By 2035, if Congress does not enact reforms, Social Security will be unable to fully pay vested benefits, warns a new report. Uncertainty about the program’s future is causing anxiety among workers who will need to rely on Social Security income along with other retirement savings.

​California can require employers to deduct pay from employees’ paychecks for a state-sponsored retirement savings plan without running afoul of federal law, a federal judge in California ruled March 29.

The House Ways & Means committee approved a bipartisan bill to promote greater savings through employer-sponsored retirement plans. The Senate isn’t far behind with a similar measure.

By Pamela Wolf, J.D.

The Court heard oral arguments on the Seminole-Auer agency deference doctrine, with both parties pushing back against the current standard and one arguing for its entire demise.

On March 27, the Justices heard oral argument on the question of whether “Auer” deference should be no more. Specifically, the question the Court will determine is whether it should overrule its earlier Bowles v. Seminole Rock & Sand Co. (1945) and Auer v. Robbins (1997) decisions, requiring courts to defer to a federal agency’s interpretations of the agency’s own ambiguous regulations.

Doctrine on the chopping block. Interestingly, neither party wants to see this agency deference doctrine survive in whole. The marine veteran who was denied retroactive benefits for his service-related post-traumatic stress disorder (PTSD) because a regulation was ambiguous as to the meaning of the word “relevant,” permitting the Department of Veterans Affairs’ interpretation to prevail in the face of competing, but equally reasonable interpretations, would like the Justices to altogether retire Seminole-Auer deference.

Among other things, the petitioner has argued that Seminole-Auer deference “is a rule of judicial decisionmaking,” the effect of which “is to vest administrative agencies with expansive lawmaking authority.” Where a regulation has more than one reasonable reading, “an agency may make a policy judgment about which interpretation it prefers, rather than a judgment about the best legal interpretation of the regulation,” according to the petitioner. “Because of Auer deference, that agency judgment has the force of law.”

But how much should be chopped off? The federal government, defending the Department of Veterans Affairs in this case, also has pushed back against the agency deference doctrine, arguing that it should be “clarified and narrowed.” Solicitor General Noel Francisco says the doctrine “raises significant concerns,” noting first that its basis is unclear, it’s not well grounded historically, the Court has failed to articulate “a consistent rationale” for it, and that it is “more difficult to justify on the basis of implicit congressional intent” than the High Court’s ruling in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. (1984).

As to Chevron, the Court has said the framework rests on a presumption that “a statute’s ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gaps,” the Solicitor General observed. He also pointed out that when an agency “fails to use the procedures Congress intended the agency to use to resolve a statutory ambiguity, Chevron deference generally does not apply.”

Interpretive vs. legislative rules. Second, Francisco pointed out, “Seminole Rock deference” is in tension with the Administrative Procedures Act’s distinction between legislative and interpretive rules. “Interpretive rules, unlike legislative rules, do not carry the force and effect of law and are exempt from notice-and-comment procedures,” he noted. “When a reviewing court gives controlling weight to an interpretive rule under Seminole Rock, it arguably treats the interpretive rule as though it were a legislative rule.”

Auer deference invoked below. Below, the veteran had sought disability benefits for PTSD, and after appealing VA determinations (but not perfecting the appeal of the initial agency decision), he was only able to obtain a 70-percent disability rating that was not retroactive to the initial date of his application.

The Department of Veterans Affairs agreed that he suffered from service-related PTSD, but it would not award him retroactive benefits based on its interpretation of the meaning of the term “relevant” as used in 38 C.F.R. § 3.156(c)(1), under which the VA will reconsider a claim if the agency “receives or associates with the claims file relevant official service department records that existed and had not been associated with the claims file when VA first decided the claim.” (Emphasis added).

The Federal Circuit Appeals Court found that both the veteran and the VA had offered reasonable constructions of the term “relevant.” According to the petition, on that basis alone, the court held that the regulation is ambiguous, and therefore invoked Auer to defer to the VA’s interpretation of its own ambiguous regulation.

Some deference to agency expertise necessary. Speaking to Paul Hughes (Mayer Brown LLP) on behalf of the veteran, Justice Breyer held up an example from the federal government’s brief to illustrate the need for at least some form of Auer deference. The court in the example “deferred to the understanding of the FDA that a particular compound should be treated as a single new active moiety, which consists of a previously approved moiety, joined by a non-ester covalent bond to a lysine group,” the Justice noted. “Do you know how much I know about that?” he said, drawing laughter.

The Justice noted that it took the FDA seven years to accomplish the first rulemaking, referencing Hughes’ contention earlier that notice and comment is the proper route when an agency wants its regulations to have the force of law, as opposed to merely creating precedent for future agency decisions, and that Auer deference should go out the window.

“But what you’re doing is saying, instead of paying attention to people who know about that, but rejecting it if it’s unreasonable, the judges should decide,” Justice Breyer suggested. “I mean, I want to parody it, but, I mean, this sounds like the greatest judicial power grab since Marbury versus Madison, which I would say was correctly decided,” the Justice said, once again prompting laughter.

If Auer goes, would there be no deference? Queried Justice Alito: “If Auer were overruled, would an agency’s interpretation, particularly in areas requiring a great deal of scientific or technical knowledge, be entitled to no deference by a court?”

Hughes said, no, that the High Court’s 1944 ruling in Skidmore v. Swift & Co. would apply.

Unconvinced, Justice Kavanaugh called Skidmore “really no deference because … it applies only when it’s persuasive, which is true of any argument.”

How about a tune-up? For his part, Solicitor General Francisco observed that while Seminole deference raises some problems in some applications, it has been on the books for decades, it has significant practical benefits, and its “practical problems can be addressed by reinforcing reasonable limitations on the doctrine.”

Referring to his understanding of how Francisco would narrow the deference standard, Justice Gorsuch said: “[A]s I understand it, there are six elements of your test. We have to decide whether the … regulation is ambiguous, whether the interpretation is reasonable, whether it’s consistent, whether it was made by someone at a high level, whether there was fair notice, and whether it was made by somebody with expertise. Is that a … recipe for stability and predictability in the law, or is that a recipe for the opposite?”

“No, I absolutely think it is and it’s a workable standard, Your Honor,” Francisco said.

It’s still all in the mind of the beholder. In response, Justice Gorsuch pointed out that people fight over what ambiguity means, what reasonable means, how consistent is consistent, and “for the life of me, I don’t know how high a level a person has to be before we’re going to defer to him, or how much notice is fair, or how much expertise counts.”

Under Francisco’s proposed rule, for example, “every agency could define relevant evidence differently,” according to Justice Gorsuch.

You could look at it this way. Speaking to the “best” interpretation of a regulation, or the “best” solution to the Seminole-Auer deference dilemma, and noting that the word “best” had come up “about 50 times,” Justice Breyer made an observation about which is “best”: “We know that democratically speaking, agencies aren’t very democratic, but there is some responsibility, and there [is] one group of people who are still less democratic, and they’re called judges.

“So if, in fact, you believe that the best solution—where there’s real ambiguity, and you just don’t know, the best solution is, in our country, a democratic solution, well, maybe the agency is the institution that’s closer to it.”

The case is No. 18-15.

By Marjorie Johnson, J.D.

A fitness-for-duty exam ordered after the officer tested positive for marijuana, and a follow-up with an ophthalmologist, revealed that a prior injury to his eye had left him unable to meet the state-mandated minimum sight standards.

Because he was unable to perform the essential functions of the job, a police officer with monocular vision who could “see nothing” from his left eye following an injury and several surgeries failed to defeat summary judgment on his federal and state-law claims of disability bias and failure to accommodate. Though he claimed he had performed the job for several years despite his vision impairment, and that it was only revealed because he was ordered to undergo a fitness-for-duty exam after he tested positive for marijuana (which he contended he only used for medical purposes), a federal court in Massachusetts refused to question the vision standards promulgated by the state’s HR division, particularly since public safety was involved (Melo v. City of Somerville, March 15, 2019, Stearns, R.).

Eye injury. The officer was hired by the city in 1997 and injured his left eye while on duty in 2002. After multiple surgeries, he returned to work without restrictions in 2003. A few years later he became a station officer, which entailed answering calls, running criminal history checks, and monitoring prisoners. He was also required to be able to perform the essential duties of a police officer.

Marijuana use. By August 2015, he had twice tested positive for marijuana. After entering into a rehabilitation agreement on the first occasion and being disciplined on the second, he was informed that a third positive test would result in termination. On September 22, his captain spoke with him about a report that he had arrived to work smelling of marijuana. The officer explained that he had lost partial vision in his left eye and, as a result, sometimes smoked marijuana to relieve his migraines and pain.

The next day, he was ordered to undergo a drug test and placed on paid leave pending the results. He disputed whether there was “reasonable suspicion” for ordering the test and the city scheduled a hearing for October 1. Instead of participating in the hearing, the officer entered into an agreement with the city requiring him to complete a drug rehabilitation program and pass a fitness-for-duty test.

Fitness-for-duty test. On October 15, the city’s doctor performing the test instructed the officer to follow up with an ophthalmologist. On December 3, an ophthalmologist performed an eye examination and opined that the officer could “see nothing” from his “aphakic” left eye. After reviewing the ophthalmologist’s report, the city’s doctor concluded that because the officer essentially had monocular vision, he was unable to perform the essential functions of a police officer, especially “pursuit driving,” and was therefore unfit for duty. The police chief agreed, and the city decided to terminate him. In lieu of termination, he agreed to involuntary accidental disability retirement, though he claimed he was coerced and threatened into it.

Couldn’t perform essential function. The city conceded he had a disability (monocular vision), but maintained that he was not qualified to perform the essential functions of his job as a police officer. The court agreed, finding that he failed to demonstrate he was otherwise qualified to be a police officer because his monocular vision rendered him incapable of performing the essential functions of the job. In so ruling, it noted that courts generally afford “substantial weight” to an employer’s determination that a job requirement is essential.

Similar case involving firefighter. The district court found guidance from Carleton v. Commonwealth, an opinion handed down from the Massachusetts Supreme Judicial Court involving a candidate for a municipal firefighter’s position who had a hearing impairment. The Carleton court held that he couldn’t prove he was “a qualified handicapped person” because he couldn’t satisfy the hearing standard promulgated by the Commonwealth’s Human Resources Division (HRD). The court declined to review the HRD’s determination that a hearing aid was an unreasonable accommodation because it involved an area where public safety was “paramount,” it was “based on consultations with medical and occupational experts in the field,” it was “not the product of prejudice, stereotypes, or unfounded fear” and it was “ratified by the Legislature.”

Officer didn’t satisfy vision standards. In this case, the HRD had similarly set minimum vision standards for police officers and identified the job’s essential functions. Relevant here, a police officer was considered unfit for duty if he had “uncorrected distance vision worse than 20/100 in either eye” or had “peripheral vision of less than 70 degrees temporally and 45 degrees nasally in either eye.” The officer undisputedly didn’t satisfy this test because, as the ophthalmologist opined, he could “see nothing” out of his left eye. The city’s doctor, in turn, determined that his monocular vision hindered his ability to operate a vehicle at high speeds, which was an essential function of the job.

While the officer argued that pursuit driving was not an essential function as he had satisfactorily performed his duties since 2003 without having to engage in it, the HRD’s determination that it was essential was entitled to considerable deference, particularly because public safety was involved. Additionally, all three independent medical reports prepared for the city’s retirement board, which unanimously voted to approve his involuntary accidental disability application for retirement, similarly determined that he was permanently unable to perform the essential functions of his position, albeit for different reasons.

Failure to accommodate. The officer also failed to advance his claim that the city failed to engage in an interactive dialogue after he requested a reasonable accommodation since no reasonable accommodation existed that would allow him to perform his job and the city was not required to grant his request for permanent light duty. And while he also contended that his use of medical marijuana was a reasonable accommodation, his argument failed since the doctors deemed him unable to perform the essential functions of a police officer because of his monocular vision, not his marijuana use. Indeed, medical marijuana would not remedy his eyesight, only his chronic pain.

Federal regulators want to help employers keep the grandfathered status of their employer-sponsored health plans that predate the Affordable Care Act, but not everyone agrees that keeping grandfathered plans at work is a good idea.

The Irish Workplace Relations Commission has awarded a legal secretary with 40 years’ service 24,000 euros (approximately U.S. $27,272) following a finding that the decision to retire the employee at 67 was discriminatory.

By Ronald Miller, J.D.

A West Virginia statute that provided a tax exemption for state law enforcement officers when they retired, but did not apply to federal law enforcement personnel, unlawfully discriminated against a retired U.S. marshal.

A state violates the intergovernmental tax immunity doctrine when it treats retired state employees more favorably than retired federal employees and there is no “significant differences between the two classes” to justify the differential treatment, ruled a unanimous U.S. Supreme Court. In this case, the pension benefits of certain former state and local law enforcement employees were exempt from state taxation under West Virginia law, but the benefits of former federal employees were not exempt from taxation. A retired member of the U.S. Marshals Service alleged that the state statute violated the intergovernmental tax immunity doctrine as codified at 4 U.S.C. §111. The High Court agreed, finding that §111 prohibits treating retired state employees more favorably than retired federal employees where there is no “significant differences between the two classes” to justify the differential treatment (Dawson v. Steager, February 20, 2019, Gorsuch, N.).

Intergovernmental tax immunity doctrine. Under 4 U.S.C. §111, the United States consents to state taxation of the pay or compensation of federal employees, but only if the state tax does not discriminate on the basis of the source of the pay or compensation. The intergovernmental tax immunity doctrine has come to be understood to bar only discriminatory taxes. The state of West Virginia does not tax the pension benefits of certain former state law enforcement employees, but it does tax the benefits of all former federal employees. A retired U.S. marshal brought suit alleging that the state violated §111.

A West Virginia trial court found that “there are no significant differences between [the federal employee’s] powers and duties as a U.S. Marshal and the powers and duties of the state and local law enforcement officers” that West Virginia exempts from income tax. However, the West Virginia Supreme Court reversed the judgment, emphasizing that relatively few state employees receive the tax break denied the federal marshal. It also stressed that the state law was intended to give a benefit to a narrow class of state retirees, not to harm federal retirees.

Differential treatment. The U.S. Supreme Court concluded that the West Virginia trial court had it right. A state violates §111 when it treats retired state employees more favorably than retired federal employees and there is no “significant differences between the two classes” to justify the differential treatment. Here, West Virginia expressly affords state law enforcement retirees a tax benefit that federal employees cannot receive. Moreover, there weren’t any “significant differences” between the federal marshal’s former job responsibilities and those of the tax-exempt state law enforcement retirees. Thus, the Court had little difficulty finding that West Virginia’s law unlawfully “discriminate[s]” against the federal marshal “because of the source of [his] pay or compensation,” just as §111 forbids.

Limited reach irrelevant. The High Court was unpersuaded by the state’s contention that even if its statute favored some state law enforcement retirees, the favored class was very small. Section 111 disallows any state tax that discriminates against a federal officer or employee, and the Court declined to create a new and judicially manufactured qualification to §111 that cannot be found in its text.

Intent is irrelevant. The Court also rejected the state’s argument that it should uphold the statute because it was not intended to harm federal employees, only to help certain state retirees. Under the terms of §111, the “State’s interest in adopting the discriminatory tax, no matter how substantial, is simply irrelevant.” What matters under §111 isn’t the intent lurking behind the law but whether the letter of the law “treat[s] those who deal with” the federal government “as well as it treats those with whom [the State] deals itself.”

Similarly situated. The state persisted, arguing that even if retired U.S. marshals and tax-exempt state law enforcement retirees had similar job responsibilities, they weren’t “similarly situated” for other reasons. Thus, West Virginia contended, the difference in treatment its law commanded doesn’t qualify as unlawful discrimination because it is “directly related to, and justified by,” a lawful and “significant difference” between the two classes. This argument also failed.

The state statute singles out for preferential treatment retirement plans associated with West Virginia police, firefighters, and deputy sheriffs. The distinguishing characteristic of these plans is the nature of the jobs previously held by retirees who may participate in them. Thus, a similarly situated federal retiree is someone who had similar job responsibilities to a state police officer, firefighter, or deputy sheriff. The state trial court had correctly focused on this point of comparison and found no “significant differences” between the former federal employee’s duties as a U.S. marshal and those of state law enforcement retirees who benefited from the exemption.

Nature of inquiry. The Court next rejected West Virginia’s contention that the federal retiree’s former job responsibilities were also similar to those of other state law enforcement retirees who don’t qualify for the exemption. Here, the Court found that the state again misunderstood the nature of the inquiry under §111. The relevant question isn’t whether federal retirees are similarly situated to state retirees who don’t receive a tax benefit; but whether they are similarly situated to those who do. Because the state statute unlawfully discriminated against the retired U.S. Marshal, the U.S. Supreme Court reversed the judgment of the West Virginia Supreme Court.

California launched a pilot program in November 2018 to help more workers save for retirement. But the new state-run program, called CalSavers, is facing legal controversy and uncertainty.