A federal judge in Manhattan has dealt a significant legal setback to former President Donald Trump’s administration by blocking efforts to sharply limit the reach and operations of a key federal labor mediation agency. The ruling, delivered on December 31, 2025, reinforces the statutory responsibilities of the Federal Mediation and Conciliation Service (FMCS), reaffirming that the administration’s actions violated federal law and Congress’s clear mandate for the agency’s mission.
Judge Rules Trump Directive Violates Federal Law
U.S. District Judge Arun Subramanian sided with 17 labor unions that challenged the administration’s March executive order, which directed the FMCS and six other small federal agencies to shrink “to the minimum presence and function required by law.” Judge Subramanian determined that the move unlawfully undermined the FMCS’s statutory duty to mediate labor disputes and provide conflict resolution services.
According to the court, the executive order did not adequately justify reducing critical mediation services and staff, and it conflicted with the law that requires FMCS to “use its best efforts” to help employers and unions reach agreements. Subramanian highlighted that Congress clearly intended for the agency to play a proactive role in mitigating labor disputes a responsibility that cannot be nullified by a presidential directive.
Cuts Devastated FMCS Operations
Following the Trump administration’s directive, FMCS dramatically scaled back operations. More than 90 % of its workforce was placed on administrative leave, all field offices were closed, and remaining staff were concentrated at headquarters in Washington, D.C. The agency also announced it would limit mediators’ deployment to only major disputes such as those in the healthcare industry with at least 250 employees, or other sectors involving 1,000 or more workers effectively excluding a wide swath of labor conflicts from federal mediation support.
These changes sparked alarm among labor advocates who warned that the absence of FMCS’s neutral mediation services could lead to more protracted strikes and labor disruptions, hurting both workers and the broader U.S. economy.
What the FMCS Does and Why It Matters
The Federal Mediation and Conciliation Service is an independent U.S. government agency established by Congress in 1947 under the Labor-Management Relations Act (Taft-Hartley Act) to provide conflict resolution services for labor disputes in both public and private sectors. Its core mission is to facilitate negotiations, mediate collective bargaining issues, and prevent work stoppages that could disrupt commerce.
Over decades, FMCS has played a critical role in avoiding costly disruptions by offering experienced mediators who assist employers and unions in reaching voluntary agreements. The agency also supports arbitration, training, and facilitation services that promote stable labor-management relationships. Without these neutral services, both sides may have fewer options to settle disagreements without resorting to strikes or lockouts.
Unions, Employers, and Legal Backlash
The lawsuit in this case was led by a coalition of major labor unions, including the AFL-CIO, American Federation of Teachers, and American Federation of Government Employees, among others. They argued that the administration’s drastic downsizing of FMCS exceeded presidential authority and undermined laws enacted by Congress.
Unions stressed that the cuts went far beyond mere administrative rearrangement and effectively dismantled the agency’s capacity to carry out essential federal functions. According to union filings, FMCS received around 15,000 notices from employers each year, supplied approximately 10,000 arbitrator panels in 2024, and appointed more than 4,000 arbitrators to resolve labor conflicts demonstrating a consistent and ongoing demand for the agency’s services.
Ruling Echoes Other Federal Court Decisions
This latest decision follows a similar ruling in Rhode Island, where another federal judge also blocked the administration from eliminating FMCS and other small federal agencies. That case emphasized that the White House had exceeded its authority by attempting to shutter agencies that Congress created and funded.
In September, a U.S. appeals court upheld a preliminary injunction blocking Trump’s administration from dissolving agencies that mediate labor disputes and support nonprofits, minority-owned businesses, and cultural institutions.
These repeated judicial interventions reflect a broader pattern in which courts are scrutinizing executive attempts to curtail or eliminate federal agencies without explicit congressional approval.
Administration Responds; Future Legal Battles Loom
The Justice Department and representatives for the unions have not publicly commented on the latest ruling. However, the Trump administration has previously defended its efforts as part of a broader strategy to reduce government size and cut what it deems wasteful spending, asserting that many of the affected agencies could be streamlined or consolidated. Although the administration has faced setbacks in court, officials have indicated they may appeal unfavorable rulings
For now, the court’s decision maintains FMCS’s existing structure and operations, ensuring that labor disputes will continue to have access to federal mediation services. The ruling also sends a strong signal that executive actions aimed at altering or defunding federal agencies must comport with statutory requirements and cannot unilaterally override Congress’s legislative intent.
Conclusion
The U.S. District Court’s decision to block the Trump administration’s attempt to limit the Federal Mediation and Conciliation Service reinforces the legal protections that govern federal labor mediation. By affirming FMCS’s operational mandate, the ruling preserves a critical dispute-resolution mechanism that supports labor stability and economic continuity in workplaces across the nation. As legal challenges unfold, this case underscores the ongoing tension between executive priorities and statutory obligations designed to uphold labor rights and federal agency functions.
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