Modern labor and employment law is basically administrative law. The rules governing minimum wages, overtime, workplace safety, collective bargaining, and more are made mostly by agencies. And these agencies make the rules primarily by publishing rules and issuing quasi-judicial decisions. So for labor and employment practitioners, it matters what kind of weight those authorities have in court.

Until recently, federal agencies had often received so-called "Chevron deference" (or something like it). This means courts have generally accepted agencies' statutory interpretation and upheld their decisions and regulations. But that could soon change. With the Supreme Court poised to reconsider Chevron and its underlying rationale, labor and employment lawyers are starting to ask, "What happens to us?"

Chevron and Labor Law Today

The Chevron standard is simple on its face. It assumes that when Congress assigns an agency to implement a statute, it expects that agency to make some policy choices. Those choices usually come up when the agency is interpreting an ambiguous term in the law. Chevron says that because it's the agency's job to make policy, courts should first ask whether the statute is really ambiguous. If it is, the court should accept the agency's interpretation as long as it's reasonable.

Today, nearly every major labor and employment agency has received Chevron-style deference from at least some courts. The Equal Employment Opportunity Commission (EEOC), Occupational Health and Safety Administration (OSHA) and US Department of Labor (DOL) all regularly invoke Chevron in court. And the National Labor Relations Board (NLRB) uses similar deference principles to defend its regulations and decisions in unfair labor practice cases.

Chevron makes these agencies' interpretations harder to challenge. To challenge one successfully, a plaintiff must win at either step one or step two. That is, the challenger must show either that the statute is clear or that the interpretation was unreasonable. Both are easier said than done in federal court.

First, at step one, federal labor and employment laws are rarely clear in practice. Many were written decades ago, when workplaces were very different. Title VII was adopted in the 1960s, decades before e-mail or the internet. And the National Labor Relations Act and Fair Labor Standards Act were passed in the 1930s, when fewer than half of workers had phones, much less smartphones. None of these laws anticipated modern challenges like after-hours e-mail, social media, or artificial intelligence. So their language rarely maps perfectly onto the modern workplace—leaving room for interpretation.

Second, at step two, courts often hesitate to say that an agency's interpretation is unreasonable. By definition, an ambiguous statute can be read in more than one way. So as long as the agency's reading is plausible, a court will usually accept it. That isn't always true, of course; courts sometimes reject agency rules as unreasonable. But that result is rare. At step two, the agency almost always wins.

This advantage may affect not only the outcomes in individual cases, but long-term agency behavior. Some scholars think that Chevron deference has made agencies more adventurous. That is, agencies have been more willing to stretch statutory language because they know they'll still get deference in court. But stretching language leads to rules less rooted in the statutory text, which in turn prompts more people to challenge agency rules. In other words, Chevron might in fact cause more litigation.

The litigation spike is nowhere more visible than in labor and employment law. In recent years, nearly every high-profile labor or employment regulation has been challenged. To cite only a few examples, lawsuits were filed against OSHA's mask-or-vaccine rule, the EEOC's EEO-1 reporting requirements, the NLRB's joint-employer rules, and a variety of DOL rules, including overtime, persuader, and independent-contractor rules.

The exact relationship between this litigation and Chevron is hard to quantify. But the data suggests that Chevron has at least boosted agency activity. Using one simple metric, the number of pages in the Federal Register—where agencies are required to publish their proposed and final rules—grew from fewer than 50,000 in 1985 to more than 97,000 by 2016. In other words, since Chevron was decided, agencies have nearly doubled their output. It should be no surprise, then, that litigation has also increased.

Employment and Labor Law in a Post-Chevron World

These trends likely result from more than just Chevron. Reversing them would require more than reversing one decision. But still, overruling Chevron would doubtlessly have immediate effects.

For one, it would immediately affect ongoing litigation. Lawsuits have been filed to challenge the DOL's independent-contractor rule, Davis-Bacon Act reform rule, and ESG-investing rule. On March 8, 2024, a federal court vacated the NLRB joint employer rule, restoring the 2020 "substantial direct and immediate control" standard instead. Still more challenges are expected regarding the DOL's proposed "white collar" salary rules. In each case, agencies either rely or likely will rely on Chevron. But if Chevron is overruled, they will have to look elsewhere for support. Rather than relying on deference, they will have to defend their rules on the merits.

The agencies might also have to defend rules that have been around for a while. In another case this term, the Supreme Court will decide when a cause of action under the Administrative Procedure Act "accrues." That matters because it dictates when the statute of limitations starts. The government says the clock starts when a rule is final; private parties have six years from that date to file suit. But the challengers say the clock starts whenever a person is first injured. So if a company starts business in 2024 and is first affected by a rule on that date, the clock starts then. The company can sue any time within the next six years, regardless of how old the rule itself is.

That debate matters for labor and employment law. Many major labor and employment rules are decades old. Some, such as the FLSA salary-basis regulations, have their roots in the 1930s. If the statute of limitations started when they were published, many of them are now out of reach. But if the clock starts when they're applied to a new plaintiff, they could be open to challenge. (Justice Brett Kavanaugh, for one, has signaled an interest in reconsidering the salary regulations.)

A similar point applies to agency decisions. Many agencies make policy not through rules, but through case-by-case adjudication. A good example is the NLRB. The NLRB has authority to issue rules and decisions; but it usually opts for decisions. And some of its decisions are quite old. The Board has been around since the mid-30s, and in the intervening century, it has built up a lot of internal doctrine. If Chevron goes away, much of that doctrine could be challenged.

Some have suggested that the Board is more insulated than other agencies. Though the NLRB gets Chevron-style deference, it doesn't rely strictly on Chevron itself. It relies instead on a series of different cases where the Supreme Court deferred to the Board's expertise. But that conclusion may be too hasty. Though the cases are different, their rationale is the same. They're based on the idea that when Congress delegates enforcement powers to an agency, it intends to defer to the agency's policy judgments. If that's right for Chevron cases, it's right in the NLRB cases too. But if it's now wrong in Chevron, it's likely just as wrong in the cases cited by the NLRB.

And in fact, the NLRB might have problems beyond its substantive rules. Its procedural rules may also be open to doubt. For example, in the Taft-Hartley Act, Congress directed the NLRB to apply the Federal Rules of Civil Procedure in unfair-labor-practice proceedings "so far as practicable." But for years, the NLRB has treated that injunction loosely: it sometimes applies the Federal Rules, sometimes not. In effect, it treats the Rules as a suggestion. But labor lawyers have criticized that practice, and private parties have petitioned the Supreme Court to fix it. And in a post-Chevron world, the Court might be more willing to decide for itself what "practicable" really means.

An Opportunity for Labor and Employment Lawyers?

These are only a few examples of what could change after Chevron goes away. The lesson for practitioners is to stay flexible and creative. Long-held shibboleths may no longer hold. Practitioners should think strategically, question received wisdom, and get creative. Those who do will best serve their clients.

Originally published by Bloomberg Law.

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