Recent Supreme Court decisions could pose long-term ripple effects for businesses.
The court ruled 6-3 last month in Loper Bright Enterprises v. Raimondo to overturn the so-called Chevron doctrine, which held that US courts should give substantial deference to federal agency decisions. As McKnight’s previously reported, the decision affects almost every US agency, among them the Department of Labor and its Wage and Hour Division and Occupational Safety & Health Administration, the US Equal Employment Opportunity Commission, the Federal Trade Commission, the National Labor Relations Board and the Centers for Medicare & Medicaid Services, all of which have issued several rules affecting long-term care providers.
According to attorneys at Fisher Phillips, abandonment of the Chevron doctrine could prove costly for businesses in more than one way.
For example, the lawyers noted, “agencies might be too tied up in court to perform crucial services.”
“We are already seeing a stream of lawsuits and legal filings from business groups and others challenging all kinds of regulations, which means that many agency leaders are now tied up in litigation and distracted from their everyday work,” Fisher Phillips said. “Since each agency only has so many resources, businesses might suffer from long delays in crucial services.”
Additionally, the attorneys said, federal agencies could “shift their resources to enforce existing regulations and crack down on industries more aggressively.” That is, with less authority to implement new rules, the agencies could shift their focus to more rigorous investigations.
Businesses could be negatively affected by advocacy groups and unions challenging business-friendly rules that the courts could more easily strike down, the lawyers added.
The ruling, according to Fisher Phillips, already has had an effect. For example, the NLRB on Friday withdrew its appeal of a district court ruling that enjoined its “joint employer” rule. And earlier this month, a federal judge in Texas blocked enforcement of an FTC rule that banned noncompete agreements.
Last month, in Securities and Exchange Commission v. Jarkesy, the Supreme Court stripped the SEC of its right to use agency administrative law judges when enforcing fraud complaints. Experts have said the decision could affect other agencies that impose civil penalties through administrative proceedings.
According to lawyers at Balch & Bingham writing for JD Supra, “ripple effects” of the Supreme Court decisions “are likely and may be momentous.”
For example, they said, in the past, the NLRB administrative law judges have had the authority to rule in labor disputes when unions accuse employers of breaking their union contracts.
“Unions have the option to take those contract breach claims to court or to contract arbitrators, but they gain leverage by submitting them to the NLRB General Counsel, who complains to the NLRB’s own judges, free of charge, and nearly always wins, at great expense to the charged employers,” Balch & Bingham said. “The mere threat of such proceedings induces many union-friendly settlements.”
