Federal Agencies Not Required to Provide Notice Before Revising Interpretive Rules
A Workplace Law Client Alert
The United States Supreme Court ruled that federal administrative agencies which enforce federal law are not required to provide advance notice or opportunity for comment before changing their existing interpretation of the law. Perez v Mortgage Bankers Association (March 6, 2015).
Federal agencies issue both formal regulations and interpretative statements or guidelines regarding the laws they enforce. The agencies issue these interpretations in various forms, including opinion letters, enforcement guidance, FAQs, compliance manuals, and other agency statements. In March 2010, the Department of Labor (DOL), which enforces the Fair Labor Standards Act (FLSA), issued an “Administrator’s Interpretation,” No. 2010-1, on whether mortgage loan officers qualified for exemption as administrative employees. The DOL took the position that “typical” mortgage loan officer duties do not meet the requirements for the administrative exemption. This position was contrary to a 2006 DOL Opinion Letter (FLSA 2006-31) issued September 8, 2006 which posited that mortgage loan officers perform exempt administrative work. The DOL acknowledged that its 2010 Interpretation was contrary to its 2006 Opinion Letter and expressly withdrew the letter.
The Mortgage Bankers Association filed a lawsuit against the Secretary of Labor challenging the DOL’s new Interpretation because it was contrary to previous DOL interpretations. The Association argued the DOL violated the Notice-and-Comment requirements of the Administrative Procedures Act when it issued its 2010 Administrator’s Interpretation. The Administrative Procedures Act requires federal agencies to issue notice of a proposed rule and provide the opportunity for public comment before issuing a new rule. The DOL did not comply with this requirement when it issued its new Interpretation.
The case was appealed to the U. S. Supreme Court which clarified that the Notice-and-Comment requirements only apply to “legislative rules,” not to “interpretative and interpretive rules.” Legislative rules have the force and effect of law. Agency interpretations generally are accorded some amount of deference by the courts – the amount of deference varies – but do not have the force and effect of law. As a result, agencies do not have to comply with the Notice-and-Comment requirements before an agency changes its interpretations.
This decision could have a profound impact on employers and others. The EEOC issues numerous interpretations. The line between legislative and interpretive rules is not a bright line. And, three of the justices filing concurring opinions in Perez indicated that they are open to reviewing whether Agency interpretations should enjoy any judicial deference. All of this means that there will be more litigation as the courts sort out these unresolved issues.
Please contact any member of the Workplace Law Group to discuss solutions to your workplace legal concerns.