By: Evan Szarenski and Jon Geier
There has been a lot written about the recent Supreme Court decision reversing the 1984 decision in Chevron (Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)) and the Chevron Doctrine that became its legacy, Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024). Conservative proponents have cheered the collapse of the “administrative state,” while more liberal advocates forecast legal chaos. Much of the public outcry and debate focuses on environmental (including climate change), health care (including drug development and approval), public land management, and many other regulatory schemes.
In the employment law realm, commentary has generally been limited to the potential battles in the wage and hour, OSHA, and other safety regulations. The authors have found little, if anything, with respect to impact on Executive Order 11246, VEVRAA or Section 503 regulations. This short blog provides the authors’ initial thoughts on the potential impact of the elimination of the Chevron Doctrine with respect to those obligations.
- Executive Order 11246 itself is not impacted by the decision, but its regulations at 60-1 et seq.are, as are those in Part 60-300 et seq. (VEVRAA) and Part 60-741 et seq. (Section 503).
- The risk to the Executive Order remains as it always has – a President by the stroke of the pen can revoke it.
- There are only a few court decisions interpreting the current regulations, or their antecedents, and most pre-date the 1984 decision in Chevron. See, e.g., United States v. Mississippi Power & Light, 638 F.2d 899 (5th Cir. 1981); Uniroyal, Inc. v. Marshall, 579 F.2d 1060 (7th Cir. 1978); Contractor’s Association of Eastern Pennsylvania v. Secretary of Labor, 442 F.2d 159 (3d Cir. 1971).
- As a result, there are many areas in the current regulations where OFCCP’s interpretation could be challenged as “arbitrary and capricious,’ or otherwise in violation of the Administrative Procedures Act. For example:
- The internet applicant definition;
- Whether a federal contractor can be both a supply and service contractor and a construction contractor;
- OFCCP’s Artificial Intelligence Guidance;
- A contractor’s obligation to evaluate compensation systems for gender-, race-, or ethnicity-based disparities; and
- The availability of back pay for violations of the EO or related statutes.
- The bigger question is whether there are contractors or contractor organizations willing to undertake a legal challenge to any of the contractor communities’ regulatory obligations.
- A very low percentage compliance reviews reach the enforcement stage.
- Of enforcement cases initiated since the start of the Obama administration, only handful of contractors continued the litigation into federal court. See, e.g., Baker DC, LLC, No. 1:17-cv-00530-SJD (S.D. Ohio 2018); Entergy Services, Inc. v. OFCCP, No. 2:14-cv-01524-MLCF-JCW (E.D. La. 2014); Frito-Lay, Inc. v. U.S. Dep’t of Labor, No. 3:12-cv-01747-B-BN (N.D. Tex. 2014); United Space Alliance, LLC v. Solis, No. 1:11-cv-00746-RCL (D.D.C. 2011).
- The virtual absence of federal litigation is likely related to the unwillingness of contractors to challenge DOL/OFCCP.
Thus, while the demise of the Chevron Doctrine will be felt across many significant regulatory schemes, in the authors’ opinions the impact to federal contractors will likely be very modest.
DCI will continue to monitor the situation and provide updates as they occur.