A class action has been filed against James M. Loy, in his capacity as administrator of the U.S. Transportation Security Administration, on behalf of older employees and union activists who allege that the administration is ignoring veterans' preference in its reduction-in-force decisions in violation of federal law and the U.S. Constitution. The action seeks an order prohibiting the Administration from hiring new security screeners and from laying off further security screeners.

The action alleges that the Administration is violating the Aviation and Transportation Security Act, the Veterans' Preference Act, the Administrative Procedures Act, and the Age Discrimination in Employment Act, as well as the First and Fifth Amendments of the U.S. Constitution in its alleged attempts to cut some 6,000 airport security screener positions nationwide. The Federation further alleged that Transportation Security Administration (TSA) has violated applicable federal civil service rules. The action further alleges that the Administration has not established RIF (reduction-in-force) retention registers, has denied re-employment rights to employees who have been let go, and has given no consideration to employees' length of federal service.

James Loy announced on April 30, 2003, that the agency would cut its federal employee airport screener workforce by 6,000 over the following five months. Loy said then that TSA would reduce its workforce by 3,000 by May 31 and by another 3,000 by the end of fiscal year 2003 on September 30. The cuts are supposedly necessary due to budget constraints.

Representative Hal Rogers (R-Ky.), chairman of the House Appropriations Subcommittee on Homeland Security, told Loy in late March 2003 that Administration should work to cut its workforce down to the 45,000 full-time positions authorized by statute. At the time, it had 55,600 screeners on duty, approximately 9,000 of whom were classified as "full-time temporary" employees working pursuant to five-year contracts.