The 2024 Paris Olympics is a remarkable showcase of athletic prowess and international unity. Gold medal athletes have reaped the rewards of their intense training, all within the confines of strict rules set by sports federations and the Olympic Committee. Similarly, for businesses to win against the competition, they must follow strict rules set out by their industry, as well as state and federal governments. 

However, the predictability of those rules, previously outlined by what was known as the “Chevron Doctrine”, is now changing. 

Established in 1984, the Chevron Doctrine empowered courts to defer to federal agencies’ interpretations of ambiguous statutes, effectively giving businesses a clearer understanding of how to comply with the law. This doctrine acted like a reliable referee with a steadfast rule playbook, helping businesses operate confidently under established norms without constantly second-guessing how laws might be interpreted. It was the unsung hero of administrative law, which not only impacted regulatory practices, but also shaping organizations’ strategies. 

All that is now changing with the recent Supreme Court ruling in Loper Bright Enterprises v. Raimondo decided earlier this year. By overturning Chevron, the court severely limited the power of federal agencies. Rather than the court deferring to an agency’s reasoning, the agency will be required to provide clear statutory authority for their actions. This change also increases the role of the judiciary in interpreting statutes. 

Much like how Olympic athletes must adapt to new rules and new competitors, businesses now face a shift in their “game,” causing more unpredictability. 

A Race for Clarity: Unpredictable Interpretations of Regulations 

The Chevron Doctrine was akin to a referee in the legal arena, providing a level of consistency by allowing courts to rely on agency interpretations when laws were unclear. This consistency gave businesses a sense of stability, enabling them to plan and operate without the constant fear of sudden legal reinterpretations. 

When the Supreme Court overturned the Chevron Doctrine, it transformed the legal playing field into something much more unpredictable. Now, instead of deferring to agencies, courts will weigh the parties’ claims and apply their own interpretations of ambiguous laws. For businesses, this is like entering a competition where the rules can change unpredictably, and the referee is no longer bound by a familiar playbook. 

Here are some examples of the effect of this ruling are – but as you can see, any regulation will require a clear mandate from the legislature.  

• Regulation of Employment Practices: Any changes to labor regulations (e.g., overtime rules, wage standards) would require more precise statutory language, leading to potential delays or increased litigation to determine the boundaries of agency power. Federal agencies like the Department of Labor often issue regulations interpreting employment laws such as the Fair Labor Standards Act or the Family and Medical Leave Act. Without Chevron deference, these agencies would need clearer congressional authorization for new regulations or changes to existing ones. 

• Healthcare Regulations: The Centers for Medicare & Medicaid Services and the Food and Drug Administration often issue detailed regulations interpreting health laws, such as the Affordable Care Act or the Food, Drug, and Cosmetic Act. Without Chevron, these agencies might need clearer congressional directives, potentially slowing the development and enforcement of new health and safety standards, such as drug approval processes or Medicaid reimbursement rules. 

• Building Codes and Standards: Federal agencies that influence building codes, such as the Department of Energy (DOE) for energy efficiency standards, might face challenges in enforcing new or updated standards without clear legislative support. This could slow the adoption of green building practices or other innovations. 

While this might seem daunting, it also presents an opportunity for businesses to influence how laws are interpreted, especially in cases where they feel overly constrained by existing regulations. 

Regulatory Gymnastics: Opportunities and Risks 

This shift introduces a new level of complexity and unpredictability into the regulatory environment. On one hand, the dismantling of the Chevron Doctrine allows businesses, particularly larger ones, to challenge regulations more vigorously. Courts are now more likely to consider the businesses’ perspectives directly, which could lead to a relaxation of certain regulatory constraints. This could be particularly advantageous for small businesses seeking greater freedom to innovate and grow. 

The new federal ban on noncompetes is an example. Many business leaders are frustrated by the sweeping rule and fear that they will lose a competitive advantage if employees can freely go work at a competitor. Under Chevron, the court would defer to the Department of Labor’s authority. Now, businesses seeking to challenge this regulation can cite how the regulation negatively impacts them and the court will weigh that alongside the agency’s position.  

On the other hand, this newfound judicial independence means that the legal landscape is less predictable. Regulations like the federal noncompete ban are now more susceptible to being contested and potentially redefined, creating an unpredictable environment. 

Being behind the curve is dangerous and the potential for regulations to change more frequently means businesses must stay in the know, ready for changes. A recent and ongoing example of this is the requirements for job postings under pay equity rules in Washington and elsewhere.  Lawsuits – including class action lawsuits – abound against companies that don’t realize they must include specific salary and benefits information in their job postings.    

Athletes Need a Coach, Businesses Need General Counsel

For small business owners, this evolving legal landscape resembles an Olympic event in itself—requiring constant adjustment, strategic thinking, and quick responses. All athletes work with a coach to help give advice, talk strategy, and adapt their training to remain competitive. Businesses are no different. 

Now more than ever, they need to work with a General Counsel to stay informed and proactive in order to navigate these regulatory shifts. Yet, businesses think they can’t afford a strategic legal partner. This is where a fractional General Counsel can be a game changer. At Equinox, we not only strategize with our clients on an ongoing basis for a fixed fee, but also provide breaking news and quarterly legal updates specific to their business. 

Engaging with legal advisors and industry groups will be crucial in understanding the implications of the Chevron decision and preparing for its impact on future regulations. 

As we say goodbye to the 2024 Olympics, let’s remember that small business owners are running their own race, navigating the twists and turns of shifting regulations. Staying informed and proactive is your business’s best strategy to ensure a gold medal-worthy performance in the regulatory arena! 

How will you turn this opportunity into an advantage? Contact our team to help you navigate the new legal landscape and learn if a fractional General Counsel advisor is right for your business.