On June 28, 2024, by a 6-3 vote, the United States Supreme Court overturned the long-standing Chevron doctrine. In rejecting this doctrine, the Supreme Court substantially limited the level of judicial deference accorded federal agencies’ interpretations of federal law and reaffirmed the role of the courts to “say what the law is.”

The Chevron Doctrine

The Chevron doctrine came into being in 1984 when the Supreme Court issued its ruling in Chevron v. Natural Resources Defense Council. Over the past 40 years, Chevron became the most cited administrative law case, with over 18,000 citations.

The Court set forth a two-part test in reviewing agency actions. First, a court must determine “whether Congress had directly spoken to the precise question at issue.” If Congress did so, the court could reject an agency interpretation if it was contrary to congressional intent. If, however, Congress had not directly addressed the question, i.e., the statute was silent or ambiguous, the court must defer to the agency’s interpretation provided it was reasonable, even if the court would have interpreted the statute differently. In effect, Chevron presumed that where there was statutory ambiguity, courts must defer to agency action.

The Court’s Ruling Overturning the Chevron Doctrine

The Court took up the issue of the Chevron doctrine’s validity in reviewing two cases, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce. Both of these matters involved the challenge of commercial fishing companies to a rule of the National Marine Fisheries Service requiring Atlantic herring fishermen to pay for the cost of government observers on board their boats. The Court ruled that the Chevron doctrine is irreconcilable with both the traditional duty of the courts to interpret the law and the federal Administrative Procedure Act (APA), which “prescrib[es] procedures for agency action [and] delineates the basic contours of judicial review of such action.”

Writing for the majority, Chief Justice Roberts stated that the Chevron doctrine was “fundamentally misguided,” and “unworkable.” He asserted that the APA requires courts, not agencies, to interpret statutes; however, the Chevron doctrine negates this duty by requiring courts to “ignore, not follow, ‘the reading the court would have reached’ had it exercised its independent judgment.” Roberts further argued that a statute’s ambiguity does not result in the “delegation of law-interpreting power” to an administrative agency nor does it excuse courts from their responsibility of statutory interpretation. Indeed, unlike courts, “agencies have no special competence in resolving statutory ambiguities.”

Refuting the argument that agencies are in a better position to interpret statutes because agencies have “subject matter expertise regarding the statutes they administer,” the Court noted that reviewing courts often deal with issues of a technical nature and consider, where applicable, the agency’s “body of experience and informed judgment.” In fact, prior to Chevron, courts already applied a level of deference to agency actions as articulated in Skidmore v. Swift & Co. While this level of deference is lower than that given to agencies under Chevron, Skidmore recognized that “[t]he weight of such [agency interpretation] in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” The Court further noted that in situations where an agency interpretation “rests on factual premises within [the agency’s] expertise,” that interpretation will be “especially informative” to the courts.

The Court also addressed the responsibility of the judiciary in cases where Congress expressly delegates discretionary authority to an agency to interpret a statute. The APA still applies, and “judges need only fulfill their obligations under the APA to independently identify and respect such delegations of authority, police the outer statutory boundaries of those delegations, and ensure that agencies exercise their discretion consistent with the APA.” By following this framework, courts adhere to the “traditional conception of the judicial function that the APA adopts.”

Now What? 

Although prior court decisions relying on Chevron are not affected by the Supreme Court’s recent decision, the overturning of the doctrine likely will reverberate across federal agencies that will now face increased scrutiny of their statutory interpretations and a resulting increase in challenges to those interpretations.

With respect to employment law, the decision potentially will affect the interpretations of the Equal Employment Opportunity Commission, the Occupational Health and Safety Administration, and the U.S. Department of Labor, among others. These agencies will have less power to further their own agendas, although unless a specific regulatory action is successfully challenged in court, nothing is stopping these agencies from continuing vigorous enforcement measures. Employers will have the opportunity to challenge overly broad and troublesome regulations, such as the DOL’s overtime rules. 

The Court’s decision does leave employers with uncertainty, however.  Federal agencies certainly will spend the foreseeable future evaluating their interpretations to determine their viability.  As a result, employers’ compliance efforts will become more complicated, at least in the short run.

Employers should pay close attention to legal developments related to federal agencies and ensure they pay close attention to the actual provisions in workplace laws rather than relying on sometimes untethered agency interpretations.