The Administrative Procedure Act of 1946 (APA) requires that federal ALJs be appointed based on scores achieved in a comprehensive testing procedure, including an four-hour written examination and an oral examination before a panel that includes an OPM representative, American Bar Assn. representative, and a sitting federal ALJ. Federal ALJs are the only merit-based judicial corps in the United States.
The APA is designed to guarantee the decisional independence of ALJs. They have absolute immunity from liability for their judicial acts and are triers of fact "insulated from political influence". Federal administrative law judges are not responsible to, or subject to the supervision or direction of employees or agents of the federal agency engaged in the performance of investigative or prosecution functions for the agency. Ex parte communications are prohibited. ALJs are exempt from performance ratings, evaluation, and bonuses. Agency officials may not interfere with their decision making and administrative law judges may be discharged only for good cause based upon a complaint filed by the agency with the Merit Systems Protections Board established and determined after an APA hearing on the record before an MSPB ALJ. Only ALJs receive these statutory protections; "hearing officers" or "trial examiners", with delegated hearing functions, are not similarly protected by the APA.
The United States Supreme Court has recognized that the role of a federal administrative law judge is "functionally comparable" to that of an Article III judge. An ALJ's powers are often, if not generally, comparable to those of a trial judge: The ALJ may issue subpoenas, rule on proffers of evidence, regulate the course of the hearing, and make or recommend decisions. The process of agency adjudication is currently structured so as to assure that the hearing examiner exercises his independent judgment on the evidence before him, free from pressures by the parties or other officials within the agency.
Procedure for reviewing an ALJ's decision varies depending upon the agency. Agencies generally have an internal appellate body, with some agencies having a Cabinet secretary deciding the final internal appeals. Moreover, after the internal agency appeals have been exhausted, a party may have the right to file an appeal in the state or federal courts. Relevant statutes usually require a party to exhaust all administrative appeals before they are allowed to sue an agency in court.
Unlike federal ALJs, whose powers are guaranteed by the APA /federal statute, state ALJs have widely varying power and prestige. In some state law contexts, ALJs have almost no power; their decisions are accorded practically no deference and become, in effect, recommendations. In some cities, notably New York, ALJs are at-will employees of the agency, making their decisional independence potentially questionable. In some agencies, ALJs dress like lawyers in business suits, share offices, and hold hearings in ordinary conference rooms. In other agencies (particularly the Division of Workers' Compensation of the California Department of Industrial Relations), ALJs wear robes like Article III judges, are referred to as "Honorable" and "Your Honor", work in private chambers, hold hearings in special "hearing rooms" that look like small courtrooms, and have court clerks who swear in witnesses.
Professional organizations that represent federal ALJs include the Federal Administrative Law Judges Conference, the Association of Administrative Law Judges, which represents only Social Security ALJs, and the Forum of United States Administrative Law judges. Professional organizations that include both state and federal ALJs include the National Association of Administrative Law Judiciary, the ABA National Conference of Administrative Law Judiciary, and the National Association of Hearing Officers.
Other federal agencies may request the U.S. Office of Personnel Management to lend them Administrative Law Judges from other federal agencies for a period of up to six months.
Some states, like California, follow the federal model of having a separate corps of ALJs attached to each agency that uses them. Others, like New Jersey, have consolidated all ALJs together into a single agency that holds hearings on behalf of all other state agencies. This type of state adjudicatory agency is called a "central panel agency". Many states have a central panel agency, but the agency does not handle all the hearings for every state agency.