A system and method for carrier deferral for full duplex energy efficient Ethernet (EEE) physical layer devices (PHYs). A carrier deferral signal can be asserted to a media access control layer to indicate to the media access control (MAC) layer that transmission of data is to be deferred due to a power savings initiative in the physical layer device. In one example, the carrier deferral signal is used when a PHY is awakened by the MAC when the MAC has something to transmit. In another example, the carrier deferral signal is used when a PHY is switching link rates.