The United States Supreme Court’s 2023-2024 term proved to be monumental. The Court issued several decisions that will have long and lasting impact on the practice of employment law and on the power of federal administrative agencies. In today’s blog post we will take a look at four key rulings from the 2023-2024 term.
Court discard’s Chevron doctrine
In Loper Bright Enterprises v. Raimondo, the Court significantly weakened the power of federal agencies by overturning Chevron v. Natural Resources Defense Council, Inc. Under Chevron courts were required to defer to administrative agencies interpretations of the statues in which they were responsible for overseeing, when statutory ambiguities existed.
In Loper the Court ruled that the judiciary is responsible for resolving statutory ambiguities and that deferring to an agency’s interpretation was prohibited by the Administrative Procedures Act (APA). As such, the Court determined that the Chevron doctrine was inappropriate under the APA. In the wake of this decision, courts have far greater latitude to strike down agency rules. In addition, an employer will likely have a greater chance of success in challenging an agency’s interpretation. However, determining whether an agency’s interpretation is binding and controlling for a particular employer may prove to be more difficult as those interpretations will likely face far greater legal scrutiny. As such, employers will need to closely monitor any legal challenges to the regulations which govern their industry and pay particular attention to how specific Circuit Courts view the regulations at issue.
Employers given more time to challenge federal regulations
In Corner Post Inc. v. Board of Governors, the Court issued a decision allowing employers to challenge federal regulation, even after they are finalized. In Comer the Court ruled that a six-year statute of limitations under APA starts after someone is actually injured by the regulation. This ultimately stretches the timeframe employers have to file suit and challenge a regulation. Therefore, should a federal agency issue a decision which impacts a particular employer, that employer can challenge the validity of the regulation even though it’s final. This gives employers a powerful tool to challenge an agency’s regulatory authority.
Court weakens NLRB’s authority to impose financial penalties on employers
The Supreme Court sided with Starbucks over the National Labor Relations Borad (NLRB) in Starbucks Corp. v. McKinney. The case revolved around Starbucks’ decision to fire some employees hosting media interviews after hours. The fired workers then filed an unfair labor practices claim with the NLRB.
The NLRB convinced a lower court to reinstate employees who had been fired while the legal battle ensued. Under Section 10(j) of the National Labor Relations Act (NLRA), the NLRB may ask a federal district judge to order certain temporary measures like reinstating fired employees while an unfair labor practice claim is litigated. In Starbucks Corp., the NLRB convinced the lower court to use a stringent standard to evaluate the board’s request.
When the case was brought to the Supreme Court, it stated that courts must use a traditional and more stringent test to review requests to reinstate employees during a legal battle. Therefore, the Court’s decision makes it more difficult for the NLRB to obtain relief for employees that have brought unfair practices claims before the Board. However, even though the Court’s decision was a win for employers, companies should still review their workplace policies and procedures to ensure that they are complying with the NLRA.
The Court rejects retaliatory intent for retaliation claims under Sarbanes-Oxley
In Murray v. UBS Securities, the Supreme Court unanimously held that a whistleblower does not need to establish that an employer acted with retaliatory intent to prove a relation claim under the Sarbanes-Oxley Act (SOX). Under SOX, employees of publicly traded companies are protected from reporting financing wrongdoing. A such, covered businesses cannot fire, demote, suspend or engage in other similar discriminatory conduct against employee when they engage in protected activity under the SOX.
A circuit split had emerged regarding the level of proof plaintiffs need to establish to prove retaliation under SOX. Specifically, the Court found that the whistleblower only needs to prove that the protected activity was a contributing factor in the employer’s adverse employment decision. The Court also noted that an employee does not need to prove that the employer acted with discriminatory intent to establish his or her whistleblower claim.
Now that the Court has made it easier for whistleblowers to file claims under SOX, employers must take steps to establish that any adverse action was done for non-discriminatory purposes. The decision stresses the importance of maintaining documentation of the reasons for an employment decision. Also, an employer should consult with counsel before making an adverse employee action against an employee that has engaged in protected activity.
