On Friday morning, the Supreme Court in Loper Bright Enterprises v. Raimondo, No. 22-451[1], reversed its long-standing precedent in Chevron USA, Inc. v. Natural Resources Defense Council (1984), which required courts reviewing federal agency actions to afford significant deference to agency expertise and interpretations on matters of law. In ending Chevron deference, the Court knocked down the first domino in a flurry of all-but-guaranteed challenges to various federal agency rulings. Many of these federal agencies regulate or administer rules relevant to and governing employers, outlined in this article earlier this week. 

Among the rules likely to be impacted is the Federal Trade Commission’s (FTC) recent rule generally banning noncompete agreements between most employers and employees. The rule’s fate, as it faces federal legal challenges in Texas and Pennsylvania, is likely to be impacted by Loper Bright’s elimination of judicial deference to agencies on legal issues. Without the protection of Chevron deference, this rule and others are now more vulnerable to challenge and possible invalidation by reviewing courts in collateral litigation.

For more information and guidance on the developing status and implications of the Supreme Court’s rulings on this subject, employers should contact the authors or your Nelson Mullins Employment Group attorney. Co-author Anushka Sarkar is a 2024 summer associate at Nelson Mullins.

[1] Today’s Loper Bright decision was decided together with Relentless v. Department of Commerce, No. 22-1219.  The two combined cases decided today address near identical legal issues on the issue of Chevron’s long-standing deference to agency rulemaking decisions.