Understanding the Impact of U.S. Supreme Court’s Decision in Loper Bright Enterprises v. Raimondo on Employment Law

In a landmark June 28, 2024 decision, the U.S. Supreme Court issued its opinion in Loper Bright Enterprises v. Raimondo, overruling the long-standing Chevron deference, a doctrine that has significantly influenced the landscape of administrative law and, by extension, employment law. This decision marks a pivotal shift in how courts may now approach statutory interpretation, especially in the context of employment regulations governed by federal agencies.

This may affect litigation of an employment lawsuit any time an administrative agency issues guidance about how to interpret a law. Thus, it could come into play for wrongful termination lawsuits, retaliation claims, discrimination, harassment, or any wage and hour claim. The old and the new approach have nuances that an experienced employment attorney can help navigate. Below we have summarized the case and how it may affect employment claims and the determination of legal rights.

Case Analysis

In Loper Bright Enterprises v. Raimondo, the National Marine Fisheries Service had expanded definitions under the Magnuson-Stevens Act, which were previously upheld under Chevron’s deferential framework. The Supreme Court, however, found this expansion inconsistent with the Act’s text as interpreted through the courts’ independent assessment. The decision emphasizes that even well-reasoned agency interpretations must align with the judicial understanding of the statute.

The End of Chevron Deference

For over four decades, Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., established a two-step process for reviewing agency interpretations of statutes they administer. Under Chevron, courts first determined whether Congress had directly addressed the issue in question. If not, courts deferred to agency interpretations deemed “reasonable,” thus granting agencies significant leeway in areas of ambiguity.

However, the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo explicitly overturns this framework. The ruling reasserts that under the Administrative Procedure Act (APA), it is the court’s duty—not the agencies’—to interpret ambiguous statutes. This seismic shift reemphasizes the court’s role in statutory interpretation, underscoring that agencies cannot receive deference simply based on the ambiguity of a statute.

Implications for Employment Law

The decision has profound implications for employment law, particularly in how employment-related statutes will be interpreted and enforced. Federal agencies like the Equal Employment Opportunity Commission (EEOC) and the Department of Labor (DOL) have historically issued rulings and guidelines interpreting ambiguous language in laws such as the Fair Labor Standards Act (FLSA) and the Americans with Disabilities Act (ADA).

With the elimination of Chevron deference, courts are now required to undertake a more rigorous judicial review of these interpretations. This means that previous agency interpretations, which might have expanded or restricted employment rights under a broader interpretation of the law, may no longer hold unless they align closely with the judicial reading of the statute.

What This Means for Employers and Employees

1.   Employers and employees may face a period of uncertainty as lower courts re-evaluate existing agency interpretations that were previously upheld under Chevron. Legal standards that were once considered settled may now be subject to challenge.
2.   Potential for More Litigation: As agencies lose the ability to interpret statutory ambiguities definitively, there may be an increase in litigation as parties challenge the applicability and interpretation of regulatory provisions. This could lead to more frequent and varied judicial interpretations of the same statute, potentially leading to a patchwork of standards until higher courts resolve the inconsistencies.
3.   Impact on Agency Guidance: Agencies might become more cautious in issuing guidance that stretches statutory boundaries. This could lead to more conservative interpretations that stick closely to the text of the law, potentially limiting the scope of regulatory protections.
4.   Long-Term Effects on Employment Practices: Employers must stay vigilant and possibly reconsider employment practices that were based on agency interpretations, which might no longer be viable. Compliance strategies may need to be adjusted in response to new judicial interpretations.

Conclusion

The Supreme Court’s decision to overturn Chevron in Loper Bright Enterprises v. Raimondo represents a fundamental realignment of the power dynamics between the judiciary and administrative agencies. For employment law, the decision introduces a new era of statutory interpretation that prioritizes judicial readings over agency discretion. Employers, employees, and their legal counsel must closely monitor how this shift affects regulatory compliance and enforcement. As the landscape of federal employment law enters this new phase, staying informed and adaptable will be key to navigating the challenges ahead. Because California law sometimes borrows from federal law, employees and employers will want to seek assistance from experienced employment attorneys like those at ILG Legal Office, PC.