For years, the rhythm of American corporate compliance was predictable. Federal agencies like the National Labor Relations Board (NLRB), the Department of Labor (DOL), and the Equal Employment Opportunity Commission (EEOC) acted as the primary architects of the workplace environment. Compliance officers operated under a reliable premise: if an agency issued guidance or established a doctrine, it was the "law of the land" until a new administration changed the political winds.
However, as the 2026 midterm elections approach, that era of predictability has come to an abrupt end. According to Steve Kruzel, a partner in the labor and employment practice group at Quarles, the regulatory landscape has not merely shifted; it has undergone a structural transformation that renders traditional compliance playbooks obsolete.
"Compliance programs can no longer treat a federal rule as settled simply because it exists on the books," Kruzel warns. In this new era, the bedrock of federal authority has been fractured, shifting the power from agency experts to the judiciary and, by extension, into the hands of the executive branch.
A Chronology of Disruption: The Three Pillars of Change
To understand the current volatility, one must look at three seminal developments that have occurred within the last 24 months. These events have effectively dismantled the "regulatory deference" model that defined American labor law for decades.
1. The Fall of Chevron (June 2024)
In Loper Bright Enterprises v. Raimondo, the Supreme Court ended four decades of Chevron deference. Under the old regime, courts were required to defer to an agency’s reasonable interpretation of ambiguous statutes. By overturning this, the Supreme Court has reclaimed the power of statutory interpretation for the judiciary. Agencies no longer have the final say on what a law means; the courts do.
2. Executive Consolidation (June 2026)
In Trump v. Slaughter, the Court overruled the precedent set in Humphrey’s Executor. This decision granted the President at-will removal power over the heads of independent agencies, including the NLRB and the EEOC. This removed the "insulation" that once protected these agencies from immediate political turnover, allowing an administration to shift enforcement priorities overnight.
3. The Successor Bar Challenge (July 2026)
The D.C. Circuit’s ruling in Hospital Menonita de Guayama v. NLRB served as a direct consequence of the Loper Bright shift. The court struck down the NLRB’s "successor bar" doctrine—a rule that prevented employers from challenging a union’s majority status shortly after an acquisition—on the grounds that it exceeded the Board’s statutory authority. This signaled that agency-created policies that lack a clear foundation in federal law are now highly vulnerable.
Supporting Data: Why "Agency Guidance" is No Longer a Shield
Historically, compliance teams relied heavily on subregulatory materials—opinion letters, general counsel memoranda, and enforcement manuals. These documents provided a "quasi-roadmap" for how a company should behave to avoid the ire of regulators.
Kruzel argues that the weight of these documents has collapsed. Under the Skidmore standard, the value of agency guidance now depends entirely on the thoroughness of the agency’s reasoning and its consistency over time. Politically motivated guidance, or rules that represent a sudden pivot from previous policy, carry little to no weight in court.
"The most exposed rules are those built on agency gap-filling rather than clear statutory text," says Kruzel. He points to several specific areas of high risk:
- Wage and Hour: DOL salary-threshold increases that rely on expansive interpretations rather than explicit legislative language.
- Labor Relations: Board-created doctrines like joint-employer standards.
- Discrimination Law: Recent, expansive interpretations of the Pregnant Workers Fairness Act that stretch beyond the text of the original statute.
Conversely, foundational laws like Title VII, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA) remain more insulated. Because these are supported by decades of independent appellate case law and explicit statutory text, they are less dependent on agency whim.
The Operational Shift: Moving from National to State-Centric
As federal authority wanes and becomes increasingly unpredictable, the "regulatory center of gravity" is moving toward the states. For multi-state employers, the federal government no longer provides a reliable "floor." Instead, states like California, New York, and Illinois are raising the "ceiling" on requirements for pay transparency, noncompetes, and organizing rules.
"The federal floor is getting lower and less certain while the state ceilings are getting higher and more diverse," Kruzel notes. This necessitates a fundamental reorganization of the compliance function. Companies can no longer rely on a single, national policy manual. Instead, they must implement:
- Jurisdiction-specific mapping: Identifying where employees sit and applying the most restrictive rules of that locale.
- Legislative monitoring: Real-time tracking of state-level bills, which now have a more immediate impact on operations than many federal agency pronouncements.
Implications: Building a Resilient Compliance Program
What does a compliance program look like when the rules of the game can change in a matter of months? According to Kruzel, the transition requires a move away from "binary compliance" toward "strategic risk management."
Staffing and Expertise
Compliance teams need to pivot from regulatory tracking to "statutory fluency." It is no longer enough to know what the NLRB says; staff must be capable of reading the actual statutory text and assessing whether an agency’s position is legally defensible in court.
The C-Suite Reporting Model
When reporting to the board, compliance officers must move away from "We are compliant/We are not" reporting. In an environment where the law is in motion, the Board needs:
- Risk Ranges: An assessment of the probability of regulatory shifts.
- Scenario Planning: What is the contingency plan if a specific rule is struck down or a new administration reverses an enforcement priority?
- Documentation as Defense: Maintaining a rigorous record of why a business decision was made, the guidance relied upon, and the business rationale. In the event of a challenge, a company that can show it acted reasonably based on a defensible interpretation of the law—even if that interpretation is later overturned—is in a much stronger position than one that simply followed agency guidance blindly.
The Role of Outside Counsel
The relationship with outside counsel must evolve from reactive to anticipatory. Rather than asking "Is this legal?", firms should be retained for "horizon scanning"—identifying which agency policies are most likely to face judicial scrutiny and helping companies prepare for the legal fallout of potential reversals.
Conclusion: The New Reality of Administrative Law
The temptation to view these changes as a temporary blip that might be corrected by the upcoming midterm elections is, in Kruzel’s view, a dangerous misunderstanding of the current landscape. Loper Bright and Slaughter are not mere policy choices; they are constitutional and judicial shifts that will define the administrative state for the foreseeable future.
For corporate leaders, the takeaway is clear: the era of the "all-powerful agency" has ended. In its place is a landscape of legal uncertainty where statutory text is the only true anchor. Companies that adapt by building flexible, text-focused, and state-aware compliance programs will be the ones that navigate the next decade of volatility, while those clinging to the old, deference-based models may find themselves exposed to risks they never anticipated.
The strategy for the future is not to guess what the regulator will do next, but to prepare for a regulatory environment that is as dynamic as the market itself.
