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Businesses Quick to Deploy Chevron’s End to Attack Labor Rules [1]

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Date: 2024-07

The US Supreme Court’s landmark ruling curbing agencies’ rulemaking power is already cropping up in numerous legal challenges to US Labor Department rules less than a week after the decision.

Loper Bright Enterprises v. Raimondo has been cited in at least five lawsuits weighing DOL regulations on overtime pay eligibility, classification of workers as employees or independent contractors, and tipped workers’ wages.

The high court’s decision late last week overruled Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., which had created a legal doctrine directing courts to defer to agencies’ reasonable interpretations of laws that are silent or ambiguous on a particular issue.

Loper Bright instead requires courts to use their “independent judicial judgment” to determine if an agency has acted within its authority, rather than automatically granting deference.

The moves to swiftly apply the high court’s new ruling will test the potency of the Loper Bright standard and provide a window into how it will affect the labor and employment legal landscape in practice.

Multiple Citings

In one challenge to the DOL’s rule limiting when employers can use the tip credit to pay tip-earning workers the lower $2.13 minimum wage under the Fair Labor Standards Act, the Restaurant Law Center argues that Loper Bright “makes clear” that the regulation shouldn’t receive “special deference.”

“Instead, it is the Court’s paramount role to decide all relevant questions of law, interpret the statutory text, and determine whether a regulation meets any of the standards set forth” in the Administrative Procedure Act, the Restaurant Law Center argued in a July 2 filing with the US Court of Appeals for the Fifth Circuit.

Businesses have also cited Loper Bright in two separate cases challenging the DOL’s independent contractor rule in federal courts in Texas and Louisiana. Both the Coalition for Workforce Innovation and a trucking company have argued that the Biden administration’s worker classification rule—which generally makes it harder for companies to classify their workers as independent contractors as opposed to employees—went beyond the agency’s authority.

Under Loper Bright, the DOL shouldn’t be owed any deference in its interpretation of the FLSA, attorneys contend in recent filings in both cases.

“To the extent that the DOL Defendants rely generally upon Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., and its progeny in their arguments by claiming they are entitled to deference based on agency expertise in promulgating the 2024 Rule, ‘Chevron is overruled,’” attorneys for trucking company Frisards Transportation said in a July 2 filing, quoting Loper Bright.

And the Fifth Circuit on July 1 directly asked business owner Robert Mayfield and the DOL to provide briefs explaining how the ruling would impact Mayfield’s pending legal challenge to a 2019 overtime rule.

Already Applied

While it’s unclear how Loper Bright ultimately will influence those cases, at least one federal court already has used the new standard to partially block a new DOL rule expanding overtime eligibility to 4 million new workers.

Judge Sean D. Jordan of the US District Court for the Eastern District of Texas cited Loper Bright when granting an injunction June 28 to temporarily freeze the Biden administration’s overtime rule from going into effect for the state of Texas, just hours after the Supreme Court issued the ruling.

Jordan found that the overtime rule was likely illegal, noting that he “carefully” followed Loper Bright’s controlling guidance in his decision.

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[1] Url: https://news.bloomberglaw.com/daily-labor-report/businesses-quick-to-deploy-chevrons-end-to-attack-labor-rules

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