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The Supreme Court Overturns Chevron

On June 28, 2024, the Supreme Court issued a decision that will have significant changes to the Chevron doctrine, a nearly 40-year-old precedent that requires courts to defer to reasonable interpretations of ambiguous statutes by federal agencies. This doctrine has been a cornerstone of administrative law, providing federal agencies with the authority to interpret and implement regulations. 

The Chevron doctrine came out of a 1984 Supreme Court case, Chevron U.S.A. Inc. v. Natural Resources Defense Council. It is a legal principle courts use when reviewing how federal agencies (such as the Equal Employment Opportunity Commission (EEOC) and the US Department of Labor (US DOL)) interpret the laws for which they are responsible for enforcing.  

The Chevron doctrine had a two-step process: 

  1. Is the law clear? If the law Congress passed is clear and unambiguous, both the agency and the courts must follow what the law plainly says. 
  2. Is the agency’s interpretation reasonable? If the law is ambiguous (meaning it could have multiple interpretations), the court will generally defer to the agency’s interpretation, as long as it is reasonable. 

Employers should care about the Chevron decision because it is likely to have significant implications for navigating the ever-evolving landscape of federal regulations, particularly regarding employment law. Here are four reasons why the potential overturning of Chevron matters to employers: 

1. Increased Regulatory Uncertainty 

The overturning of Chevron means that courts no longer grant federal agencies a degree of deference when interpreting ambiguous laws. This means that agency interpretations may be easily challenged in lower courts and could lead to reduced clarity and predictability for businesses complying with regulations as the courts will have more power to interpret laws. This could further lead to greater uncertainty regarding what constitutes legal compliance, as different courts could interpret laws differently. 

2. Potential for Increased Litigation 

The overturning of Chevron might make it easier for employees and advocacy groups to challenge agency interpretations. This could lead to more lawsuits against employers alleging violations of regulations, even if they followed the agency’s guidance.  

3. Potential for Shifting Regulatory Landscape  

Without the Chevron deference, courts might strike down agency interpretations deemed inconsistent with their understanding of the law. This could result in significant changes to regulations governing various aspects of employment, leaving employers scrambling to adapt. 

4. Potential for Increased Legal Costs 

The increased uncertainty and potential for litigation could lead to higher legal costs for employers, as they navigate the changing regulatory landscape and defend themselves against potential legal challenges.  

Notably, the ruling is not retroactive; Chief Justice Roberts was careful to write in his opinion that the decision does “not call into question prior cases that relied on the Chevron framework.” 

Next Steps 

It is crucial to note that the specific impact of the overturning Chevron would depend on the specific federal regulation in question. Certain agencies might be more affected than others, and some regulations might be more likely to be challenged than others.  

While the ultimate impact of the Chevron decision remains uncertain, employers should be aware of the potential consequences and stay informed about further developments. Consulting with legal counsel familiar with employment law is recommended to navigate the changing regulatory landscape and mitigate potential risks. 

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.