Can federal agencies make up whatever policies they like unless Congress tells them not to? PLF answered an emphatic “no” in an amicus brief filed today to support a petition to the Supreme Court. In National Restaurant Assocation v. Department of Labor, courts allowed the Department to expand its power beyond limits set by Congress. This concentration of power into one branch of government threatens the basic liberty sheltered by the Constitution’s checks and balances.
The dispute revolves around the Department’s aggressive interpretation of the Fair Labor Standards Act. That Act sets certain rules for the federal minimum wage. Employers can fulfill the minimum wage obligation in one of two ways: they can set the base hourly wage at or above the minimum, or they can set the wage below the minimum and use employee tips to fill in the gap. This is known as a tip credit. But businesses that want to use a tip credit must submit to an additional requirement: they can’t make their tipped employees share tips with non-tipped staff. So long as a business doesn’t use the tip credit, though, it’s free to adopt whatever tip-sharing policy it wants.
Enter the Department of Labor. The Department wanted all businesses to submit to the tip-sharing rule, even though it only applies to businesses using a tip credit. So it created a rule extending the tip-sharing rule to every employer, regardless of whether they took a tip credit.
A group of restaurants sued to stop the rule. A deeply divided Ninth Circuit Court of Appeals, however, upheld the Department of Labor’s rule, deferring to the Department’s interpretation of the Fair Labor Standards Act. Now, the Supreme Court has the chance to grant a key case on the scope of agency power. This case is about more than tips–it’s also a vital fight over the separation of powers and the rule of law.
The Ninth Circuit’s extreme deference to the Department of Labor allows bureaucratic power to balloon into the limitless silence of what Congress has chosen not to say. “You didn’t say I couldn’t” becomes the new standard for determining whether Congress has delegated rule-making authority–a presumption that Congress hands over any legislative power it leaves unused. Certainly, agencies can add details where statutory language is ambiguous. But the Department of Labor seeks much more than that: it wants to expand its role from filling potholes to building interstates.
Allowing agencies to create rules that extend beyond a statute’s language retrofits the balance of powers orchestrated by the Constitution. Article I vests all legislative power in Congress. If agencies make laws, then we’ve ceded this key lawmaking power to unelected bureaucrats who can bypass the procedural hoops that help prevent Congress from abusing its power.
And when Courts defer to these agency rules, they allow agencies to usurp judicial power. As interpretive authority migrates across the power structure, the protections carefully designed to insulate the courts from political influence don’t tag along. Fixed salaries and tenure serve as key bulwarks to ensure a court’s impartiality. But agencies are anything but impartial. The siphoning of legislative and judicial power into the executive branch undermines our constitutional structure. As James Madison warned: “The accumulation of all powers, legislative, executive, and judiciary, in the same hands . . . may justly be pronounced the very definition of tyranny.”
All agency rules must stick to the language of the statute in order to keep government power separated into three branches. That means the Department of Labor can’t impose rules on businesses that Congress has chosen not to regulate. The Supreme Court needs to issue a clear message to all federal agencies: The outer reaches of a statute are bookends, not blank pages.