Divided Appeals Court Dismisses States' Challenge Of Probationary Federal Employee Firings

By Jory Heckman, Federal News Network, Maryland Matters

September 9, 2025

A divided federal appeals court ordered the dismissal Monday of a case by a group of states challenging the Trump administration’s termination of thousands of probationary federal employees.

The 2-1 ruling, by a three-judge panel of the 4th U.S. Circuit Court of Appeals, deals a significant blow to one of the two major cases that had challenged this year’s efforts to downsize the workforce by firing probationary workers en masse.

Nineteen states and the District of Columbia filed the lawsuit in March, arguing that widespread firings at many agencies led to a sharp increase in unemployment claims and other sudden pressure on state budgets. In some cases, states said they had to expend “substantial resources” — sometimes creating new websites or opening new phone lines — to handle the volume of unemployment claims coming from fired probationary employees.

Maryland, one of the states in the suit, said it saw a 330% increase in unemployment claims in the weeks after the firings compared to the same time a year before.

But the court ruled that states “failed to allege a cognizable and redressable injury” from the widespread terminations.

“In holding that the states did not allege a cognizable injury, we recognize that they are not the proper parties to bring this suit,” Judge Harvie Wilkinson wrote on behalf of the majority. “The real and direct harms were suffered not by the states, but by the terminated probationary employees, none of whom are even parties to this suit.”

Three departments account for more than half of the total federal workforce losses

The states argued that these terminations were not “for-cause” firings, and amounted to a reduction-in-force — except that agencies did not provide 30- or 60-day notices to impacted employees, as required by law.

The Treasury Inspector General for Tax Administration (TIGTA) found last month that virtually all of the 7,315 probationary employees the IRS fired were either rated as high performers on performance reviews or had no performance ratings on record.

The divided panel’s decision reversed a ruling by a U.S. District judge in Maryland who had issued a preliminary injunction in April directing agencies to “take all steps necessary to undo the purported terminations of such affected probationary employees.” The appeals court quickly put a hold on that ruling and on Monday it the district judge to dismiss the case entirely.

“We acknowledge that the abrupt and indiscriminate dismissal of the probationary employees here exacted all-too-human costs upon those affected. But this real impact on the employees, who are not parties here, cannot govern our review,” Wilkinson wrote.

The court’s majority argued that the federal government has widespread authority to manage its workforce.

“The federal government is required in all kinds of ways to respect the basic sovereignty of the states. But the reverse is also true. It is hard to imagine a more traditionally federal function than the management of the federal workforce,” Wilkinson wrote. “The federal workforce performs federal functions. How it performs them is a matter of federal concern.”

The court’s majority ruled that states “may have valid practical reasons to be concerned about their citizens’ employment statuses,” but said the surge in unemployment insurance claims, or a potential decrease in tax revenue, didn’t demonstrate sufficient harm for the court to rule in their favor.

Ruling in favor of the states, they argued, would give them too much power to overrule the federal government’s authority to manage its own workforce.

“Any allegation of improper termination by any federal employer could allow a state to swoop in and claim a tax loss for standing purposes. The only limit would be states’ willingness to sue,” Wilkinson wrote.

Judge DeAndrea Gist Benjamin, in her dissent, said the court’s majority “ignored the real harms asserted by the states,” and that agencies inflicted those harms by not complying with RIF requirements.

“Nowhere have the states asked to micromanage the government. They ask merely for what they are due — notice under the statutes and regulations. Because I will not endorse the government’s attempt to circumvent our nation’s laws, I respectfully dissent,” Benjamin wrote.

Benjamin said she agreed fired probationary employees “suffered the brunt of the harm,” but concluded that agencies, in effect, carried out a widespread RIF without the kind of advanced notice that would have helped state governments provide the necessary support services to impacted residents.

“All that is required is for the federal government to adhere to statutory notice requirements as set forth by federal law. The government had the opportunity to conduct the RIF according to statutory procedure and chose not to do so,” she wrote.

In addition to a surge in unemployment insurance applications and a potential loss in tax revenue, Benajmin said the mass terminations gave states little time to determine the loss of federal employees who, up until that point, were working with state agencies.

Unless the states successfully elevate their challenge to the full 4th Circuit or to the Supreme Court, Monday’s decision leaves only one remaining federal case challenging the probationary terminations.

In a northern California court, a judge is considering a separate case brought by federal employee unions that also challenges the terminations. Attorneys for the government and for labor organizations presented their arguments for summary judgement on Aug. 28, and a ruling is expected soon. Previously, in the same case, the Supreme Court ruled that a group of nonprofit organizations does not have the right to sue over the firings.