SCOTUS Overrules “Chevron” – What Does It Mean For Employers?

by | Jul 1, 2024 | Courts, DOL, Federal, Labor Relations Ink, Labor Relations Insight, Legal, News, NLRB, SCOTUS, SCOTUS

The U.S. Supreme Court shook things up by overruling the 40-year-old Chevron v. Natural Resources Defense Council decision. This move has legal circles buzzing, and many folks are left scratching their heads, wondering what the big deal is with Chevron anyway. Let’s break it down.

What the Heck is Chevron?

The original Chevron case revolved around a dry question: Did the Clean Air Act allow the Environmental Protection Agency (EPA) to define “stationary source” since the Act itself didn’t spell it out? The Supreme Court devised a two-part test for such situations:

  1. Check the Statute: If Congress explicitly addressed the issue, that’s the end of it.
  2. Agency Interpretation: If the statute is vague or silent, the agency steps in and interprets it. If the agency’s take was reasonable, the courts had to roll with it, even if they had a different view.

This became known as Chevron deference.

Say Goodbye to Chevron Deference

Fast forward to last Friday. The Supreme Court decided in Loper Bright Enterprises v. Raimondo that Chevron deference is no more. The Court ruled that courts must use their own judgment to decide if an agency has overstepped its bounds. The majority opinion emphasized that courts should check potential agency overreach, stating, “Courts decide legal questions by applying their own judgment.”

Why Overruling Chevron Matters

While past cases decided using Chevron deference aren’t going anywhere, this ruling changes the game for how courts will handle ambiguous statutes from now on. Here’s why it matters:

  1. Judicial Independence: Judges will no longer be rubber-stamping agency interpretations of ambiguous laws. Instead, they’ll be flexing their own interpretive muscles.
  2. More Legal Showdowns: Expect a surge in challenges to agency actions, as courts will now scrutinize agency interpretations more closely.

Impact on Employers

Here’s how this Supreme Court decision might shake things up for employers:

Wage and Hour Regulations

Look out for challenges to Department of Labor regulations on overtime and independent contractor classifications. Employers might see some favorable rulings as courts no longer defer to the Department of Labor’s interpretations.

Non-Competition Agreements

The Federal Trade Commission’s (FTC) proposed rule banning non-competes could face tough scrutiny.

Discrimination and Harassment

The Equal Employment Opportunity Commission (EEOC) handles federal anti-discrimination laws. Expect a spike in challenges to EEOC regulations, particularly those addressing age and disability discrimination.

Labor Law and NLRB Decisions

The NLRB has been making many employee-friendly decisions lately. With Chevron deference out the window, employers might successfully challenge some of these rulings, potentially leading to more balanced outcomes.

The Bottom Line

The end of Chevron deference marks a significant shift in how administrative law is interpreted, with courts now taking a more hands-on approach. For employers, this could open doors to more effectively challenging agency regulations and decisions.

INK Newsletter


The Left of Boom Show