Employer Perspective: The New Regulatory Landscape After the End of Chevron Deference

Federal courts did not wait long before beginning to apply the U.S. Supreme Court's landmark June 28 ruling in Loper Bright Enterprises v. Raimondo — a decision thatoverturned the Court's previous "Chevron deference" standard。

In fact, on the very day the Supreme Court issued its ruling, Judge Sean Jordan cited the decision while considering a U.S. Department of Labor overtime rule under the Fair Labor Standards Act. Jordan held that the salary level test set by the Department in its final overtime rule "effectively replaced" the FLSA's overtime exemption for employees in certain duties,exceeding its statutory authority。

Jordan temporarily blocked the rule's application to Texas employees, and although his ruling has limited nationwide applicability, the rule still faces multiple legal challenges. Alex MacDonald, a shareholder at Littler Mendelson, said this may be the first agency regulation that federal appellate courts have the opportunity to review in the "post-Chevron era."

The Long-Term Impact of Overturning Chevron

Before Loper Bright , federal courts, relying on the Supreme Court's 1974 ruling in Chevron v. National Resources Defense Council , generally deferred to agency interpretations of ambiguous statutes. MacDonald noted: "That approach is no longer applicable; ambiguity alone is no longer sufficient to trigger deference."

Instead, in its late-Juneruling, the Supreme Court clarified that courts must, under the Administrative Procedure Act, "exercise independent judgment in determining whether an agency has acted within its statutory authority."

Paul DeCamp, a member of Epstein Becker Green and former administrator of the Department of Labor's Wage and Hour Division, believes the decision could lead to the invalidation of multiple DOL regulations, though employers may not see immediate effects. This is partly because the Court did not overturn any prior rulings made under Chevron .

Additionally, the Court clarified that Loper Bright did not overturn its 1944 ruling in Skidmore v. Swift & Co. , in which the Court held that certain agency "interpretations and opinions" could be considered as guidance. MacDonald said this was later reframed by federal courts as a form of deference, but the level of deference articulated in Skidmore did not reach the level granted to federal agencies under Chevron .

DeCamp noted that with Chevron deference abolished, the "heavy weight on the government's side of the scale" has been removed, and courts will no longer give special status to interpretations by agencies like the DOL.

DeCamp said: "The long-term impact is that the elimination of Chevron deference may force agencies, including the Department of Labor, to be more careful and thoughtful when crafting rules. In the long run, this will lead to better regulations that more closely align with congressional intent."

Some hold a different view, worrying that Loper Bright could lead courts to become more deeply involved in policymaking. Jim Townsend, director of Wayne State University's Levin Center for Oversight and Democracy, believes the decision reflects a misunderstanding of the regulatory process.

Townsend said: "Congress often plays a significant role in overseeing and providing feedback on these regulations." He added that the notion that agencies deliberately disregard congressional intent when crafting rules "is not true," and "that's not how it works in reality."

DOL Rules May Face an Unfavorable Landscape in Federal Courts

DeCamp said another long-term effect employers should watch is that theLoper Bright ruling may, to some extent, mitigate the back-and-forth swings in regulatory actions between election cycles.

He added: "Of course, when administrations change, policy preferences often shift dramatically—that's part of the normal ebb and flow of the electoral process, and I don't think that will change. But the elimination of Chevron deference, and the careful pressure it places on the executive branch, will help ease this regulatory 'seesaw' effect."

Few DOL regulations exemplify this effect as clearly as its independent contractor rule. The Department recently finalized anupdated independent contractor rule, effective in March. MacDonald believes this rule is an example of the DOL interpreting a statutory term that could be viewed as ambiguous—the FLSA's definition of "employee"—in a way that may exceed its authority, making it vulnerable to challenge in the "post-Chevron era."

DeCamp said courts will still consider agency expertise when assessing the validity of regulations, especially those involving highly technical or scientific terms. However, he noted that many regulations the DOL has issued in recent years may not fall into that category.

DeCamp said: "Given the Court's ruling, I would struggle to identify which of the DOL's regulations over the past few decades were based on technical expertise rather than policy preferences, especially those from the Wage and Hour Division."

DeCamp added that this does not mean all or most DOL regulations are invalid, nor would courts find them so. But ultimately, "the framework for analyzing these regulations will be far less favorable to the DOL than it once was."

Employers Can Prepare—and Get Involved

That said, MacDonald said this does not mean HR departments should expect controversial regulations to be overturned overnight; existing compliance obligations remain in effect. He added that future agencies may also turn to issuing sub-regulatory guidance like opinion letters rather than updating regulations.

MacDonald said: "We're not overturning the entire system right now. All cases decided under Chevron remain valid. You can still rely on the Code of Federal Regulations. It's just that going forward, regulations will face stricter scrutiny, and you may see fewer regulations issued."

DeCamp similarly noted that existing federal regulations remain in effect, even as employers have opportunities to challenge particularly vulnerable regulations and submit public comments on proposed rules. He said: "Employers should not view Loper Bright as a license to violate the law."

Meanwhile, Townsend said employers might also engage with congressional lawmakers, especially committee chairs and ranking members, to provide input on regulations during the legislative process. He added that while ensuring a more stable regulatory environment is not solely the responsibility of regulated parties, collaboration helps.

Townsend said: "The more dialogue you have with these groups, the more you build a record about the meaning of statutory terms and the connection between regulations and the law. Otherwise, we face a vacuum."