The United States Supreme Court’s landmark decision on June 28, 2024 to overturn a 40-year-old precedent that allowed federal government a significant leeway in the interpretation of congressional statutes has been condemned and praised by various groups and individuals around the world. Articles and social media posts have been provided with various opinions on what this ruling will do to the current regulations and how it will impact future activities by a number of federal agencies, like OSHA, EPA, SEC, PHMSA, NMFS, and others.
What everyone really wants to know among other things is whether this change in legal approach going to help or hurt the employers and employees alike. In this short piece, we will understand the decision, review Chief Justice Roberts’ clarification, and consider the broader implications for the employers and the employees.
What is the Chevron Doctrine?
It all stemmed from a narrow question of fishery management law: whether the National Marine Fisheries Service’s requirement that certain vessels pay for federal observers onboard their boats was consistent with the Magnuson-Stevens Act. But the root issue of the case was whether the court administrating the case should defer to a federal agency’s interpretation or whether it should decide it on its own (Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984)). In that case the court deferred to NMFS in its decision. This became known as the Chevron doctrine and this methodology has been used in adjudicating more than 18,000 court cases and arriving at more than 3,000 administrative decisions for the past 40 years. In courts the judicial branch deferred to “permissible” agency interpretations of the statutes those agencies administer – even when a reviewing court read the statute differently.
What ended up happening then was that each case was resolved in favor of the government challenges. So, the bottom line was that if an employer wanted to challenge the government, the government generally won under the Chevron doctrine.
What Does the June 28th Decision do to the Previous 18,000 Cases Citing Chevron?
Chief Justice Roberts indicated that the court’s decision would not require earlier cases that relied on Chevron to be overturned. Roberts wrote, “Mere reliance on Chevron cannot constitute a ‘special justification’ for overruling a decision upholding agency action, because to say a precedent relied on Chevron is, at best, just an argument that the precedent was wrongly decided – which is not enough, standing along, to overrule the case.”
Will the Overturn Help or Hurt Employers and Employees?
For those who believe that the government will always have the employer’s or employees’ best interests in mind, the recent Supreme Court decision is damaging. It may mean lengthier rule-making processes, more legal challenges from the employers, and less ability for the federal agencies to dictate the executive branch’s dogma or each new administration’s philosophy for all.
One of the underlying ideas behind the camp that believes this Supreme Court’s decision will hurt the employees is the conviction that the average employer is intent on mistreating and abusing their employees to the extent allowable by law. And there is no doubt that some employers may indeed act that way. But most do not. Why? Because employees always have the option to vote with their feet, leaving truly terrible employers the moment they have a chance for a better job. So, common sense says that burdensome, stringent, and creative interpretations or inventions of the various agencies are simply not necessary to reign in bad employers, as their abusive practices generally result in their own demise.
Additionally, those employers that will chose to litigate against an agency will still have to establish principally that an agency action was arbitrary and capricious, abused discretion, or violated law to prevail on a challenge to an agency adjudication or rulemaking. In other words, courts will no longer defer to an agency’s interpretation of a statute but those challenging it will still have a relatively high burden of proof.
However, for those that believe in limited government, the overturn of the Chevron deference is a restoration of the balance between the three separate and independent branches of government: legislative, executive, and judicial. The executive branch of the government, and federal agencies in particular, will no longer be able to utilize arbitrary or capricious methods in interpreting the law. This limitation of the federal government, according to this view, can only help the employers and employees alike.
Those in this camp simply cite some recent examples of the federal agencies’ arbitrary over-reach, which resulted in hurting instead of helping both employers and employees. One such case is the Securities and Exchange Commission’s ESG rule requiring registrants to disclose information that can and has been widely politicized and weaponized against employers, resulting in lost contracts, difficulties obtaining loans and lines of credit, reputational damages, etc. This rule was actively resisted by the majority of American industries and employers due to its burdensome requirements overtaxing businesses still struggling to recover from COVID-19.
Another example of an agency over-reach was OSHA’s 2021 COVID-19 Vaccine Mandate, based on poorly researched data, which intended to force up to 80 million American workers to choose between their jobs and experimental shots. This emergency standard had to be blocked by the Supreme Court.
All in all, while it may still be too early to know the full extent of the Supreme Court’s Chevron ruling, this article established that the crux of the answer on its effect upon the US employers and employees alike really is based on one’s perspective on the role of the federal government in our everyday lives.
