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Divided SCOTUS Affirms Auer Deference to Agencies’ Interpretations

The Supreme Court of the United States recently affirmed so-called Auer deference (also referred to as Seminole Rock deference), which requires courts to defer to an agency’s own interpretation of its ambiguous regulations. A 5-4 decision in Kisor v. Wilkie, penned by Justice Kagan and with Chief Justice Roberts playing the role of swing vote, the Supreme Court found it prudent not to overturn precedent, but rather to “reinforce [Auer’s] limits.”

The decision is not limited to any particular agency, and will likely impact wage and hour as well as discrimination litigation, based on the past and future interpretations from the U.S. Department of Labor (DOL) and the U.S. Equal Employment Opportunity Commissions (EEOC).

Kisor v. Wilkie is important due to the Supreme Court’s redefining of Auer’s applicability, rather than the Court’s judgment or the facts of the case. In short, James Kisor, a Vietnam War veteran, was denied disability benefits by the Department of Veteran Affairs (VA). After losing his appeal to the Court of Appeals for Veterans Claims, Kisor appealed to the U.S. Court of Appeals for the Federal Circuit, which affirmed the denial after affording Auer deference to the VA’s interpretation of its own rules and regulations.

The Supreme Court granted certiorari to answer the question of whether Auer should be overruled. It ultimately declined to overturn this deferential doctrine, but emphasized that the application of Auer should be carefully circumscribed. Accordingly, the Court set forth a five-part inquiry to determine whether Auer deference should be applied in a particular case.

  1. Auer deference should not be afforded unless the regulation or rule is “genuinely ambiguous.” As such, Auer deference should only apply when “the law runs out, and policy-laden choice is what is left over.” Indeed, before genuine ambiguity is found, “a court must exhaust all ‘traditional tools’ of construction” (e.g., considering the rule/regulation’s text, structure, history, and purpose).

  2. If “genuine ambiguity” remains, the agency’s interpretation must be “reasonable” – which the Court noted is not a foregone conclusion.

  3. The interpretation must be the agency’s “authoritative” or “official position,” not merely an “ad hoc statement.” Accordingly, the interpretation must be akin to an “official staff memoranda” “published in the federal register,” and not, for example, an informal memoranda or a speech by a mid-level official.

  4. The interpretation must reflect the agency’s substantive expertise in the area, and not an interpretive issue that would naturally fall within a judge’s wheelhouse.

  5. The agency’s interpretation must reflect “fair and considered judgment,” not a “post hoc rationalization” after an attack on the agency, such as when the interpretation is raised for the first time in a legal brief, and must not be a “new interpretation” that creates unfair surprise. The Court noted that it has rarely afforded Auer deference to an agency construction that conflicts with a prior interpretation by the agency. 

A strongly-worded dissent by Justice Gorsuch described these “limits” as rendering Auer “zombified,” and stated that instead Auer deference should have been done away with altogether.

How the Kisor limitations to Auer deference will play out in the lower courts remains to be seen. Will the status quo prevail, or will the reliance upon Auer truly be cabined, as the majority suggests?

For example, in employment litigation, parties often rely upon pronouncements from the relevant agencies (DOL and EEOC, for example) to support their positions. This notably occurs in wage and hour cases involving the so-called “20% rule” (or “80/20 rule”), which plaintiffs’ argue bars employers from taking a tip credit when a tipped employee spends more than 20 percent of his or her work time performing non-tip generating duties. The DOL has made several, sometimes conflicting pronouncements concerning the “20% rule,” most recently in November 2018. Against the backdrop of the Kisor decision, the DOL’s position will be something to watch the lower courts grapple with in the near term.

After Kisor, employers involved in litigation would be wise to remain mindful that courts may continue to defer to agency interpretation under Auer, but that the threshold for doing so has been heightened. It is not a foregone conclusion that courts will afford Auer deference when the issue is raised, including where the DOL or EEOC have issued interpretations favorable to plaintiff employees.

© 2020 BARNES & THORNBURG LLPNational Law Review, Volume IX, Number 184


About this Author

Peter J. Wozniak Barnes Thornburg Chicago  Labor Employment

Pete Wozniak is a vigorous advocate who strives to help his clients navigate issues that can be fraught with challenges as painlessly and efficiently as possible. He is a candid and personable counselor, offering his clients direct advice by leveraging his deep experience performing a broad range of outcome critical functions for complex labor and employment matters.

Pete represents clients across a number of industries, including transportation and logistics, restaurants, retail, manufacturing, and temporary staffing. Handling a number of high profile matters, he identifies the...

Mark Wallin, Attorney, BT, Chicago, Labor Employment
Of Counsel

In order to provide the best counsel, Mark Wallin believes it is his role to understand his clients’ business needs so he can help them determine what resolution will provide the most benefit. His keen ability to understand his clients’ practical concerns allows him to advise on the best path to successfully resolve issues – whether through traditional litigation or negotiated resolution.

In the course of his practice, Mark has focused on providing the highest-level of service to his clients and building long-term relationships. Specifically, he defends employers in a wide range of employment matters including wage and hour class and collective actions, as well as complex, multi-plaintiff and single plaintiff employment discrimination claims brought not only by private plaintiffs but also initiated by the Equal Employment Opportunity Commission (EEOC).

Mark has successfully represented companies of virtually all sizes, litigating matters across multiple areas of the law, from the pleading stage through appeal. He has also represented clients in arbitrations and before administrative bodies.

Mark vigilantly stays abreast of cases, laws, and trends that may impact his clients coming out of the courts, Congress and the state legislature, as well as the U.S. Department of Labor, the EEOC, and state regulatory agencies. He strives to keep a watchful eye on how labor and employment related laws are evolving so as to proactively advise clients.

In addition to his regular legal practice, Mark has undertaken several pro bono cases including trying criminal jury trials in state and federal court, and representing indigent plaintiffs in civil rights matters as part of the federal Trial Bar.

Mark began honing his litigation skill during law school when he interned at the U.S. Attorney’s office for the Northern District of Illinois, where he handled both civil and criminal issues. He also interned for a judge on the U.S. Court of Appeals for the Seventh Circuit, which gave him a unique vantage of seeing the issues from the court’s perspective.