The Sweet Taste of Victory: NFIB Legal Center Wracks-Up Wins at the Supreme Court

Date: July 31, 2018

Emily Dickinson once wrote that “success is counted sweetest by those who ne’er succeed.” That poetic verse rings true for small business, as the proverbial underdog. Indeed, for too long the courts have tipped the scales of justice against the little guy. But as we said a year ago, there are growing reasons for optimism at the Supreme Court. And this year we’ve made major headway in the on-going fight for small business rights.

First, our win in Encino Motorcars v. Navarro will help small business owners dealing with wage and hour issues throughout the country. While the main-stream media ignored this case, the reality is that Encino will likely have greater practical impact than any other decision of the Supreme Court’s 2017-18 term. In fact, we called Encino this year’s great sleeper case because it leveled the playing field for small business in Fair Labor Standards Act (FLSA) cases.

For years, the Supreme Court said that judges should place a thumb on the scale of justice in favor of trial attorneys, in suits against employers. This emboldened the plaintiff’s bar to take more aggressive and cavalier positions. And employers were fighting an uphill battle because the courts would resolve statutory ambiguities in favor of the employee.

For example, in Encino Motorcars, the Ninth Circuit Federal Court of Appeal ruled that an employer had improperly classified its employees as exempt from the FLSA’s overtime requirements. The Ninth Circuit acknowledged that there were colorable arguments on both sides of the equation; however, rather than endeavoring to decide upon the best interpretation of the law, the Court invoked a supposed rule that “remedial statutes” should be construed against the employer. But, in the end, the NFIB Small Business Legal Center played a vital role both in reversing the Ninth Circuit and in prompting the Supreme Court to repudiate the supposed “remedial statutes” canon.

Marinello v. United States was another underreported case with major implications for small business. In Marinello we convinced the Supreme Court that taxpayers should not face prosecution for lawful business practices—not unless there is hard evidence that the owner acted with corrupt intent to obstruct a pending Internal Revenue Service investigation. A contrary ruling would have opened the door for prosecutions against potentially any business.

NFIB Legal Center also helped secure victories for small business in two more high-profile cases. In Epic Systems Corp. v. Lewiswe secured the right for small business owners to incorporate arbitration agreements in employment contracts. This should enable businesses to resolve legal disputes more efficiently and with fewer costs.

Lastly, we played a significant role in urging the Court to overturn a 1978 decision that had previously authorized laws requiring public employees to provide funding for union activities. The decision in Janus v. America Federation of State and Municipal Employees was a step forward for First Amendment rights. But the decision also has larger implications democracy. Indeed, it levels the playing field for small business in states like California, Illinois and Massachusetts, where public employee unions have enjoyed inordinate political power for the past four decades. In sum, this was a very good year.

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