Labor & Employment Law Daily Wrap Up, LITIGATION NEWS, TRENDS—Federal employee unions sue OPM over new discipline, performance evaluation rules, (Aug 26, 2026)

By Brandi O. Brown, J.D.

"In short, OPM has granted itself plenary and, in its view, unreviewable authority to fire employees across the government. It is hard to imagine a scheme that is more contrary to Congress' design."

A coalition of federal employee unions has filed suit against the U.S. Office of Personnel Management, alleging that two recently finalized regulations unlawfully expand the agency's authority over the federal workforce and undermine statutory protections established by Congress.

Two new rules. The complaint, filed August 24, 2026, in the U.S. District Court for the Northern District of California, challenges OPM's new "Suitability and Fitness" rule, 91 Fed. Reg. 39361 (June 30, 2026), and a new rule pertaining to performance appraisals that was issued on July 7, 2026 (see 91 Fed. Reg. 8780 (Feb. 24, 2026) (known as the “Performance Appraisal Rule”).

Plaintiffs include the American Federation of Government Employees, the American Federation of State, County and Municipal Employees, the International Federation of Professional and Technical Engineers, the National Federation of Federal Employees, and several AFGE locals representing federal workers in California.

The unions contend that both rules violate the Administrative Procedure Act because they conflict with the Civil Service Reform Act of 1978, exceed OPM's statutory authority, and are arbitrary and capricious. They are seeking declaratory and injunctive relief, including an order vacating both regulations.

Transformed into discipline and removal mechanism. At the center of the lawsuit is OPM's suitability rule, which took effect July 30, 2026. The unions argue that the regulation fundamentally transforms a hiring-related suitability screening process “used previously to assess an individual’s pre-employment character and conduct for initial admission into the federal service” into an “unfettered mechanism to police post-appointment misconduct and fire employees at OPM’s will without any of the protections Congress intended.”

According to the complaint, OPM previously used suitability determinations primarily to evaluate applicants and appointees before employment, while misconduct by existing employees was addressed under procedures established by Chapter 75 of the Civil Service Reform Act, which notably imposes a for cause standard.

OPM gave itself sole authority for current employees. The complaint alleges that the new rule permits OPM to exercise "sole jurisdiction" over certain suitability actions involving current employees and post-appointment conduct, giving the agency authority to order removals and potentially bar individuals from future federal employment.

"In short,” they allege, “OPM has granted itself plenary and, in its view, unreviewable authority to fire employees across the government. It is hard to imagine a scheme that is more contrary to Congress' design."

The unions contend that the regulation strips employees of procedural protections Congress provided for adverse employment actions, including the right to appeal removals to the Merit Systems Protection Board and seek judicial review in the U.S. Court of Appeals for the Federal Circuit.

According to the unions, OPM has estimated that roughly half of federal employee removal actions could shift from the traditional Chapter 75 process to suitability actions under the new framework. The plaintiffs argue that the change effectively allows OPM to become "the ultimate decisionmaker" in disciplinary matters across the federal government.

Forced ranking. The lawsuit also targets OPM's revised performance appraisal rule, which became effective August 6. The unions challenge provisions allowing OPM to require agencies to use standardized distributions of performance ratings, a system they characterize as a forced ranking or forced distribution model.

Federal law requires agencies, "to the maximum extent feasible," to evaluate employee performance using objective criteria, the complaint states. The unions argue that a forced distribution system would require agencies to rank employees against one another rather than measure them solely against objective performance standards. As a result, employees who perform at the same high level could receive different ratings based on comparative rankings rather than individual performance.

Grievance limitations. They further challenge provisions limiting grievances over performance evaluations once existing collective bargaining agreements expire and eliminating certain higher-level management review requirements for the lowest performance ratings. They contend those changes conflict with statutory grievance procedures and lack adequate justification.

The unions say they collectively represent approximately one million federal employees who will be subject to the challenged regulations. The complaint asserts that the rules will diminish employment protections, interfere with unions' representation activities, and force labor organizations to divert resources to address the regulations' effects on federal workers.

The lawsuit asks the court to declare both rules unlawful under the Administrative Procedure Act and set them aside.

The case is No. 3:26-cv-08835.

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