is required.

However, Healthcare Dive found that employees in at least four offices received RIF notices designating their entire office as the competitive area and stating the entire area would be separated, yet not all employees were laid off. To protect the identities of sources, specific office names were not disclosed, but they involved multiple divisions within NIH, the Centers for Medicare & Medicaid Services (CMS), and the Administration for Children and Families (ACF).

"I guess they just haven't gotten to us yet," one NIH employee said. "If they eliminate the whole office, they can take the fast track and get rid of everyone. But they can't keep some and cut others."

Tamara Slater, a shareholder at the employment law firm Alan Lescht and Associates, also believes this appears to violate the law. "I do think that when looking at the RIF notices, there are many aspects that don't seem to have been followed correctly," Slater said. "HHS seems to be trying to circumvent RIF regulations by separating entire competitive areas, but they haven't actually separated everyone in those areas. I think that's what they're trying to do, and I think there will be legal challenges."

A RIF notice issued by HHS Chief Human Capital Officer Tom Nagy stated that a retention register had been prepared to execute the RIF. But a former ACF employee said that based on who in their office was laid off and who wasn't, it seemed unlikely the department actually conducted a ranking. "My seniority was higher than one of my direct reports, but he wasn't RIF'd; if the process had been done correctly, he should have been," they said. An HHS spokesperson did not respond to multiple requests for comment.

Unions and Law Firms Step In

Other aspects of the RIF also have problems, including erroneous information in termination notices. Some employees received RIF notices with incorrect office names or inaccurate performance ratings. Employment lawyers say such errors may not be illegal in themselves, but they could negatively impact specific employees, such as affecting their position on the retention register or their entitled severance pay.

Robert Hinckley Jr., managing shareholder at the law firm Buchalter, advised employees with problematic paperwork to notify human resources and plan to appeal to the Merit Systems Protection Board (MSPB). However, many HHS human resources employees were also laid off in the RIF, and Equal Employment Opportunity Commission office staff were cut as well, which will lead to a backlog of correction requests and hinder employees from filing discrimination complaints. The MSPB faces similar issues; earlier this year, only one of its three board members remained in office after one member's term expired and President Donald Trump removed a Democratic appointee. That appointee, Cathy Harris, was reinstated by a district court, but the Supreme Court temporarily upheld her removal. Leadership turmoil, combined with a surge in appeals from other federal employees, could lead to a case backlog.

In the short term, employees have limited avenues to complain about how the RIF was conducted. Lawsuits could fill that gap. At least two law firms in Washington, D.C., are communicating with affected HHS employees about the possibility of filing class-action lawsuits, including Gilbert Employment Law and Federal Practice Group, which hosted the April 8 town hall.

"We have heard from hundreds of employees across multiple HHS sub-agencies who received RIF notices with various errors, ranging from oddly defined competitive areas to incorrect performance ratings, veteran status, and service computation dates," Debra D'Agostino, founding partner of FPG, told Healthcare Dive in an email. "We plan to file class MSPB appeals on their behalf." D'Agostino expects to succeed because nearly all RIF notices contain errors, and it appears no HHS HR office lawfully created a retention register. "Instead, it looks like someone, possibly under the Department of Government Efficiency (DOGE), took an org chart, crossed out certain offices, divisions, branches, etc., and then generated RIF notices for employees in those offices from an old database—that's why the notices are riddled with errors."

HHS unions have also accused the department of violating collective bargaining agreements. NTEU told members on Wednesday that it had filed an agency grievance against HHS, alleging violations of RIF procedures and failure to give the union proper notice, in breach of its contract. NTEU covers employees at the Food and Drug Administration (FDA), the Substance Abuse and Mental Health Services Administration, ACF, and other agencies. The grievance could go to an independent arbitrator, who might order HHS to reinstate affected employees. However, in March, Trump issued an executive order stripping collective bargaining rights from hundreds of thousands of federal employees, including those at HHS. Unions have challenged the order in court; the order, issued before the layoffs, could provide legal cover for the government's breach of its contract with HHS unions.

"Not notifying the union is a big problem. I suspect that's one of the reasons the executive order was issued on March 27, which said collective bargaining agreements don't apply to certain agencies, including HHS," Slater said.

Although several lawyers believe legal challenges to the HHS RIF have a strong chance of success, one unaffected FDA employee said they expect the outcome may mirror other instances of the Trump administration aggressively exercising executive power. "Nobody listens to the courts anyway," they said. "These are tough times."