The U.S. Supreme Court recently cut back sharply on the power of federal agencies to interpret the laws they administer and ruled that courts should rely on their own interpretation of ambiguous laws. This overturned the Chevron deference, ending a 40-year-old practice of deferring to agencies’ interpretations of federal laws when creating regulations.
In 1984, the Supreme Court first decided the landmark Chevron decision, which requires courts to defer to the legal views of federal agencies—including the agencies that enforce labor and employment laws.
On June 28, 2024, in the case of Loper Bright Enterprises v. Raimondo, the high court said the Chevron deference was inconsistent with the Administrative Procedure Act (APA) and gave unelected government officials too much authority.
During a recent webinar hosted by Littler’s Workplace Policy Institute, Littler Shareholder Alex MacDonald said courts will now give statutes their “best” interpretation, meaning agencies will have less leeway to write broad rules.
“Federal agencies will likely issue more informal guidance,” MacDonald said. “What that really is, is the agency expressing their view of a statute. During the Obama administration, the Department of Labor would issue an administrative interpretation which would lay out why they felt a statute needed a fix, but it doesn’t have any binding legal effect.”
MacDonald said that can have an effect on private businesses that are trying to figure out how to follow the law.
“They can’t find a particular code of federal regulations, so they go to an agency’s website, and they find these interpretations telling them what the agency’s view of the law is,” MacDonald said. “Many businesses will say, ‘That’s good enough for me,’ because it’s the most authoritative thing they can find. So, an agency can still influence behavior in the private sector, even without issuing formal regulations.”
MacDonald said the high court’s decision could cause a number of Department of Labor regulations to fall, though employers may not see the effects for some time. That’s in part because the court did not overturn any decisions that were made in accordance with its Chevron holding.
