Last Friday, the United States Supreme Court issued a decision in Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce. The Court overruled its 1984 decision in Chevron, U.S.A. Inc. v. Natural Resources Defense Council Inc., which held that courts should defer to federal agencies to interpret ambiguities and gaps in the laws that the agencies implement (known as Chevron deference).
In its opinion, the Supreme Court held that the Administrative Procedure Act requires courts to exercise their independent judgment in interpreting the law, and consequently, “courts may not defer to an agency interpretation of the law simply because the statute is ambiguous.” However, the Supreme Court noted that the holdings of prior cases that relied on Chevron deference remain lawful and may not be overturned solely because they relied on Chevron.
Chevron deference has had a meaningful influence on the interpretation and enforcement of employment laws. Federal employment agencies, including the United States Equal Employment Opportunity Commission, the Occupational Health and Safety Administration, the United States Department of Labor (DOL) and the National Labor Relations Board, have relied on Chevron deference in issuing and defending agency interpretations.
Considering the Supreme Court’s ruling, federal agencies will not be able to rely on Chevron deference in existing litigation, including lawsuits that have been filed to challenge the DOL’s independent contractor and overtime rules, and may be subject to additional legal challenges regarding existing rules. Federal agencies may also issue fewer regulations and take more moderate positions in the regulations they issue, and they may face greater difficulty in addressing policy issues.