The Impact of SCOTUS Overruling
Chevron Deference

On June 28, 2024, the U.S. Supreme Court issued
a decision in Loper Bright Enterprises v. Raimondo
and Relentless Inc. v. Department of Commerce. The
Court overruled its 1984 decision in Chevron, U.S.A.
Inc. v. Natural Resources Defense Council Inc., which
held that courts should defer to federal agencies to
interpret ambiguities and gaps in the laws that the
agencies implement (known as Chevron deference).
Congress has the authority to pass laws that govern
employers, and federal agencies have the authority
to enforce those laws. To fill in any gaps or to remedy
ambiguities, federal agencies may issue more detailed
guidance on how the laws should be interpreted and
applied. For example, agencies may publish informal
guidance, issue opinions or publish formal regulations.
Under the doctrine of Chevron deference, courts are
directed to defer to such agency guidance where the
statute is ambiguous and the agency’s interpretation is
reasonable.

Federal employment agencies, including the
U.S. Equal Employment Opportunity Commission,
OSHA, the U.S. Department of Labor (DOL)
and the National Labor Relations Board, have
relied on Chevron deference in issuing and
defending agency interpretations.

The Supreme Court overruled Chevron deference in
a 6-3 decision. In its opinion, the Supreme Court held
that the Administrative Procedure Act requires courts
to exercise their independent judgment in interpreting
the law, and consequently, “courts may not defer to an agency interpretation of the law simply because
the statute is ambiguous.” However, the Supreme
Court noted that the holdings of prior cases that relied
on Chevron deference remain lawful and may not be
overturned solely because they relied on Chevron.

Impact on the Workplace

Chevron deference is a landmark administrative law
decision. It has had a meaningful influence on the
interpretation and enforcement of employment laws.
In light of the Supreme Court’s ruling, federal agencies
will not be able to rely on Chevron deference in
existing litigation, including lawsuits that have been
filed to challenge the DOL’s independent contractor
and overtime rules, and may be subject to additional
legal challenges regarding existing rules. Federal
agencies may also issue fewer regulations and take
more moderate positions in the regulations they issue,
and they may face greater difficulty in addressing
policy issues.

From an employee perspective, this decision signals a
possible major change in regulatory power. It has the
potential to impact agencies that regulate the workplace
and protect employees against influences like
discrimination. At this point, it’s too early to determine
the full impact, so employees and employers alike will
have to wait and see.

Recent Case Serves as Reminder
That Employees Are Entitled to
Certain Benefit-related Documents

The U.S. District Court for the District of Montana
recently awarded over $32,000 in penalties against an
employer’s self-insured health plan and its third-party
administrator (TPA) for failing to provide information to
a plan participant upon request. Employees should be
aware of their benefits-related rights and understand
how to obtain the information they need.

What Are ERISA Requirements?

The Employee Retirement Income Security Act of
1974 (ERISA) is a federal law that sets minimum
standards for employee benefit plans maintained by
private-sector employers, requiring employers to automatically
provide employees with certain benefits-related
documents, such as a summary plan description
(SPD).

ERISA also requires employers to provide
certain documents upon written request by a
participant or a beneficiary. These documents
include the latest SPD, Form 5500, bargaining
agreement, trust agreement, and any contract
or other instrument under which the plan is
established or operated.

What Happened in Court?

In this most recent case, a plan participant and his
daughter sued their self-insured health plan and its
TPA after the plan denied coverage for the daughter’s
mental health treatments. In part, the plaintiffs alleged
that the plan violated the federal Mental Health Parity
and Addiction Equity Act (MHPAEA) by applying a more
restrictive limitation on mental health treatment than
on treatment for medical and surgical issues. The
plaintiffs requested a copy of documents related to the
plan’s compliance with MHPAEA, including information
regarding the plan’s application of nonquantitative
treatment limitations.

The court concluded that the requested MHPAEA-related
documents fell under ERISA’s disclosure
requirement, which means that the defendant’s failure
to respond triggered penalties. The court awarded
penalties of $110 per day for 294 days, from 30 days
after the plaintiffs’ written request through the date
the lawsuit was filed, totaling $32,340.

What Does This Mean?

ERISA is meant to help employee benefits plan participants
understand how their plan works and their eligibility
for benefits. As such, employees are entitled to
certain benefit-related documents, and upon request,
they must be provided in a timely manner.

Talk to your manager or HR representative if you have
any questions or concerns about employee benefits.