The United States Supreme Court recently overturned the longstanding Chevron doctrine, which governed the powers of federal regulatory agencies for four decades. What does this mean for your business, and how can Goosmann Law assist you?
What Used To Be
Prior to the recent Supreme Court decision, the Chevron doctrine governed how courts reviewed agency interpretations of statutes. This doctrine involved a two-step process: first, determining if Congress clearly addressed the issue in the statute; if clear, the court would follow Congress’s intent. If ambiguous, courts applied a "reasonableness" standard to assess the agency’s interpretation. This approach gave federal agencies significant flexibility in defining and implementing regulations, often leaving little room for businesses to challenge those interpretations. For example, this flexibility was evident in a recent rule proposed by the Department of Labor (DOL) concerning the distinction between independent contractors and employees under the Fair Labor Standards Act. Since the Act did not clearly define these terms, the DOL had broad authority to establish criteria for who qualifies as an independent contractor or employee. This compelled businesses to adhere to their determinations, illustrating the considerable power agencies wielded over businesses when enforcing statutory provisions.
However, with Chevron now overturned, the landscape has changed significantly. The DOL (or any agency) can no longer unilaterally define who qualifies as an independent contractor or employee. Instead, only Congress or the courts can set such definitions.
The New Normal
Following the Supreme Court decisions in Loper Bright Enterprises v. Raimondo, 603 U.S. _____ (2024), and SEC v. Jarkesy, 603 U.S. ____ (2024), there will be a notable shift in how courts view federal regulations. Under Chevron, agencies received significant deference in interpreting ambiguous regulations. Now, it is likely courts will scrutinize these interpretations more critically. This shift allows businesses greater opportunity to challenge agency actions that exceed their authority, empowering Congress to play a more direct role in shaping federal policies. It may result in more lawsuits being brought and placing courts at the forefront of these federal policies to determine how they should be interpreted.
In one decision, the Supreme Court removed the long-recognized and understood foundation for interpreting federal rules and regulations. The removal of Chevron deference creates a vacuum for determining the correct way to interpret federal rules and regulations and gives no guidance to regulators on how to proceed. While this change may offer businesses a simpler path to challenge regulatory overreach, it also invites complexities. By giving the Courts and Judges more authority to determine the validity of federal regulations, the rules are prone to increased legal challenges leading to more frequent changes. This is especially possible in the immediate future as agencies, advocates, and the country tries to fill the vacuum created by Loper. Constant regulatory updates can create compliance challenges for business owners who must adapt to evolving requirements on top of the already strenuous requirements of owning a business. Moreover, differing interpretations of statutes across jurisdictions can further complicate compliance efforts, potentially leading to confusion and compliance issues for businesses.
Here to Help
This is where Goosmann Law is invaluable; our attorneys are prepared to navigate you through this new legal frontier. As new court decisions, laws, and the regulatory landscape continue to evolve it is crucial for employers to be proactive to protect their business, employees, and their personal interests. Goosmann attorneys are equipped and ready to help you understand your rights and responsibilities across all aspects of their business operations and beyond. From complying with changing federal regulations to planning your estate, Goosmann Law Firm is a full-service law firm prepared and equipped to help you and your business address all your legal needs. Contact us today to ensure your and stay ahead in this dynamic regulatory environment.