On December 30, 2025, a federal judge in the Southern District of New York vacated a recent Federal Mediation and Conciliation Service (“FMCS”) policy that laid off a substantial number of federal mediators and sharply limited when the agency would provide mediation services.

In March 2025, FMCS – the federal agency charged with mediating labor disputes – adopted a policy limiting its mediation services to disputes involving bargaining units of at least 250 employees in the healthcare industry and at least 1,000 employees in most other sectors. The policy also implemented a reduction in force leaving FMCS with only six mediators. FMCS adopted the policy in response to a March 14, 2025 executive order issued by President Trump instructing federal agencies to reduce headcount to the greatest extent possible, an order that was permanently enjoined in November 2025 by a Rhode Island federal court in State of Rhode Island v. Trump.

Approximately one month later, on December 30, Judge Arun Subramanian of the Southern District of New York granted summary judgment in favor of several labor organizations in American Federation of Teachers, AFL-CIO v. Davis. The plaintiff unions alleged that the FMCS policy disrupted ongoing collective bargaining negotiations and unlawfully restricted access to mediation services. Judge Subramanian first rejected the government’s threshold arguments, holding that the plaintiff unions had standing based on concrete harms such as canceled and delayed bargaining sessions. He further held that the policy was a “final agency action”—not a purely discretionary internal agency staffing decision—such that it is not insulated from judicial review under the Administrative Procedure Act (“APA”).

On the merits, Judge Subramanian held the policy was invalid under the APA because FMCS failed to explain any basis for the numerical threshold for bargaining unit size to trigger FMCS mediation, which made the policy “arbitrary and capricious.” Judge Subramanian further held that the policy expressly conflicted with the statutory mandate of Section 8(d) of the National Labor Relations Act which requires FMCS to use its “best efforts” to mediate collective bargaining disputes in the healthcare industry. Thus, with respect to the healthcare industry, Judge Subramanian concluded that Congress intended for FMCS to at least attempt to assist in resolving all such disputes and rejected the government’s argument that the provision of mediation services was discretionary and could be conditioned on the size of the bargaining unit.

Judge Subramanian vacated the policy and ordered FMCS to reverse the reduction in force. The court declined to address broader constitutional arguments regarding separation of powers and the Take Care Clause.

Takeaways

The government has 60 days to commence an appeal of Judge Subramanian’s decision; however, such an appeal appears unlikely.  Shortly before Judge Subramanian’s decision, on December 23, government defendants in State of Rhode Island v. Trump, filed a notice of compliance with the court’s summary judgment order permanently enjoining President Trump’s March 2025 executive order. The notice of compliance stated that the government intended to comply with the court’s order at several federal agencies including FMCS by reinstating laid off personnel and voiding “the underlying policies to which the Executive Order-related actions at issue in this case were taken.”

Absent some unanticipated appeal, FMCS operations—including its labor mediation services—should continue without interruption. Employers and unions may continue to rely on FMCS mediation services to assist parties with collective bargaining and resolving labor disputes. While not required in all industries, FMCS mediation can be a powerful tool to help parties reach compromise and avoid prolonged disputes.

We will continue to monitor this case and other decisions and agency actions that may impact labor relations.

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Photo of Joshua Fox Joshua Fox

Joshua S. Fox is a partner in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented a number…

Joshua S. Fox is a partner in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented a number of Major League Baseball Clubs in all aspects of the salary arbitration process.  Josh also has extensive experience representing professional sports leagues and teams in grievance-arbitration proceedings, and has played a key role in representing professional sports leagues in all aspects of their collective bargaining negotiations with players and officials, including the Major League Baseball, National Hockey League, the National Football League, Major League Soccer, the Professional Referee Organization, and the National Basketball Association.  Josh has also represented teams and arenas in all aspects of labor relations involving labor unions representing arena staff.

In addition, Josh has extensive experience representing clients in the performing arts industry, including the New York City Ballet, New York City Opera, Big Apple Circus, among many others, in collective bargaining negotiations with performers and musicians, the administration of their collective bargaining agreements, and in grievance arbitrations.

Josh also represents a diverse range of clients, including real estate developers and contractors, pipe line contractors, hospitals, hotels, manufacturers and public employers, in collective bargaining, counseling on general employment matters and proceedings before the National Labor Relations Board, New York State Public Employment Relations Board and arbitrators.

Josh also serves as an adjunct professor at Cornell University’s School of Industrial Labor Relations for several years, teaching a course regarding Major League Baseball salary arbitration.

Prior to joining Proskauer, Josh worked for a year and a half at the National Hockey League, where he was involved in all labor and employment matters, including preparations for collective bargaining, grievance arbitration, contract drafting and reviewing and employment counseling. Josh also interned in the labor relations department of Major League Baseball and at Region 2 of the National Labor Relations Board. He was a member of the Brooklyn Law Review and the Appellate Moot Court Honor Society and served as president of the Brooklyn Entertainment and Sports Law Society.

Photo of Daniel H. Dorson Daniel H. Dorson

Daniel Dorson is an associate in the Labor & Employment Law Department and a member of the Labor-Management Relation Group. Daniel represents unionized and non-unionized employers in all stages of labor-management relations including union organizing campaigns, collective bargaining negotiations, contract administration, grievance arbitrations…

Daniel Dorson is an associate in the Labor & Employment Law Department and a member of the Labor-Management Relation Group. Daniel represents unionized and non-unionized employers in all stages of labor-management relations including union organizing campaigns, collective bargaining negotiations, contract administration, grievance arbitrations, work stoppages, and day-to-day labor relations issues. Daniel also represents employers in proceedings before the National Labor Relations Board including representation petitions, unfair labor practice charges, and compliance matters.

Daniel also has experience representing employers in federal court and before state and federal administrative agencies. He has defended employers against single plaintiff claims and class and collective actions alleging discrimination, harassment, and wage and hour violations.

While in law school, Daniel interned for the National Football League and the Arizona Coyotes. Prior to beginning his legal career, Daniel worked in football operations and administration for the Arizona Cardinals, Detroit Lions, Miami Dolphins, and Indianapolis Colts.

Photo of Jake Lee Jake Lee

Jake Lee attended the Paul M. Hebert Law Center, Louisiana State University, where he was an Issue Editor for the Louisiana Law Review. During law school, Jake served as an extern to the Honorable John W. deGravelles at the United States District Court…

Jake Lee attended the Paul M. Hebert Law Center, Louisiana State University, where he was an Issue Editor for the Louisiana Law Review. During law school, Jake served as an extern to the Honorable John W. deGravelles at the United States District Court for the Middle District of Louisiana. Prior to attending law school, Jake attended the University of Georgia.