Supreme Court’s Ruling on Deference to Administrative Interpretations of Law


What this Could Mean for Employers

By Attorneys Autumn D. Klick and James P. Reidy

On June 28, 2024, the United States Supreme Court issued a decision in Loper Bright Enter. v. Raimondo, a case that raised the question about the authority of a federal agency to interpret provisions of federal law. The decision was significant in that it overturned long standing case law, and eliminated what was known as “Chevron deference.” Prior to the Court’s opinion in Loper, federal courts deferred to administrative agencies in their interpretation and enforcement of federal law where there were ambiguities in the law. Now, these ambiguities are for the courts to determine. This ruling will likely lead to an increase in lawsuits challenging agency interpretations and conclusions regarding legislative meaning.

What is Chevron Deference and why is this a Big Deal? Chevron deference originated from a 1984 U.S. Supreme Court case entitled Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., in which the Court created a two-step review process to analyze agency interpretations of the law. First, the courts were to decide whether the law itself was clear, and second—if it was unclear—the courts were to defer to the administrative agency’s reasonable interpretation of the law. Simply put, Chevron caused the courts to defer to administrative agencies’ explanations where the law itself was unclear.

Now, Loper Bright has done away with the automatic deference to administrative agencies based exclusively on legislative ambiguity.  Instead, the courts will have a more significant role in defining the meaning of statutes. As such, it will be easier to challenge agency regulations, and it will restrict agencies’ ability to provide explanations for the statutes written by Congress. Following the decision, it now falls on courts to construe the law, without deferring to administrative agencies’ analyses and explanations to fill the gaps.

Restoring Balance in Separate Branches. The Court’s reasoning in Loper Bright is based on the constitutional separation of powers.  The opinion supports the proposition that the only branch of government which can draft law is the legislative, and the only branch that can interpret law is the judicial. Whereas, administrative agencies, as part of the Executive Branch, are to implement and enforce the laws written by Congress. The Court found that providing too much deference to agency interpretation took away some of the judicial branch’s constitutional power.

What this Could Mean for Employers. Minimizing deference to administrative agencies will likely lead to an increase in lawsuits where courts are being asked to clarify provisions and applications of laws, instead of relying on agency interpretations and precedent where there are statutory ambiguities. For example, the Loper Bright decision could impact current litigation regarding the U.S. DOL’s white collar exemptions to federal overtime law, and the EEOC’s guidelines and interpretations of the Pregnant Workers Fairness Act (“PWFA”). However, while the decision to overturn Chevron deference could impact future litigation, it does not mean that the judiciary will, in fact, rule against an agency’s interpretation. Courts still have the discretion to consider the opinions and recommendations of administrative agencies in making their decisions.

It is also important for employers to consider the lack of certainty this decision may bring. Instead of relying upon agency familiarity to predict upcoming regulations or decisions, it will not be as easy to anticipate how federal courts throughout the United States will interpret Congress’ intent and the meaning of ambiguous provisions of federal law.

So, What does this Mean Going Forward? For now, employers should continue to operate with the understanding that federal agencies’ regulations and interpretations of law must be understood and followed. There have not been any changes to employment-related agency interpretations of the law at this point. However, employers should also keep their eyes open, as there are will likely be increased litigation over relevant agency enforcement policies and decisions that could impact the trajectory and application of federal workplace laws, regulations, rules and guidance. Stay tuned!

The attorneys in Sheehan Phinney’s Labor and Employment Law Practice Group are ready to assist you with any questions you may have regarding compliance with these workplace policies.  This article is intended to serve as a summary of the issues outlined herein.  While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.