Labor Commission Rules Threatened in Post-Chevron Era: What Employers Need to Know

The Supreme Court’s recent landmark ruling, which gives employers a powerful tool to combat regulatory abuse, will have a broad impact on nearly every area of employment law. We look at the specific laws and federal agency positions that are most vulnerable to attack now that SCOTUS has abandoned decades-old law Chevron doctrine. In this issue, we will focus on how the new standard could be used to combat the National Labor Relations Board’s control of labor relations doctrine.

How SCOTUS Stripped Federal Agencies of Power

For 40 years, courts have routinely relied on the agency’s “reasonable” interpretation of vague regulatory provisions, but the Supreme Court simply rejected this so-called Chevron respect. Courts now have the authority to exercise independent judgment to decide whether an agency overstepped its bounds. Read more about this landmark decision and how it could impact your workplace.

In addition, the Court ruled July 1 that the six-year statute of limitations for challenging regulatory actions under the Administrative Procedures Act doesn’t start running until someone is actually harmed by the regulation, which could significantly lengthen the time employers have to sue for rules they consider overly broad. Previously, the six-year statute of limitations started running when the law took effect. Here’s how the ruling opens the door for employers to challenge federal regulations.

A Look at the NLRB’s Vast Power

The National Labor Relations Board (NLRB) has transformed labor law in recent years. Several factors have allowed the agency to act as a quasi-legislative body:

The National Labor Relations Act (NLRA) is is subject to a wide interpretationespecially considering how much the labor market has changed since this law was passed in 1935.
Historically, the NLRB depend on Chevron respect among the many standards that individual agencies (regardless of who occupies the White House) must follow when issuing regulations and defending their own interpretations of the law.
Like many executive branch agencies, the NLRB has become increasingly politicizedwhich led to significant “pendulum swings” in the ideology of the Board during subsequent terms of office of the administration.

The agency tends to exercise its authority in two primary ways: rulemaking and decision-making. The NLRB has aggressively pursued both functions (especially the latter) against the backdrop of President Biden’s original campaign promise to be “the most pro-union president in American history”—making Chevron respect for the agency more important than ever before.

New Weaknesses at the NLRB

End Chevron is poised to have a profound impact on the Board’s doctrine. Now that courts are less bound to defer to agency interpretations of their own rules, the NLRB is poised to lose its recently unchecked power as its positions become subject to increased and significant judicial scrutiny.

As a result, several controversial rules could be struck down, from the final joint agency employer rule (which has been temporarily stayed pending judicial review) to the so-called “quickie” election rule and other regulatory modifications that never made it through the conventional notice and rulemaking process. Perhaps most importantly, the narrower standard of deference could pave the way for a lower threshold for challenge:

tables an increasingly broad interpretation of “protected organized activity” under Section 7 of the NLRA (for example, this decision restores a broader “total evidence standard” for assessing whether individual conduct is protected);
decisions that have an impact union employers (for example, these decisions reinstate restrictions on employer action during initial contact negotiations and after the contract has expired); and
decisions that have an impact non-union employers (for example, this decision creates a new framework that will determine when employers are required to bargain with unions without representative elections or this decision expands the Board’s arsenal of remedies in all agency proceedings to include consequential damages)

It should be noted, however, that while the Supreme Court has said it is good to get rid of it, Chevron respect, his decision in 1944 Skidmore v Swift remains seemingly untouched. Skidmore The doctrine (along with a series of subsequent decisions on the NLRB’s special deference) extends some degree of deference to agencies in situations where the agency can persuasively explain why its position on the issue should prevail, but this is a much narrower test than Chevron.

What’s next?

We expect a flood of cases attacking the NLRB’s interpretations of the NLRA, and many of the Board’s administrative rules and guidelines may not survive judicial review. We can also expect to see different rulings on similar issues in different jurisdictions—possibly leading to more forum choices for parties aggrieved by the Board’s final decisions and orders (as well as a patchwork of compliance obligations and more headaches for employers in many states). For example, the first federal appellate court to review an NLRB order after Chevron was overturned, indicating that a “very high degree of deference” to the agency was warranted under the circumstances — but there’s nothing to stop the court (or others) from taking a different view in the future. Over time, though, the net result is likely to be diminished authority for the NLRB.

What should you do?

You should work with your attorney to determine whether you can or should change any practices or policies in light of the expected changes, and to assess whether you should reexamine any ongoing litigation or agency investigations in light of the new standard.
You should also work with industry and trade associations to identify agency positions that impact your business, and work together to challenge agencies that overstep boundaries.