For employees, it is critical to understand how the U.S. Supreme Court’s recent ruling on the Chevron doctrine impacts the way that their employers may change operations. While the change in the law does not have an immediate impact, over the long term, it could change the way employers manage employees and the way disputes between employees and employers are settled. The decision reshapes the administrative landscape and changes the balance of power specifically between administrative agencies and judiciary agencies.
What Does the Chevron Deference Relate To?
In its recent decision in Loper Bright Enterprises v. Raimondo, the Supreme Court overruled the practice of judicial deference to regulatory agencies, a process often taken when the need to interpret statutes arose. The Chevron deference refers to situations where there are challenges to regulations. Under this doctrine, a court must first determine if Congress has directly addressed the specific issue. If it had not, or the law was unclear, the court was then required to defer to the relevant federal agency for more insight and interpretation of the law.
While this may seem like nothing more than a simple regulatory process change, it has a direct impact on employers over time. Now, a court decides whether an agency has acted within its rights and authority in creating the regulation.The court can defer to an agency’s interpretation of the law or not do so. The bottom line: the court now must reach its own conclusion on the statute’s meaning and application.
What Does This Mean for Employment Law?
When an employment-related matter comes before the court, the court can now make key decisions without referring to the U.S. Labor Department, the New Jersey Department of Labor or other related agencies.
For employees, this isn’t necessarily a bad thing. Removing deference to the agencies gives plaintiffs a better shot at a law-based, judicial decision. Instead of relying on the bad agency finding, the court can make its own decision based on its interpretation of the law.
What Could This Change Mean Long Term?
While no immediate change occurs to any employment law, it does change the body that makes decisions about employment law regulations and their decision-making process. This could have a wide range of implications over time.
The courts are likely to have more scrutiny on such regulations
Prior to this new ruling, the court independently interpreted statutes and ensured the regulatory agency was in its right to take such actions.
Now, all federal agencies can expect more thorough judicial scrutiny when issuing, defending, and enforcing regulations.
Employers will need to maintain compliance
Employers will need to maintain compliance with changes over time. While no changes are required right now, future judicial decisions could require employers to make adjustments.
Potentially Impacted Key Regulations
Businesses and employees should pay close attention to any related decision from the court, but a few specific areas could be affected concerning employment law.
- Noncompete clauses: In April, the FTC banned noncompete clauses. The law goes into effect in September, but several challenging lawsuits could change the implementation of the elimination of noncompetes.
- Retirement plans: The Department of Labor has made numerous decisions related to regulatory requirements for retirement planning. These could be challenged over time, including those that address fiduciary investment advice rules.
- Health plans: Mandates regarding group health plans could also be in the line of sight. Numerous federal agencies have varied regulations related to health plans, and some of these could face additional scrutiny under the new ruling.
What Should Employers or Employees Do Now?
There is no need for immediate changes, but be vigilant for changing guidance in the coming months or years. For employees and employers, the move to judicial decision-making could offer more scrutiny and may make it harder for less-than-desirable regulatory agency decisions to be applicable. This could affect the way in which labor laws are enforced as the Courts, not non-lawyer agency employees, will have the final say on legal issues.
It is important to note that this ruling does not overturn any previous decisions. It does not lessen any current workplace protection, statute, or requirement of employees or employers. Employers must still adhere to all current workplace laws and regulations.
If you are facing challenges to employment law, we encourage you to reach out to Ayesha Hamilton and the team at Hamilton Law Firm.