Under the Fair Labor Standards Act, governments may compensate employees for overtime work with compensatory time off, if there is an agreement between the employee and the government that compensatory time off is a way to compensate for overtime work. The FLSA and its implementing regulations require that when these agreements are in place the government employer must honor an employee request for compensatory time off within a reasonable period, so long as it will not unduly disrupt the employer’s operations. The FLSA and its regulations set a cap on the number of compensatory time off hours an employee may accrue, and they allow the government employer to cash out (that is, pay off) accrued compensatory time off, rather than allow the employee to take all the accrued time off. In Christensen v. Harris County, the issue was whether a government employer could, consistent with this statutory and regulatory scheme, require an employee to take accrued compensatory time when the employee did not want to, rather than cash out the employee or wait until the employee requested time off.

The statute and regulations were silent on the matter, and the Court was unanimous that the statute was ambiguous on the subject. The Acting Administrator of the Wage and Hour Division of the U.S. Department of Labor, however, had opined in a formal opinion letter that a government employer could require its employees to take compensatory time off only if the underlying agreement relating to taking compensatory time in lieu of wages so provided. This raised the question whether the Chevron doctrine should apply, requiring deference to the agency’s reasonable interpretation. In an opinion for the Court by Judge Thomas, five of the justices agreed that it should not.

The Court without any particular elaboration simply stated that this interpretation was "contained in an opinion letter, not one arrived at after, for example, a formal adjudication or notice-and-comment rulemaking. Interpretations such as these in opinion letters – like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law – do not warrant Chevron-style deference." These statements were followed with citations to three cases and Davis & Pierce’s treatise. Rather, the Court said, the interpretation was subject only to Skidmore deference, see Skidmore v. Swift & Co. 323 U.S. 134 (1944) (a case also involving an opinion letter of the Wage and Hour Administrator). That deference, often referred to as "weak deference" in contrast to the "strong deference" under Chevron, only affords "respect" to the agency interpretation, and then only to the extent that the interpretation, in light of the agency’s experience and expertise, has "the power to persuade." In Christensen, the Court found the opinion letter unpersuasive, and it believed "the better reading" of the statute was to allow an employer to require employees to take compensatory time at a particular time, without any need to include it in the underlying agreement regarding compensatory time.

The Court then went on to address whether the opinion letter was entitled to the particular deference afforded to an agency’s interpretations of its own regulations, citing Auer v. Robbins, 519 U.S. 452 (1997), and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945). It found that the regulation itself was not ambiguous; it was "plainly permissive." Accordingly, "to defer to the agency’s position would be to permit the agency, under the guise of interpreting a regulation, to create de facto a new regulation."

Justice Scalia took issue with the Court’s avoidance of Chevron and its reliance on Skidmore, although even applying Chevron, he concluded the agency’s interpretation was unreasonable. He maintained that Skidmore is an anachronism, "dating from an era [that is, pre-Chevron] in which we declined to give agency interpretations (including interpretive regulations, as opposed to ‘legislative rules’) authoritative effect." In other words, before Chevron, courts did not recognize an agency’s interpretation of a statute to be authoritative even when it was contained within a rule that had gone through notice and comment. Rather, courts had insisted that John Marshall’s statement in Marbury v. Madison, that it is "the province and duty of the judicial department to say what the law is," meant that courts had to exercise independent judgement as to the meaning of statutes. Chevron clearly changes this understanding. Moreover, Justice Scalia noted that in a number of cases the Court had invoked Chevron and applied its deference to interpretations not contained in agency regulations, including those contained in letters.

(excerpted from Administrative & Regulatory Law News, Section of Administrative Law & Regulatory Practice, American Bar Association, Vol. 25, No. 4, Summer 2000)