In a much anticipated decision delivered on the very last day of their current term, the Court has overruled long standing precedent that will have many impacts in the benefits space. On June 28th, in Loper v Raimondo, the Court held by a 6-2 vote to overturn Chevron.

Since Chevron v Natural Resources was decided in 1984, Federal Agencies (such as the IRS and the EEOC) have been giving ‘deference’ in their interpretation, implementation and oversight of laws. This means the Courts have given “respect” to the way an agency decides laws under their purview are followed (and what the laws mean). Any conflicting interpretation is decided in favor of the agency’s argument. 

In short, with today’s ruling, this practice has been deemed improper. Justice Gorsuch states in his opinion that from here on out, the Court will “resolve cases and controversies without any systemic bias in the government’s favor.” (p. 33)

What happens now? The biggest question will be how current federal regulatory guidance will be impacted. The EEOC, DOL and IRS have numerous FAQs and interpretations that ‘fill gaps’ in existing law, many of which employers rely on in their administration of health and welfare plans. If these foundational interpretations are challenged in the court system, justices will no longer be required to defer to the government. 

There is no immediate impact to employers as plan sponsors. We will be watching this closely in the coming months.