A recent Supreme Court decision, Perez v. Mortgage Bankers Ass’n, highlights two important points about the authority of the U.S. Department of Labor, IRS, and other administrative agencies to interpret rules:
- U.S. courts will generally follow administrative interpretations of statutes and an agency’s regulations, except in rare circumstances. This deference extends to “sub-regulatory” guidance, like opinion letters, rulings, notices, amicus briefs, and probably even FAQs posted on a website; and
- Agencies have wide latitude to change their minds on interpretive guidance, without any obligation to consult with the public.
The decision illustrates the practical importance of getting involved in the regulatory process, and advocating for important clarifications before regulations are finalized. Although agencies may change interpretive guidance unilaterally, unambiguous regulations generally cannot be changed without advance notice and an opportunity to comment.
Background. This case involved whether mortgage-loan officers are eligible for overtime under the Fair Labor Standards Act.
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