The United States Supreme Court decided that the interpretation of statutes by federal agencies are not entitled to deference, thus overturning a 40 year precedent. A United States District Court issued a preliminary injunction blocking implementation of the Fair Labor Standards Act overtime rule. The preliminary injunction is limited to employees of the State of Texas. The Occupational Safety and Health Administration proposed the first federal heat standards. The Civil Rights Act of 1964 celebrated its 60th anniversary on July 2nd.
Courts Narrow Administrative Power of Federal Agencies – In a 6 – 3 decision in the case Loper Bright Enterprises v. Raimondo, the United States Supreme Court overturned a 40 year precedent and decided that the interpretation of statutes by federal agencies are not entitled to deference. According to Chief Justice Roberts, “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.” Acknowledging that courts may be assisted by paying “careful attention to the judgment of the Executive Branch,” he concluded that the courts “need not…and may not defer to an agency interpretation of the law simply because a statute is ambiguous.”
In the 1984 decision in Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., the Supreme Court established a two-part framework to be used when interpreting statutes administered by federal agencies. First, courts must determine whether Congress has clearly decided the question before a court. If congressional intent can be determined, that would be the end of the inquiry. Where the law is silent or ambiguous, the courts must defer to the agency’s interpretation if “it is based on a permissible interpretation of the statute.”
The majority opinion noted that the deference required to agencies in the Chevron decision is “misguided because agencies have no special competence in resolving statutory ambiguities. Courts do.” The majority opinion cautioned that in overturning the Chevron decision, it was not questioning prior opinions that applied the framework established by that ruling.
In dissent, Justice Kagan observed that the federal agencies are staffed with experts in their respective fields while courts lack “relevant expertise or experience” and should not “insert itself into an agency’s expertise-driven, policy-laden functions.” She believes that deferring to agencies will ensure that statutes are interpreted the way in which Congress intended.
Preliminary Injunction Issued Blocking FLSA Overtime Rule – The United States District Court for the Eastern District of Texas issued a preliminary injunction blocking the Fair Labor Standards Act (FLSA) overtime rule from being applied to employees of the State of Texas. While the ruling in the case of State of Texas v. United States Department of Labor is limited to Texas State employees, there are other cases pending in US District Courts that may result in blocking the new rule from being applied to a larger number of employees. In finding that the rule exceeds the authority Congress delegated to the Department of Labor, the District Court concluded that the executive, administrative, and professional exemptions are based on duties and not salary and the changes contained in the rule would “make salary predominate over duties for millions of employees.”
The rule increased the salary basis threshold in two steps effective July 1, 2024, to $844/week or $43,888 per year and to $1,128/week or $58,656 per year effective January 1, 2025. The current salary basis threshold is $684/week or $35,568/year. With the January 1, 2025, adjustment, the salary basis would be based on the 20th percentile of the lowest wage US census region (the south) to the 35th percentile of that same region. The rule also provides for adjustments to the salary basis threshold every three years starting on July 1, 2027. The DOL estimates that about 4 million additional workers would be eligible for overtime once the rule is fully implemented on January 1, 2025. The District Court believed that this violated the salary level test’s “primary and modest purpose…to identify potentially exempt employees by screening out obviously nonexempt employees.”
In noting that this is the same District Court that invalidated the 2016 FLSA overtime rule, the court quoted baseball Hall of Famer and philosopher Yogi Berra who stated, “this is déjà vu all over again.” The District Court noted that in passing the FLSA, the Congress directed the DOL to “define and delimit” the exemption’s “operative terms, all of which concern an employee’s duties – not his salary.” As a result, any rule concerning the exemption such as the 2024 rule needs to be based on duties. The District Court concluded that similar to the 2016 rule, “the salary level thresholds imposed under the 2024 Rule effectively eliminate consideration of whether an employee performs bona fide executive, administrative, or professional capacity duties in favor of what amounts to a salary-only test.”
OSHA Proposes Heat Standard – The Department of Labor’s Occupational Safety and Health Administration (OSHA) issued a proposed rule designed to protect workers from the health risks of extreme heat. When finalized, OSHA estimates that the rule would help to protect about 36 million workers. President Biden stated that this rule “would establish the nation’s first-ever federal safety standard addressing excessive heat in the workplace.” The proposed rule is awaiting publication in the Federal Register and when this occurs, the public will have 120 days to submit comments.
According to OSHA, employers would need to develop a written injury and illness prevention plan for workplaces impacted by extreme heat. The plan would need to include a comprehensive list of the types of work activities covered by the plan as well as at least one heat safety coordinator to implement and monitor the plan. When employees are exposed to heat above the heat trigger, they must be provided with drinking water, break areas that provide shade if an outdoor work site and at indoor work sites, either air-conditioning or increased air movement. Employees who are exposed to high heat must be given at least a 15 minute paid rest break at least every two hours. New and returning employees who have been out of work for at least 14 days must be provided with time to acclimatize themselves to the heat.
The proposed rule requires employers to provide employees with training annually on among other things, heat stress hazards, heat-related injuries and illnesses, risk factors for heat-related injury or illness, signs and symptoms of heat-related illness, importance of taking rest breaks, need to drink water, and the importance of reporting heat-related illness they experience or observe in co-workers. Employers need to provide supervisors and heat safety coordinators with annual training.
Civil Rights Act Celebrates 60th Anniversary – On July 2nd, the Civil Rights Act of 1964 celebrated its 60th anniversary. The law was signed by President Lyndon Johnson and Title VII of the law prohibits employment discrimination based on race, color, religion, sex, and national origin. The law is administered by the Equal Employment Opportunity Commission (EEOC). EEOC Chair Charlotte A. Burrows stated, “Today, the Civil Rights Act continues to bring us closer to a society that grants full opportunity to all people and welcomes persons of all backgrounds in our 21st century workplaces.”
Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues and was an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.