Great Lakes Wire

Two recent decisions by the Supreme Court will have implications for human resources. The first decision, Loper Bright Enterprises v. Raimondo, No. 22-451 (2024), addressed the Chevron deference doctrine, which has influenced agency actions for 40 years. The second decision, SEC v. Jarskey, No. 22-859 (2024), examined the powers of internal administrative courts in cases involving monetary relief.

The Loper Bright case involved a rule by the National Marine Fisheries Service requiring fishermen to pay for observers mandated by a fishery management plan. The trial court upheld this rule based on Chevron deference from the 1984 Chevron v. Natural Resources Defense Council case concerning Environmental Protection Agency powers: "If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress," Justice John Paul Stevens wrote in 1984. However, if a statute is ambiguous or silent on an issue, courts should defer to reasonable interpretations by agencies.

The Supreme Court provided two justifications for this approach: judges lack specialized expertise and agency decisions are checked through presidential appointments and Senate confirmations.

However, the current Supreme Court overruled this interpretation: "The Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous."

This ruling does not eliminate administrative agencies but requires specific congressional delegation for regulatory interpretations. Courts will use an older standard allowing some deference to agencies.

This decision aligns with West Virginia v. EPA (2022), which held that significant new regulations require explicit congressional authorization.

For HR professionals, this reversal could impact Wage and Hour’s new overtime regulations and lead to more extensive court reviews of salary level tests under FLSA considerations as seen in Mayfield v. LABR (Fifth Circuit Court of Appeals). Controversial regulations from DOL, NLRB, OSHA will face direct court review rather than internal agency review.

The second case, SEC v. Jarskey (2024), restricts internal agencies' courts from imposing civil penalties or remedies but does not void total reviews by these courts. This case involved a hedge fund founder accused of fraud where past practice allowed SEC's administrative law judges to impose monetary penalties—a practice now ruled unconstitutional under the Seventh Amendment right to a jury trial.

For HR professionals, agencies like OFCCP, Wage and Hour Division, NLRB and OSHA must seek federal court approval for monetary penalties against employers—potentially slowing down processes and providing employers with neutral settings to contest allegations.

In summary, these Supreme Court decisions delineate roles between government branches more clearly.

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