July 3, 2024

Supreme Court Overturns Chevron Doctrine, Impacting Employer Regulations

The U.S. Supreme Court has overturned the longstanding Chevron doctrine, which required courts to defer to federal agencies’ interpretations of ambiguous statutes. The ruling, in the cases of Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, could have significant implications for employers due to the numerous regulations issued by agencies like the DOL, OSHA, and NLRB. 

Chevron Doctrine: An Overview 

Under the Chevron doctrine, courts followed a two-step framework. First, they determined whether the statute was clear. If ambiguous, they then evaluated whether the agency’s interpretation was reasonable, often deferring to the agency’s expertise. This deference allowed agencies considerable latitude in shaping regulations with minimal judicial interference. 

Impact on Workplace Law 

For over 40 years, Chevron deference has supported a wide range of agency regulations affecting employment law. Agencies like the DOL and EEOC have used this framework to expand statutory interpretations, such as imposing salary requirements for exemptions under the Fair Labor Standards Act (FLSA) and requiring accommodations under the Pregnant Workers Fairness Act (PWFA). 

The Court’s Decision 

The Supreme Court, in its ruling, emphasized that courts must independently interpret statutes and not merely defer to agency interpretations. The Administrative Procedure Act (APA) stipulates that agencies are not entitled to deference when interpreting laws. However, the Court noted that agency interpretations might still influence courts if they have been consistent over time or if the statute explicitly grants the agency authority. 

Implications for Employers 

While the decision does not immediately change existing regulations, it paves the way for more successful challenges to agency rules. This shift could impact pending cases involving significant regulations, such as DOL’s Farmworker Protection Rule, the EEOC’s PWFA rules, OSHA’s inspection rules, and the NLRB’s joint-employer rule. 

Employers should remain vigilant, as this decision may lead to varying interpretations across different jurisdictions, creating compliance challenges. Although less deference to agencies might seem beneficial, it also introduces unpredictability, making it crucial for employers to stay informed and adaptable to ongoing legal developments.