August 2024 Volume 6

OPERATIONS & MANAGEMENT

HOW SHOULD EMPLOYERS ACT IN A POST-CHEVRON WORLD? By Johanna Fabrizio Parker

I t is just after Independence Day as I write this, so I could already be wrong by the time you are reading it. But that’s OK. (It wouldn’t be the first time – or the last.) I suspect that a lot of us will be right – and wrong – on this issue as there seems to be no one path forward. The Chevron decision – and the very recent decision overturning it (Loper Bright Enterprises v. Raimondo) have perhaps not received as much press as other Supreme Court cases impacting social issues or presi dential politics. But the Supreme Court’s overruling of its longstanding Chevron deci sion will have a significant impact on legal matters that impact businesses. I do not

profess to be a Supreme Court scholar, and this is not meant to be an academic lecture, so forgive the shorthand. Here’s how I think about Chevron and why it matters to you (especially now). Our legislature (Congress) makes laws – meaning it writes and creates the actual stat utes that are the law. Our executive branch – specifically through various agencies – is tasked (in part) with administering these laws. To do so, the agencies create rules – rules about what a statute means; rules about what it means to comply with the statute; etc. As you might imagine, not everyone agrees as to what the statutory language drafted by Congress means, creating disputes for the

courts. Under Chevron, if a statute was silent or ambiguous, a court had to look to how the governing agency had interpreted it. Very simply stated, the first judgment in the case of silence or question was to come from the agency and not the court – with the court’s giving the agency’s interpretation a certain level of respect or deference. But, on June 28, 2024, the Supreme Court said otherwise. Under Loper, the Supreme Court makes clear that it is the courts’ job to interpret the law – not the agency. And the court should do its job. Any deferring to the agency effectively would be an improper abdication of duty. Within days – including on that same day – two initial rulings came out, relying in part on this new world order and seemingly predicting demise for two new rules with substantial impact on employers. First (on June 28), the Eastern District of Texas enjoined the application of the new overtime rule proffered by the Depart ment of Labor (DOL). Under current rules, to be exempt from overtime (in almost all cases), an employee needs to make a certain weekly salary (which was $684) and pass the job duties test. The new rule, which took effect for most employers on July 1, 2024, did not change the job duties test. It did raise the salary to $844/week beginning on July 1, and then $1,128/week, begin ning on January 1, 2025, with an automatic increase after that. The Court enjoined the rule – but just for the plaintiff-employer (the State of Texas – not in Texas generally) – finding that the DOL really had no ability to have a salary test to determine who is, or is not, exempt. The statute only focuses on an employee’s job duties in determining exempt status – there is no reference to a salary threshold whatsoever. Per the Court, the DOL cannot effectively get around this by creating its own salary test.

FIA MAGAZINE | AUGUST 2024 46