US Supreme Court Eliminates Deference To Administrative Agencies On Questions Of Law

On June 28, 2024, the U.S. Supreme Court ruled in Loper Bright Enterprises v. Raimondo that courts may not defer to an administrative agency’s interpretation of a law and must instead exercise independent judgment. This decision protects businesses from administrative agencies that may use their regulations to expand laws passed by Congress. 

It is important to remember when considering this case that administrative agencies, like the Department of Labor or the Equal Employment Opportunity Commission, are part of the federal government’s Executive Branch. As we previously discussed, when the Legislative Branch (Congress) passes a law, an administrative agency may issue regulations interpreting the law. Under the “Chevron doctrine,” if a law does not address an issue or is unclear, a court is required to defer to the agency’s interpretation of the law (provided it is reasonable), even if the court would have reached a different interpretation and even if the agency’s interpretation has been inconsistent over time. 

In Loper, the Supreme Court ended this deference, overturning the Chevron doctrine. The Court explained that the U.S. Constitution assigns to the Judicial Branch (the federal courts) the responsibility and power to interpret the laws passed by Congress. Federal courts are required to rely on their own judgment when a law is unclear and may not “waive or surrender” their obligation to interpret the law to an administrative agency. While a judge can use an agency’s interpretation as guidance, the views of the Executive Branch cannot supersede the Judicial Branch. “Otherwise, judicial judgment would not be independent at all.” 

The Court also explained that the Chevron doctrine directly conflicts with the Administrative Procedure Act (APA), which was enacted in 1946 “as a check upon administrators whose zeal might otherwise have carried them to excesses not contemplated in legislation creating their offices.” The APA specifies that courts, not agencies, decide all questions of law. It also requires courts to hold unlawful and set aside any agency action, findings, and conclusions that do not follow the law. Had Congress intended for the courts to defer to agency interpretations of the law, it would have said so in the APA. 

The Loper ruling has no immediate effect for most employers, but it will certainly impact current and future legal challenges to regulations and administrative agency actions, including pending cases over the Department of Labor’s new overtime rule and the Federal Trade Association’s ban on noncompete agreements. Whether a court agrees or disagrees with an administrative agency’s interpretation of laws in these and other cases, employers can at least be assured that the proper branch of government is making the decision using tools of statutory construction instead of political policy preferences. 

As always, if you have questions about this case, please contact a KZA attorney.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.