With the US Supreme Court’s June 28 decision in Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce, the four-decades Chevron doctrine is no longer. While the Court’s decision has altered administrative jurisprudence as we have come to know it, its impact on labor and employment agency action may vary from sweeping change to a continuation of the status quo. This LawFlash presents a brief summary of the expected impacts for labor and employment law practitioners.
With Loper Bright, federal courts have been directed not to defer to administrative agencies’ interpretations of ambiguous or broad statutes, save for narrow exceptions such as express delegations. Instead, federal courts must exercise independent judgment when reviewing statutory text and use traditional tools of statutory construction to find the “best meaning” of the statute. The agency simply presenting a “reasonable” or “permissible” construction of an ambiguous statute is not sufficient for it to prevail.
That said, the Supreme Court made clear in Loper Bright that all existing judicial decisions upholding agency rules and orders are not automatically overruled by the new decision, even if courts relied on Chevron in those earlier decisions.
The end of Chevron deference is not likely to have immediate impact on the Equal Employment Opportunity Commission’s (EEOC) day-to-day work. Title VII of the Civil Rights Act only authorizes the EEOC to issue procedural regulations. As a result, the agency always has issued its interpretations of Title VII through nonbinding guidance. Loper Bright does not directly address judicial review of subregulatory agency guidance. However, it remains to be seen whether subregulatory agency guidance may be impacted going forward.
Other antidiscrimination laws enforced by the agency (for example, the Age Discrimination in Employment Act and the Americans with Disabilities Act) contain general delegations of rulemaking authority. While the regulations promulgated pursuant to these statutes will likely no longer be entitled to Chevron deference, there already is a large body of case law that applies to these statutes, thus lessening the impact of Loper Bright. Remedies awarded under the antidiscrimination laws enforced by the EEOC are statutory, not regulatory, so Loper Bright also will not impact those laws.
On the other hand, EEOC recently issued regulations implementing the Pregnant Workers Fairness Act (PWFA) (see our April 25, 2024 LawFlash), and challenges to its abortion-related provisions already have been filed. In light of Loper Bright, we anticipate that other aspects of the PWFA regulations will face increased scrutiny, since courts will no longer be required to give the EEOC deference.
As a result, employers should continue efforts to abide by all antidiscrimination laws and EEOC guidance to help minimize litigation and enforcement risk, while monitoring developments in the courts.
Chevron’s demise will make it more difficult for the Wage and Hour Division of the Department of Labor (DOL) to defend its wage and hour rules in court. DOL enforcement of various wage and hour statutes, notably the Fair Labor Standards Act (FLSA), has resulted in countless regulations regarding minimum wage, prevailing wages, the tip credit, overtime pay, and recordkeeping. Courts have routinely relied on Chevron when deferring to DOL’s statutory interpretation in upholding those standards and affirming wage violations. Without Chevron, however, the validity of those rules, or of new rules, is less certain.
That said, Loper Bright did not overrule any specific agency actions, and prior judicial decisions interpreting the statute still apply. Employers are thus advised to continue adhering to all DOL rules and regulations and to comply with DOL investigations unless and until courts specifically invalidate DOL actions.
Nonetheless, Loper Bright will significantly impact current and future challenges to DOL’s wage and hour rules. For example, currently pending before the Fifth Circuit is a challenge to DOL’s 2020 rule setting a salary minimum for “white collar” exemptions. The Fifth Circuit in Mayfield v. LABR recently requested the parties submit briefing on the impact of Loper Bright as it pertains to the challenge. Moreover, in State of Texas v. U.S. Department of Labor, a district court in Texas cited Loper Bright in support of its grant of an injunction for the state of Texas regarding the DOL’s most recent change to the overtime rules. We anticipate other courts with litigation challenging the DOL’s wage and hour rules will likewise take Loper Bright into consideration.
The Occupational Safety and Health Administration (OSHA) will similarly confront greater headwinds following Chevron’s overruling, although when and how those challenges will occur is difficult to predict. As of publication, OSHA actions relying on Chevron are still in place until parties expressly challenge them under Loper Bright. Most employers will continue to adhere to all OSHA rules and standards unless and until courts say otherwise—although some may elect to accept enforcement risk on standards known to have been bolstered by Chevron deference and then challenge the validity of any citation issued on this basis.
OSHA should expect numerous challenges to its rules, and our team continues to compile rules prime for review following Loper Bright. For example, the odds for the existing court challenge to OSHA’s April 2024 Union Walkaround Rule (see our April 3, 2024 LawFlash) improve after Loper Bright because a court no longer needs to defer to the DOL regarding the meaning of the term “representative authorized by his employees” in 29 U.S.C. § 652(e).
Forthcoming challenges to OSHA’s enforcement capabilities are also likely because courts have relied on Chevron deference to affirm various OSHA citations. This includes citations issued under OSHA’s multiemployer worksite policy, OSHA’s instance-by-instance policy, and OSHA’s interpretation of “hazard recognition” and other terms in general duty clause citations. Challenges are not limited to safety and health enforcement, but also may expand to whistleblower claims. For example, employers may challenge whether internal safety complaints are protected activity under Section 11(c) of the Occupational Safety and Health Act. These rules and standards all face an unknown future under Loper Bright.
The National Labor Relations Act (NLRA) empowers the National Labor Relations Board (NLRB) to prevent any person from engaging in any unfair labor practice affecting commerce. The NLRA also establishes the NLRB as primary factfinder in this role: “the findings of the Board with respect to questions of fact if supported by substantial evidence on the record considered as a whole shall in like manner be conclusive.”
Over many decades, and especially under the Biden administration, the NLRB and its general counsel have pursued a much-expanded interpretation of law as compared to the original congressional intent and statutory text. Indeed, the NLRB views itself as the preeminent federal agency that regulates almost any worker-to-worker interaction or issues regarding their terms and conditions of employment, not just union organizing, collective bargaining, and similar group efforts. This has led the NLRB to operate with a long-standing view that it has the power to effectively make new law, impose it retroactively, and consistently change standards from one presidential administration to the next. Those days should be numbered under Loper Bright.
Importantly, both before and after Chevron, the Supreme Court gave deference to the NLRB’s legal positions and did not independently decide the best meaning of the statute. But Loper Bright should eliminate the basis upon which the prior decisions rested, and post-Chevron Supreme Court decisions, including Epic Systems, have looked closely at aggressive or novel statutory interpretations by the NLRB and rejected them as unsupported by the statutory text or legislative intent.
While the NLRB has relied on judicial cases issued prior to Chevron to support its deference arguments, and will likely continue to do so, the Court in Loper Bright makes clear that deference only applies to the factual, not legal, determinations of the NLRB. Under Loper Bright, the validity of NLRB’s new legal rulings appears to fall under the more exacting principles of Skidmore v. Swift, which include judicial inquiry into the NLRB’s thoroughness of reasoning and consistency over the years, for example. It is also unclear how Loper Bright will impact NLRB determinations that involve mixed questions of law and fact.
Here, the impact for labor law will likely occur soon. The NLRB has made recent forays changing labor law standards on a variety of topics, including elections, organizing, protected concerted activity, employment agreements, and access to company property. Our team can assist in assessing statutory interpretations under the NLRA that may be challenged in the federal courts both in the short term and long term.
Practically, employers should work with counsel to consider at what stage of NLRB proceedings they raise new or enhanced defenses citing Loper Bright and make clear the distinction between purely factual issues, for which the NLRB should still enjoy deference, as opposed to legal issues, for which it will no longer enjoy the same deference. It is likely unnecessary to raise Loper Bright defenses at the initial, investigatory stages of NLRB proceedings as regions will not have the authority to dismiss cases based on the Loper Bright decision, nor will the failure to raise defenses at that level impact any long-term legal strategy. However, if a complaint issues, employers should consider raising Loper Bright defenses in any answers, or post-hearing briefs, requests for review, and exceptions moving forward.
Additionally, in relation to representation cases, raising a Loper Bright argument generally is warranted for any Cemex-related cases, or any objections/subsequent unfair labor practices pertaining to Cemex or the general counsel’s captive audience meeting initiative. (See our August 27, 2023 LawFlash.) Overall, the decision to raise a Loper Bright defense at various stages of NLRB proceedings should be considered on a case-by-case basis in coordination with labor counsel.
On July 16, please join Harry Johnson, Michael Kenneally, David Broderdorf, and Crystal Carey for a webinar that will conduct a deeper dive into specific issues pertaining to labor-management relations and provide practical considerations, including more specific defenses to consider at various stages of NLRB matters.
As we continue to understand Loper Bright’s reach, employers should be strategic with how and when to make Loper Bright arguments before agencies and courts and, in making those arguments, afford greater reliance on statutes’ text and legislative intent. Our team will remain vigilant in tracking Loper Bright’s impact on agency conduct to ensure that employers understand its implications and stands ready to assist in these analyses.
If you have any questions or would like more information on the issues discussed in this LawFlash, please reach out to any of the contacts below or any member of our Chevron Task Force.