Federal Mediation Services’ Future Dim Despite Workers’ Return

Dozens of federal labor mediators are back on the job after all but four were fired by the Trump administration, just as the government forges ahead with plans to shutter their small but critical agency.

Around half of the mediators at the Federal Mediation and Conciliation Service accepted offers to return following a May court order, according to two people familiar with the situation. The agency, which has played a pivotal role in resolving labor disputes at companies like the Boeing Co. and Apple Inc., had 143 mediators before Trump gutted it in a March executive order.

But their re-employment could be short lived as the White House asks Congress for a sharp decrease in budget for fiscal year 2026, signaling efforts to dismantle the bureau for good.

The agency, which typically has an annual budget of around $50 million to help reduce conflict between employers and unions, is seeking just $7 million in fiscal year 2026 “for expenses necessary to carry out the closure of the agency.” The plan leaves room for only 18 employees, down from 162 in 2025.

Shutting down FMCS, which mediates contract negotiations and helps to prevent labor conflict, will have a significant impact on small- and medium-sized employers that lack the resources to hire private mediation services, former FMCS deputy director Wilma Liebman said.

It sends a message that “conflict resolution, dispute resolution, improved labor-management relations are not considered in the public interest,” and employers are likely to see more strikes without FMCS’ free resources, she said.

Anna Davis, general counsel and acting director of FMCS, declined to comment. A White House spokesperson didn’t immediately respond to a request for comment.

State of Mediation

Facing the service’s closure, FMCS budget director Will Shields resigned June 26 and told colleagues he needs to “regroup and reassess” his career.

“Work without purpose, not hard work and brutal conditions, is what breaks a person down,” he said in an email to colleagues obtained by Bloomberg Law. “For three months we have all been digging holes and filling them.”

The agency’s budget justification didn’t specify which positions would be slashed, but it only earmarked money for high-level positions above a GS-10.

A previously-laid off FMCS mediator, who spoke on the condition of anonymity, said he was rehired in June but has conducted all of his mediation work remotely since. Some of his fellow mediators chose not to return to the agency when offered reinstatement, he said.

Current morale in the agency is low, the mediator added. Administrative staff, including HR and IT personnel who were laid off in April, weren’t reinstated.

“There’s this overwhelming negative mindset of none of it matters, because after September 30 the agency is gone,” the mediator said. “They’re just going through the motions.”

Javier Ramirez, former deputy director of field operations at FMCS under the Biden administration, called the potential closure “tragic” and said the agency’s typical budget is far less than what it saves the economy by preventing strikes. Ramirez now leads a dispute resolution service at Cornell University in partnership with the American Arbitration Association.

“With the budget that’s being proposed, if that were to come true, FMCS would be impossible to operate as we know it,” Ramirez said. He said the agency has already rolled back its work training employers and unions on how to deescalate disputes, and predicted more and longer strikes.

The program at Cornell is one early indication that labor observers and practitioners are considering how to prevent workplace disputes in FMCS’ absence. Several states—including California, Michigan, and Washington—have taken steps to address the gap left behind by the federal mediators or are altering their labor relations statutes to curb the impact.

Litigation Proceeding

President Donald Trump ordered officials to eliminate FMCS and six other small agencies to the “maximum extent” in his executive order. The service’s administrators then laid off a majority of the workforce.

Rhode Island and over a dozen other states’ attorneys general sued the administration for effectively shuttering the agencies without Congressional approval.

Chief Judge John McConnell, an Obama appointee to the US District Court for the District of Rhode Island, ordered the administration to halt layoffs at FMCS, the Institute of Museum and Library Services, and the Minority Business Development Agency.

It’s unclear whether potential plaintiffs could have any recourse for fighting FMCS’s closure, if it’s approved by Congress through the budgetary process, but Liebman said she expects to see further litigation.

The legal battle over FMCS is just one part of a broadening tapestry of litigation challenging Trump’s efforts to downsize the federal government’s scope and reach. Both union and management-side attorneys are sounding alarms over the move to shrink the labor dispute resolution agency.