Employment Law Report
Loper Bright Enterprises v. Raimondo: Replacing Agency Deference with Independent Judicial Judgment, What’s the Catch?
Written by: Tyson Gorman with assistance from Sadie Rothrock, Wyatt Summer Associate
Two weeks ago, the United States Supreme Court decided Loper Bright Enterprises v. Raimondo, overturning Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. and ending forty years of deference to federal administrative agency action.
Chevron and Loper Bright
For the last forty years, courts have used the Chevron framework to decide when they must defer to federal agencies’ interpretations of statutes enforced by federal administrative agencies. Under Chevron, if courts found a statute ambiguous or silent on the relevant issue, they were required to defer to the administrative agency’s statutory interpretation of the statute, so long as it was a “permissible” interpretation. Courts were also required to defer to the agency’s interpretation even if they would have interpreted the statute differently. The rationale for the Chevron deference was that federal administrative agencies, not judges, were experts in their fields. Thus, agencies are better suited to deal with the scientific or technical issues that arise in administrative law.
Now, under Loper Bright Enterprises v. Raimondo, when courts are faced with an ambiguous statute enforced by a federal administrative agency, courts must independently interpret those statutes using the traditional tools of statutory construction. Courts can no longer simply defer to the agency’s interpretation. Loper Bright does not state that courts are required to give zero weight to an agency’s interpretation—rather, the Supreme Court acknowledges an agency’s interpretation can be informative in cases where the agency’s statutory interpretation “rests on factual premises within the agency’s expertise.” One rationale for this new approach is that judges, not agencies, are experts in statutory interpretation and therefore should be the ones interpreting statutes.
Looking Forward—Potential Effects of the Loper Bright Decision on Employment Law
Currently, it is unclear what, if any, precise implications Loper Bright would have on employment law. However, it is plausible that the Loper Bright decision will create an influx of litigation. With courts no longer deferring to the interpretations of federal agencies, litigants might have a better chance of prevailing in reviewing courts.
Non-compete agreements and accommodations for employees are two specific employment law issues that could be impacted by the Loper Bright decision. Three months ago, the Federal Trade Commission (FTC) announced a new rule banning almost all non-competes nationwide.[1] This new rule was challenged in a federal court in Texas, and until the case is decided on its merits, the Texas court has stayed the effective date of the rule for the plaintiffs. As it stands, the rule is still set to become effective September 4, 2024. If the rule banning non-compete agreements is upheld, and if a part of the rule is ever deemed ambiguous, the end of Chevron deference could eventually impact how courts interpret the rule.
The EEOC recently released a final rule and interpretive guidance concerning the Pregnant Workers Fairness Act (PWFA).[2] The final rule was challenged in Louisiana and Arkansas district courts, with the Louisiana court issuing a preliminary injunction and the Arkansas court denying the request for a preliminary injunction. These conflicting decisions may make their way to appellate courts for review, and appellate review of these decisions could certainly implicate Loper Bright.
Despite the potential for change, Loper Bright may also have no impact on employment law, and as of today, the decision, which concerned the fishing industry, has no immediate impact on employment law. Further, Loper Bright does not call into question cases decided under the Chevron framework. Those decisions are still subject to statutory stare decisis and according to the court, are not overruled just because the reviewing court reached its decision by relying on the Chevron framework. Therefore, cases decided before Loper Bright remain good law.
Even though courts now have a greater ability under Loper Bright to refuse to defer to an agency’s interpretation, it does not mean the courts will. Take, for example, the D.C. Circuit’s post-Loper Bright decision in Hospital de la Concepcion v. NLRB, in which the court addressed the NLRB’s interpretation of a contract. In Hospital de la Concepcion, the court reiterated that it reviews NLRB “decisions with a ‘very high degree of deference,’” only rejecting NLRB decisions that depart “from established precedent without reasoned justification.” The court applied this standard, and after independently interpreting the contract, as now required under Loper Bright, the court did not reject the NLRB’s interpretation of the contract.
Ultimately, only time will tell how Loper Bright will impact the employment law world. Employers with questions relating to the Loper Bright decision and its potential implications, are encouraged to contact a member of Wyatt’s Labor and Employment practice group.
[1] To read more about the FTC’s ban on nearly all non-compete agreements, visit this Wyatt Labor and Employment Blog Article authored by Matthew Bunnell.
[2] To read more about the EEOC’s final rule concerning the PWFA, visit this Wyatt Labor and Employment Blog Article authored by Tyson Gorman with assistance from Bradley Simpson, Wyatt Summer Associate.
