Are Bright Times Ahead For Employers At The NLRB?

On June 28, 2024, the United States Supreme Court, in Loper Bright Enterprises v. Raimondo ended four decades of deference to federal agency action under Chevron and ushered in a new era of administrative law. What Loper Bright means for National Labor Relations Board (NLRB) decisions, however, is not fully clear because – as discussed below – federal courts of appeal rarely rely upon Chevron in granting deference to the NLRB. Moreover, before the Supreme Court's Chevron decision in 1984, appellate courts had given some deference, although not to the level of Chevron, to the NLRB based on the view that it was uniquely qualified to develop labor policy. While the Supreme Court's reasoning in overruling Chevron could apply to precedent granting deference to the NLRB, it remains to be seen the impact that Loper Bright will have on continued deference to NLRB decisions. What is certain, however, is that deference to the NLRB is no longer a given and employers may be in a better position to challenge the agency's decisions.

The Chevron Doctrine

The Supreme Court announced the Chevron doctrine as a legal standard to determine when courts must defer to a federal agency's interpretation of a statute enforced by that agency. Traditionally, judges exercised independence when interpreting statutes. The courts could – and did – look to the interpretations of executive agencies for guidance but did not grant those interpretations deference. This is because, as Chief Justice John Marshall wrote in 1803, it is "emphatically the province and duty of the judicial department to say what the law is."

Chevron departed from judicial tradition by requiring courts to defer to a federal agency's statutory interpretation if the court determined that the statute is silent or ambiguous on the matter at issue. If such a finding was made, Chevron required the court to defer to a "permissible" construction of the statute, even if the reviewing court would have interpreted the statutory language differently than the agency. The doctrine was largely premised on the belief that federal agencies are subject matter experts and, as part of the Executive Branch, political actors better situated to develop and implement policy.

Deference to NLRB Decisions and Rulemaking Before Loper Bright

Before Chevron, the Supreme Court had granted some deference to the NLRB, although not to the level of Chevron. In 1944, the Supreme Court in NLRB v. Hearst Publications, Inc. deferred to the NLRB's interpretation of the National Labor Relations Act's definition of "employee" because the agency's determination was supported by the factual record and had a reasonable basis in law. That same year, in Skidmore v. Swift and Co., the Supreme Court developed a lesser standard of deference that looked to several factors to determine how much weight an agency's determination should be granted, but did not grant controlling deference to the agency's decision. In the late 1970s, the Supreme Court issued a pair of decisions, NLRB v. Iron Workers Local 103 and Ford Motor Co. v. NLRB, that granted the NLRB "considerable deference" because the Court majority believed Congress had given the NLRB primary responsibility for interpreting the Act and effectuating national labor policy.

Since Chevron, federal courts of appeal have rarely applied it when reviewing NLRB decisions. For example, the United States Court of Appeals for the District of Columbia – the most important circuit court for the development of administrative law – has heard approximately 1,150 post-Chevron cases in which the NLRB has been a party, but has relied upon Chevron only 40 times in granting deference to the NLRB. And the majority of these 40 cases did not conduct a full Chevron analysis, but only cited to the case for the general proposition that courts grant deference to agency decisions.

Further, the courts of appeal have relied upon Iron Workers Local 103 and Ford Motor Co. even less often than Chevron in granting the NLRB deference. The D.C. Circuit has cited to Iron Workers Local 103 in 24 cases and to Ford Motor Co. in 38 cases in which the NLRB was a party. In the thousands of NLRB cases reviewed by the D.C. Circuit since the 1944 Hearst decision, that court has cited to it a total of 71 times and only 6 times since the turn of the century. Likewise, courts of appeal have cited to Skidmore less than 10 times in cases involving the NLRB in the last 80 years.

What precedent do courts of appeal look to when granting deference to NLRB decisions and rulemaking? Typically, their own precedent that formulates the applicable deference in similar but different terms. Recent decisions have described deference as being appropriate "unless . . . the Board acted arbitrarily or otherwise erred in applying established law to the facts" (D.C. Circuit), if the Board's interpretation of the Act is "rational and consistent" (Third Circuit), or if the Board's decision is a "reasonably defensible interpretation of the Act" (Ninth Circuit).

Loper Bright Tosses Out Chevron Deference

The Loper Bright majority ended Chevron deference because it was counter to the long-standing prerogative of judges to independently interpret statutes and violated the Administrative Procedure Act's directive that courts are to determine "all relevant questions of law" when reviewing administrative action. As such, courts should independently review all legal determinations made by federal agencies unless a specific statutory directive instructs otherwise. The Supreme Court noted that courts routinely interpret ambiguous statutes and there is nothing unique about statutory interpretation when reviewing agency determinations.

The government argued that Chevron should survive because (1) administrative agencies are subject matter experts on the statute they administer, (2) deference promotes uniform construction of federal law, and (3) agencies are better policy makers than courts. The Court rejected the government's first argument on the grounds that it is the courts and not administrative agencies who are experts in statutory interpretation. Next, it rejected the government's second argument because an examination of Chevron decisions showed that it did not in fact promote uniform construction of federal law. Finally, the Court rejected the third argument because resolution of statutory ambiguities is the proper domain of the judicial branch and courts should exercise this role free from politics.

The Court recognized that courts have and should continue to respect administrative interpretations of the law, especially when issued contemporaneously with the enactment of a statute and consistent over time. In this vein, the Court seemingly left in place Skidmore deference because it instructs courts to consider the persuasiveness of the agency's rationale rather than to grant deference even if the court would have decided otherwise. The Court also seemed to approve of the deference granted in Hearst, but noted that such deference was consistent with traditional judicial powers because the issue in that case "was sufficiently intertwined with the agency's factfinding." Lastly, the Court did not disturb court deference to an agency's factual findings when supported by sufficient evidence in the record.

What Happens Next?

The Loper Bright decision expressly overruled Chevron, which as discussed above was rarely relied upon by courts of appeal in granting deference to NLRB decisions. But the Supreme Court's rationale for doing so makes clear that it is the provenance of courts, and not administrative agencies, to interpret statutes and that the APA requires courts (and not agencies) to decide questions of law and perform statutory interpretations.

Going forward, deference to the NLRB is no longer a given. And now that the NLRB has lost one weapon in its arsenal for upholding its action, we can expect more litigation as employers have gained a weapon to challenge NLRB decisions. Courts will likely review NLRB decisions without granting them anything more than Skidmore deference, which grants the NLRB the "power to persuade" but not displace independent court judgment.

The NLRB had previously stated publicly that it should receive deference under Ford Motor Co., even if Chevron were to be overruled. This is not surprising from an agency who just argued (and lost) a case before the Supreme Court on the premise it should be held to a lesser standard than others when seeking a preliminary injunction and whose Solicitor recently published a 64-page law review article describing why the agency should be exempt from recent Supreme Court precedent because its ability to unilaterally direct labor policy will be compromised. Employers can therefore expect the NLRB to continue to argue for "considerable deference" to its decisions and regulations in courts of appeal.

It is possible that the NLRB will continue to receive deference as it did in Hearst, where the interpretation at issue is primarily based upon factual rather than legal considerations. This may be problematic for the NLRB because, as the Court noted, this limited deference is especially warranted when an agency's determination was issued near the time of its enactment and remained consistent over time. Any post-Loper Bright deference available to the NLRB may therefore be limited because of its notorious flip-flopping and because the Act was enacted nearly nine decades ago. This would particularly apply to the current General Counsel and Democrat-controlled Board who have no qualms about overturning precedent and continuously finding new meaning and authority in the 90-year-old text of the Act. In any case, Loper Bright may provide employers strong ammunition to challenge highly controversial NLRB decisions relating to demands for recognition, workplace policies, and joint employment standards, among others. Whether and to what extent courts of appeal will grant deference to the NLRB remains to be seen.

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