On June 28, 2024, the United States Supreme Court (SCOTUS) issued a pair of decisions that overturned what has long been referred to as Chevron Deference. Because the Court reversed the 40-year-old Chevron precedent, federal courts are no longer required to defer to an agency’s (reasonable) interpretation of an ambiguous statute. While this is a far-reaching legal development, the elimination of Chevron Deference will have a particularly profound impact on labor and employment law due to the significant influence that federal agencies like the Equal Employment Opportunity Commission (EEOC), the Occupational Safety and Health Administration (OSHA), the National Labor Relations Board (NLRB), and the U.S. Department of Labor (DOL) have on employment law interpretation and enforcement.
What was the Chevron Deference?
In 1984, SCOTUS issued a landmark decision, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. This case held that when Congress creates an ambiguous law, courts must defer to the relevant federal agency’s reasonable interpretation of that law. Practically speaking, Chevron deference meant the administrative agency was the most persuasive and reliable source of information when it came to the interpretation of a vague statute – notwithstanding whether other outsiders or courts agreed. This meant that even if a superior, more persuasive interpretation was presented by a non-agency attorney or expert, the court was generally bound to defer to the reasonable agency interpretation.
What is the New Rule?
As decided in the companion cases Loper Bright Enterprises. v. Raimondo and Relentless, Inc. v. Department of Commerce, federal courts must now exercise their own “independent judgment” when deciding how to interpret an ambiguous statute. Instead of automatically deferring to agency interpretation, courts are required to utilize “tools of statutory interpretation” to “effectuate the will of Congress.” That said, courts are not barred from factoring an agency’s interpretation into their independent judgment.
While a substantial change, SCOTUS’s new decision does not disturb the holding of the pre-Chevron case Skidmore v. Swift & Company. Known as the Skidmore deference, while courts have the final call in interpreting a statute, “courts may extend respectful consideration to another branch’s interpretation of the law.” That means that agency interpretations of the law may still be given weight by federal courts, which remains helpful to judicial review in cases where the agency’s interpretation is based on complex factual premises within the agency’s expertise. For instance, imagine an ambiguous law that implicates aeronautical engineering and thermodynamics. A judge who is not knowledgeable in these areas might find the Federal Aviation Administration’s (“FAA”) interpretation of this law incredibly helpful in the court’s analysis because aeronautical engineering and thermodynamics are squarely within the expertise of the FAA.
How Will this New Decision Affect Employers?
This recent decision has two primary implications for employers. First, federal agencies like the EEOC, OSHA, the NLRB, and the DOL have less power to influence how ambiguous employment statutes are interpreted. For instance, if an employer wants to challenge the EEOC’s recent interpretation of what constitutes a “pregnancy-related condition” under the Pregnant Worker’s Fairness Act (“PWFA”), then the court may look to the EEOC’s interpretation of any ambiguity in the law. It will not, however, be bound to follow the EEOC’s interpretive regulations if it determines they are inconsistent with the purposes of the statute.
Second, this new decision has the potential to create a patchwork of varying interpretations of the law across federal judicial districts and circuits across the country. For instance, two federal circuits might reach opposite conclusions about what constitutes a “pregnancy-related condition” under the PWFA. Multi-state employers who have locations across the country may need to calibrate their policy enforcement in a manner consistent with the judicial district in which their employees reside. In light of this complex web of differing judicial interpretations that will soon beset multi-state employers, it is all the more likely that employers will need to lean on their labor and employment counsel to ensure appropriate compliance.
JAH Can Help
Our labor and employment attorneys at JAH are here to help you plan and navigate the Supreme Court Chevron Deference ruling and how it will impact your business. Click here to contact a member of our Employment Practice Group if you require assistance.
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