The recruiting industry must brace for change after a landmark U.S. Supreme Court ruling strips federal agencies of power

The Supreme Court’s recent landmark ruling, which gives employers a powerful tool to combat regulatory abuse, will have broad implications for nearly every area of employment law—and every industry. We look at how industries will be hit specifically, now that federal agency rules and positions are more vulnerable after SCOTUS abandoned decades of Chevron doctrine. This issue focuses on what recruitment industry you can expect after-Chevron world – both the good news and the bad – and presents four practical steps you can take to prepare for this new era.

What happened?

On June 28, the U.S. Supreme Court shook the legal world by striking down the famous Chevron doctrine, holding that courts should not simply rely on an agency’s interpretation of an ambiguous federal statute. In Loper LightThe court said that judges now “must exercise their independent judgment” when deciding cases involving agency rules, regulations, guidelines, or other actions. Simply put, the ruling gives courts—not administrative agencies—the authority to determine what the law actually is. You can read all about it here , including all the different ways the employment law landscape could soon change.

How will this impact the employment industry?

While there are no specific federal laws that directly address recruiting as an industry, there are a number of general workplace laws that have a huge impact on your day-to-day work. All of them are now on the potential block of cuts, with corporate and employer advocacy groups lining up to file lawsuits against them. From a recruiting industry perspective, here are a few things to keep an eye on—with some good news and some bad news.

One of the first success stories: the common employer principle

Here is an example of a rule that has already been effectively abolished, in part due to the fall Chevron doctrine. Months after a federal judge in Texas overturned National Labor Relations Board Common Employer Rule This would have made it much easier for employees to obtain the status of employees of more than one entity and would have resulted in increased union organizing efforts, the Board simply withdrew the appeal and effectively ended the attempt to regulate this area through regulations.

Although it did not admit to it, it seems that the Council saw the writing on the wall after the SCOTUS decision and knew that it would face an uphill battle to pass such sweeping legislation in the current environment. This development is a victory for the staffing industry, knowing that these provisions would have deterred or discouraged potential clients from entering into contracts with staffing firms due to concerns about potential joint employer liability. Now that a potential barrier to business growth has been removed, positive growth can be expected for the staffing industry.

2 stories that haven’t been fully written yet…

Employment agencies monitor Department of Labor Overtime Regulations close for a while. It raises the minimum amount employers must pay an employee to be considered exempt from overtime — from about $35,000 per year to $43,000 per year starting July 1, and then another big jump to $58,000 starting Jan. 1, 2025 (you can read the full summary here ). The industry is concerned about the negative consequences the rule will have on certain types of workers employed by staffing agencies (such as recruiters) whose exempt status could be affected by the new salary threshold. And while a federal judge in Texas recently agreed that the rule should be struck down, his order is very limited and applies only to Texas public-sector employees. Expect courts to hear more challenges to the overtime rule in the coming months — and a successful challenge to it would go a long way toward alleviating those concerns.

And a few of OSHA Workplace Safety Guidelines have a huge impact on the health care industry. In particular, the agency recently issued sweeping electronic records regulations and groundbreaking transition rules that allow union representatives to accompany safety inspectors on facility rounds (even in nonunion locations). Expect opponents to line up to fend off the more burdensome parts of these well-intended but burdensome regulations.

Fall Chevron Isn’t it as great as it seems?

The healthcare industry was already a challenge CMS Nursing Home Staffing Minimums which will require nursing homes to provide at least 3.48 hours of nursing care per resident per day, including 0.55 hours of care from a registered nurse per resident per day and at least 2.45 hours of care from a nurse aide per resident per day, as well as 24-hour on-site services from a registered nurse (among other requirements). The new SCOTUS standard case gives more ammunition to this challenge, which will play out over the next three years during a phased-in period (which will largely begin in May 2026).

However, companies with healthcare hiring positions could actually benefit from the rule, as it would mandate more hiring and potentially lead to an increase in demand for healthcare workers—so a successful challenge could have a negative impact on demand for staffing services. You can read a more detailed discussion of other unintended consequences here Chevronhere comes his downfall.

4 Practical Tips for Recruiting Companies

We encourage recruiting leaders to take the following four steps to stay agile during this period of uncertainty.

Be informed and proactive – Ensure your legal team or outside counsel is regularly updated on important court decisions and regulatory changes. Staying ahead of the curve will allow you to anticipate and prepare for potential impacts.
Improve legal and compliance resources – Consider expanding your in-house legal team or increasing your collaboration with outside legal counsel. Actively support compliance by assigning a member of your team to review resources, identify areas where changes are proposed, and provide real-time tracking of regulatory changes. Legal counsel can also help determine if you have any new arguments to challenge agency actions and advise you on the level of risk associated with taking different positions based on specific rules.
Advocate for clarity and honesty – Actively participate in industry and trade associations, such as the American Staffing Association, that will lead the way in providing resources and advocacy support to help navigate the changing regulatory landscape. Hand in hand with these organizations, you can work with policymakers and advocate for a clear, fair, and predictable regulatory framework. Effective advocacy can help shape regulations that support the growth and stability of the staffing industry.
Leadership training – Ensure your leadership team understands the impact of the recent Supreme Court ruling, what existing laws and regulations may impact your industry, and how to track changes to ensure compliance with the latest updates.

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The Supreme Court’s landmark decision marks a significant shift in the regulatory landscape, presenting both challenges and opportunities for staffing firms. You can effectively navigate this period of change by staying informed and actively engaging in advocacy.