Written by Jeff P. Johnson and Lauren Hancock Miller From Troutman Pepper Locke on February 28, 2025
Last week, in Tennessee v. EEOC, the Eighth Circuit reversed a district court’s decision and reinstated a lawsuit by 17 states (led by the Tennessee and Arkansas attorneys general (AG)), holding that these states have standing to sue the Equal Employment Opportunity Commission (EEOC) over its regulations implementing the Pregnant Workers Fairness Act, 42 U.S.C. § 2000gg. This decision deserves mention because the court seemingly made it easier to demonstrate standing by finding that the “realities facing” regulated parties can demonstrate a concrete injury even without a threat of enforcement.
The act provides liability for employers who do not make “reasonable accommodations to the known limitations related to the pregnancy, childbirth, or related medical conditions” of an employee absent undue hardship to the employer. Congress tasked the EEOC with promulgating rules implementing this requirement. In one such rule, the EEOC listed several conditions as examples that “are, or may be, related medical conditions” that the employer must accommodate under the act. The states challenged this regulation as arbitrary and capricious, exceeding the EEOC’s statutory authority, and infringing on their free speech rights. They asserted one identified example expressly conflicted with each state’s current policy, but as employers, they would have to follow the EEOC’s rule. The district court dismissed the case for lack of standing, finding no injury because there is no credible threat of enforcement — the EEOC cannot bring enforcement actions against state employers. It also found that any injury could not be redressed by a judicial decision because the act (which was not challenged), rather than the regulation, imposed the requirement to reasonably accommodate the employee, and vacating the regulation would not stop an employee from asserting those rights under the act.
After denying an injunction pending appeal and expediting the case, the Eighth Circuit held that the states had standing because, as employers, they “are the object of an agency action, [so] they are injured by the imposition of new regulatory obligations.” The court did not require the states to show any “specific economic harms or whether the States faced a credible threat of enforcement.” It rejected the EEOC’s claims that certain measures contemplated by the regulations were voluntary (such as updating employment policies) and that the regulation does not “produce an injury until an employee requests” an accommodation that the state refuses to provide. The court held in part that such contentions are “inconsistent with the realities facing these regulated parties,” noting that courts presume states will follow a regulation in effect.
The Eighth Circuit’s decision has two notable takeaways as shown by other circuit precedent addressing pre-enforcement standing. First, the court’s decision rests on the formality that issuing a rule grants a regulated party standing with or without a possibility of enforcement. The court distinguished a separate case that involved a U.S. Department of Housing and Urban Development (HUD) memorandum providing new interpretation of the Fair Housing Act, directing its agencies to “fully enforce” that interpretation. Even though a school in that case challenged the memorandum as a rule, it did not have standing because the memorandum “d[id] not expose the [school] to any legal penalties for noncompliance.” Here, the Eighth Circuit found the states have standing because the EEOC’s rule suggested an example of what “may be a related medical condition” under the Pregnant Workers Fairness Act, even though there was no threat of enforcement or legal penalties for failing to comply with that example.
Second, the decision creates some tension with Eighth Circuit precedent in Iowa League of Cities v. E.P.A. where the court held parties can challenge procedural defects when an agency promulgates a rule because the party has a right to “avoid[] regulatory obligations above and beyond those that can be statutorily imposed upon them.” That holding indicates merely promulgating a rule is an insufficient injury in fact for regulated parties and that they must also show the regulation imposes obligations on them. But unlike Iowa League of Cities, EEOC’s rule interprets the statute as imposing the obligation to provide an accommodation, not the regulation — an issue the court in Iowa League of Cities says nothing about. Nonetheless, as it stands, the decision in Tennessee v. EEOC, appears to provide an automatic injury to entities that are the object of federal regulation due to unspecified practical “realities” requiring regulated parties to take any action.
As a practical matter, the case is noteworthy because it continues the upward trend of state AGs using their status as employers to challenge federal regulations. As market participants, states or even their individual offices of AG frequently must comply with federal regulations. During the Biden administration, Republican AGs used this to challenge COVID-19 vaccine mandates and various executive orders that affected employers. In one student loan forgiveness skirmish, the Office of the Missouri AG alleged that the loan forgiveness program injured its interests because the federal Public Service Loan Forgiveness Program that the office relied on to recruit and retain employees became much less attractive. This trend has continued under the Trump administration with Democratic AGs suing over National Institutes of Health (NIH) funding freezes claiming that the loss of funding injures their state universities’ ability to employ medical and research personnel. With such a favorable decision for states, the Eighth Circuit will likely see increased litigation, and state AGs will continue to play a key role influencing federal regulations impacting the workplace.
Why It Matters
The decision in Tennessee v. EEOC highlights the ongoing trend of state AGs leveraging their status as employers to contest federal mandates and sets a precedent that could influence future regulatory challenges. By affirming states are not required to show specific economic harm or a credible threat of enforcement for standing to sue, the Eighth Circuit has empowered states to more readily contest federal rules they perceive as federal overreach. This means that state AGs will continue to play a pivotal role in the judicial review of federal regulations.
