US Supreme Court Rules that DOL May Change Interpretations of Regulations without Public Notice and Comment

At the New York Labor & Employment Law Report, Joseph Dier analyzes the recent consolidated US Supreme Court decisions in Perez v. Mortgage Bankers Association and Nickols v. Mortgage Bankers Association. The underlying issue in the cases was whether mortgage-loan officers are covered by the so-called “administrative exemption” of the Fair Labor Standards Act. The US Department of Labor (DOL) had changed its opinion on the issue twice from 2004 to 2010. Prior to 2004, the DOL’s position was that mortgage-loan officers did not qualify for the administrative exemption. From 2004 to 2010, its opinion was that officers qualified for the exemption. And in 2010, the DOL reversed itself again, taking the position that officers did not qualify for the exemption. The DOL did not provide public notice and an opportunity for comment pursuant to the Administrative Procedure Act prior to either position change.
 
Dier summarized the consolidated US Supreme Court decisions and the implications as follows:

On March 9, 2015, the United States Supreme Court ruled unanimously in two consolidated cases that a federal agency does not have to go through the formal rulemaking process, which includes providing public notice and an opportunity for comment, 'when it wishes to issue a new interpretation of a regulation that deviates significantly from one the agency has previously adopted.'

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The implications of the Supreme Court’s decision reach far beyond the FLSA status of mortgage-loan officers.  The Supreme Court’s ruling paves the way for federal agencies to make significant changes to its interpretations of rules without notice to the public and an opportunity for public comment.  Although employers can still look to administrative interpretations (such as opinion letters issued by DOL’s Wage and Hour Division) for some guidance in complying with employment laws and regulations, employers should be diligent about keeping up with any changes to those administrative interpretations.

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