ANNUAL REPORT · 8 NFIB 2018 Small Business Legal Center Annual Report NFIB.comlegalcenter NFIB...

ANNUAL REPORT

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TABLE OF CONTENTS

Executive Director’s Message ..................................................Page 41

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7

6

2

5

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In the News ..............................................................................Page 13

Publications and Blogs ...........................................................Page 18

Outreach and Member Events ..............................................Page 19

NFIB Small Business Legal Center’s Amicus Program ........ Page 11

Case Involvement ...................................................................Page 10

NFIB Small Business Legal Center 2018 Highlights in the Courts ................................................. Page 8

About the NFIB Small Business Legal Center ........................Page 6

NFIB 2018 | Small Business Legal Center Annual Report NFIB.com/legal-center4

To Our Donors, Supporters and Associates,

Since 2000 the NFIB Small Business Legal Center has advocated on behalf of small business -- fighting unreasonable and illegal government regulations, combatting costly abuses to our civil justice system, and protecting small business owners’ freedom to grow their businesses. Our 2018 victories demonstrate the importance that the court system plays in stopping overburdensome and illegal regulations. Reviewing the Legal Center’s victories in 2018 demonstrates, once again, how important it is to have the small business voice represented in courts across the country.

One of our biggest victories in 2018 came when the Department of Labor formally rescinded its so-called “persuader rule” in response to our successful lawsuit challenging the rule as illegal and unconstitutional. As you may recall, the “persuader rule” required business owners to publicly report to DOL any communication with outside consultants or legal counsel about employee relations or union organizing. Previously, business owners were only required to report when outside counsel directly communicated with employees. Had the rule taken effect small business owners would have been particularly disadvantaged because most do not have the means to employ in-house lawyers or compliance officers to handle union elections and employee relations.

Our amicus program also continues to positively impact laws of particular concern to small business. We filed 53 briefs in federal and state courts and the U.S. Supreme Court in 2018 and small business will see the rewards of our work for years to come. Among other things, in Janus v. American Federation of State, County, and Municipal Employees, we helped make the case that it is an unconstitutional violation of the First Amendment for states to forcibly require public employees to financially back public employee unions that they do not support. As a result of the Court’s decision in Janus, public unions will no longer have a guaranteed stream of income that they can use to push policies harmful to small business in state capitals across the country. As highlighted in this report, we also saw positive changes to laws regarding how courts apply employment regulations and even criminal laws to small business. And we participated in another Supreme Court case that bodes well for your property rights moving forward.

But new battlefields have arisen – particularly in cities and states across the country. In 2018 we were involved in several lawsuits against states and cities trying to impose

Executive Director’s Message

NFIB 2018 | Small Business Legal Center Annual Report NFIB.com/legal-center 5

new, illegal mandates on small business. Of note, we are seeing more and more cities trying to increase the minimum wage, require paid leave, and impose other costly mandates on Main Street. We challenged a City of Austin ordinance that would require local businesses to provide at least six days of paid sick leave to employees. We were able to keep the law from taking effect and won our first big battle in the Texas Court of Appeals.

On the regulatory front, I testified before Congress on three separate occasions telling the small business story. Among other things, I explained the need for a more transparent, open regulatory process that levels the playing field for those disproportionately impacted by the cost of regulation – America’s small business owners.

We also provided critical direction to over 1000 small business owners who contacted us throughout the year with questions concerning regulations and laws that directly impacted them. Although our staff cannot provide legal advice, we do encourage you to reach out with your questions. Unlike you, we have the time to hunt down a law or regulation about which you might have a question or concern and point you in the right direction so that, if needed, you have the tools necessary to chart a course with your attorney to get the issue resolved. And you can always check out our website and Facebook page for important tips and educational programming that can help you learn more about the laws that apply to your business.

None of our work could happen without your support. Just like you, the Legal Center operates on razor thin margins. Every dollar you give us is precious and spent in a way to maximize small business impact in the courts.

Thank you for your generosity.

Karen HarnedExecutive Director


About the NFIB Small Business Legal Center

NFIB’s Small Business Legal Center works for your small business, supporting you in the nation’s courts and serving as a legal resource for small businesses.

What is the NFIB Small Business Legal Center?

NFIB Small Business Legal Center as Litigator

NFIB Small Business Legal Center as Educator

The NFIB Small Business Legal Center is the voice for small business in the nation’s courts and the legal resource for small business owners nationwide. Simply, we educate and litigate for small business. The Legal Center is not a legal defense fund.

The Legal Center is the advocate for small business in the courts. We do what federal and state NFIB lobbyists do, but instead of lobbying legislators we advocate in the courts through briefs and oral arguments. We tell judges how the decision they make, in a given case, will impact small businesses nationwide. Importantly, we only initiate lawsuits and file amicus (“friend-of-the court”) briefs in precedent-setting cases. That means we go to court only in those cases that will impact many small business owners.

Recent estimates show that the thousands of pages of federal regulations alone cost Americans more than $1 trillion. With so many rules to keep track of, it’s not surprising that many small business owners don’t know or understand the laws that apply to them. That’s where the Legal Center comes in. We prepare guidance documents to help small businesses nationwide understand the most vital issues affecting their business.


Download Guides at NFIB.com/guideseries

We have guidance documents that cover laws important to small businesses nationwide.

NFIB Guide to Taxes

NFIB Guide to Handling OSHA Inspections

NFIB Guide to Federal Employment Law

NFIB Guide to the Employee Handbook

NFIB Guide to Wage and Hour Laws

NFIB Guide to Managing Unionization Efforts

NFIB Guide to Independent Contractors

NFIB Guide to Developing a Document Retention Policy (DRP)


NFIB Small Business Legal Center Successfully Overturns DOL’s Union Persuader Rule In 2018, NFIB won a crucial victory for small business by overturning the Persuader Rule, a controversial 2016 rule issued by the Obama Administration. The rule would have required business owners to publicly report to the Department of Labor any communication with outside consultants or legal counsel about employee relations or union organizing. Previously, business owners were only required to report when outside counsel directly communicated with employees. In April 2016, NFIB filed a lawsuit against DOL in the United States District Court, Northern District of Texas, Lubbock Division, and argued that the union persuader rule violated the First Amendment’s guarantee of freedom of speech and right of association. In its July 17, 2018 decision to rescind the Persuader Rule, DOL acknowledged that NFIB’s lawsuit had kept the Persuader Rule from adversely affecting small businesses. NFIB Lawsuit Successfully Blocks Austin Paid Sick Leave OrdinanceIn response to NFIB’s lawsuit filed in April 2018 challenging the legality of Austin’s paid sick leave ordinance, a Texas appellate court issued a decision in August 2018 blocking the law from taking effect. Although an appeal was filed by the City, the court decision enjoining the ordinance was welcome relief for small-business owners.

Local measures such as Austin’s paid sick leave ordinance, result in a patchwork of rules and regulations that create major problems for small businesses--especially those with mobile employees.

NFIB Small Business Legal Center 2018 Highlights in the CourtsHere is a recap of the Small Business Legal Center’s most important 2018 wins. Many thanks to our generous donors for helping to make 2018 such a successful year. We realized impressive wins in federal and state courts and, most notably, have a renewed focus on fighting back against unreasonable and unconstitutional state and local mandates. To keep up with all our legal work, visit NFIB.com/legal-center.


U.S. Supreme Court Victories Help Restore Legal Certainty for Small Business The NFIB Small Business Legal Center helped secure a victory in what was arguably the most important case decided by the U.S. Supreme Court in 2018. In Janus v. American Federation of State, Municipal and County Employees, the Court ruled that it is unconstitutional for a state to compel public employees to pay fees to unions. This was a victory for the small business community because it leveled the playing field for employers in states where public employee unions have had inordinate influence in the political process.

In Encino Motorcars LLC v. Navarro the Supreme Court agreed with NFIB that service advisors at car dealerships are exempt from overtime pay requirements. In his opinion, Justice Thomas expressly endorsed NFIB’s argument that courts should not tilt the scales of justice against employers when interpreting ambiguous statutory text. Also, the Legal Center applauded the Supreme Court’s decision in Marinello v. United States. The NFIB Small Business Legal Center filed an amicus brief in this case, arguing that the Supreme Court should construe obstruction of justice statutes reasonably to allow for criminal prosecution only when a company takes actions to impede a known investigation. The Supreme Court agreed with the Legal Center’s argument, giving small business an important win that protects against prosecutions for good faith conduct.

Finally, in a big victory for homebuilders, farmers, and landowners across the country, the Court unanimously decided, in Weyerhaeuser Co. v. U.S. Fish & Wildlife Services, that the U.S. Fish & Wildlife Service must consider the economic impact to the community before imposing critical habitat designations under the Endangered Species Act. The Court prohibited the government from imposing more expansive critical habitat designations than necessary and ruled that affected landowners can sue to contest improper designations.

Legal Center Fights to Limit Small Employer Liabilities in the States The Legal Center joined a lawsuit in Washington, Weaver v. City of Everett, arguing that workers compensation claimants should not be allowed to contest conclusions of law that were definitively decided in previous proceedings. We told the Washington Supreme Court that claimants should not get a second-bite at the apple when they’ve already lost in a prior filing.

In Mississippi, we filed a brief arguing that employers should be protected from liability for off-duty accidents in Mar-Jac Poultry v. Love. Meanwhile, in Wal-Mart v. Forfar, we urged the Colorado Supreme Court to limit recovery for plaintiffs who have already had their medical expenses covered by Medicare—arguing that defendant businesses should not be required to pay for medical expenses that are improperly billed by a healthcare provider. Finally, in 2018 the Legal Center filed in a lawsuit, Philadelphia Chamber of Commerce v. City of Philadelphia, challenging a Philadelphia ordinance that prohibits employers from asking applicants about prior salary history.


Case Involvement

California ............................................2Colorado .............................................2Florida .................................................1Georgia ...............................................1Illinois ..................................................1Massachusetts ...................................1Mississippi ..........................................2New Mexico .......................................1New York ............................................1Pennsylvania ......................................5Texas ...................................................1Washington ........................................1Wisconsin ...........................................1

State Court Filings

DC Circuit ........................................1Second Circuit .................................1Third Circuit .....................................2Fifth Circuit ......................................1Sixth Circuit .....................................1Seventh Circuit ...............................1Eleventh Circuit ..............................2

Federal Courts of Appeal Filings

NFIB Small Business Legal Center Amicus Filings= NFIB amicus activity


NFIB Small Business Legal Center’s Amicus ProgramThanks to our generous donors, the NFIB Small Business Legal Center brought the voice of small business to federal and state courts across the country with 53 amicus brief filings across the country. As ever, we strive to use donor money wisely so that we can have the greatest impact on the legal system. Over the past ten years, we’ve filed over 500 amicus briefs in cases affecting the rights of entrepreneurs to own, grow and successfully manage their business.

NFIB Small Business Legal Center Filings by Year

2 0 0 9

33

25

35

45

61

70 71

61 60

53

2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8


7% 10%

25%

17%

40%

STATE v.

FEDERAL

21% 22%

30%

27%

AMICUS BRIEF FILINGS

BY SUBJECT

Property Rights and Tax

Labor and Employment

Tort and Lawsuit Abuse

Other Regulatory

U.S. Supreme Court Merits

U.S. Supreme Court Certiorari

Federal Court of Appeal

State Court

National Labor Relations Board


Karen Harned Offered Expert Commentary on SCOTUS’ Janus OpinionFox NewsFox News talked with Karen Harned about the importance of the Supreme Court’s decision in Janus v. American Federation of State, County and Municipal Employees. “In addition to leveling the playing field, the Janus case can protect First Amendment rights, and preserve the voice of small businesses that simply cannot afford many of the initiatives supported by public employee unions, like more regulations and higher taxes. The outcome of the Janus case is a critical one, and the small business community will be watching,” said Harned. Read More: https://fxn.ws/2yaCI20

CNNKaren Harned discussed the importance that the Janus decision will have on both public and private sector employers noting that the public employee unions, if left unchecked, can effectively shut out the voices of small businesses. Read More: https://cnn.it/2y6NBlh

SCOTUSblogKaren Harned participated in a symposium on the historic Janus decision, offering a small business perspective on this public employee union case. Read More: http://bit.ly/32JymNr Karen Harned discussed the importance of the Supreme Court’s decision in Encino Motorcars, LLC v. Navarro The Oregon Business Report The business report, quoted Ms. Harned in its coverage of the Encino decision. “Small business owners rely heavily on a stable and consistent regulatory environment as they grow their businesses,” said Karen Harned, Executive Director of the NFIB Small Business Legal Center. “The Supreme Court’s decision is welcome news for small businesses who cannot afford increased overtime costs mandated

2018 Media HighlightsIN THE NEWS


by the Department of Labor, or the time and resources needed to fight costly wage and hour lawsuits.”Read More: http://bit.ly/2LF1al0 NFIB Small Business Legal Center Reviewed Judge Kavanaugh’s Record on PBS News Hour Karen Harned provided the small business perspective on Judge Brett Kavanaugh’s judicial record in a PBS News Hour series leading up to Justice Kavanaugh’s confirmation hearings.Read More: https://to.pbs.org/30Qx1Td

NFIB Small Business Legal Center’s Executive Director Testified in U.S. House of Representatives about the Importance of Deregulatory Initiatives Insurance News The Insurance News covered Ms. Harned’s March 15, 2018 testimony in front of the House Oversight and Government Reform Committee. Harned discussed the challenges and costs that “unnecessary and burdensome regulation has on small business,” as well as the dangers and difficulties created when administrative agencies themselves create new policy through “guidance documents”. Read More: http://bit.ly/2Y0lX93 Legal Center Offered Expert Commentary on U.S. Department of Labor’s Proposed Wage and Hour Rule on Tip SharingBNA/Bloomberg Law Elizabeth Milito, Senior Executive Counsel, noted that the proposed rule is “really limited in scope. I know if you read the media stories you might just think this new rule is going to apply to all tipped employees but that is definitely not the case.” Read More: http://bit.ly/2OhTDdY

NFIB.com/legal-center 15NFIB 2018 | Small Business Legal Center Annual Report

NFIB Legal Center Interviewed About Holiday Party Risks Colorado Springs Business Journal Senior Executive Counsel Elizabeth Milito’s tips on holiday office parties were picked up by a number of media outlets including the Business Journals. Read More: http://bit.ly/2ZatJd0

Legal Center Opposed Intrusive Pennsylvania Employment Mandates Law360 and The Philadelphia Inquirer The NFIB Legal Center’s amicus brief challenging Philadelphia’s ordinance prohibiting employers from inquiring about an applicant’s salary history was covered by Law 360. Read More: http://bit.ly/2SCNRlK

The Philadelphia Inquirer reported on the litigation and quoted Karen Harned. Read More: http://bit.ly/30TcUUo

Also in Pennsylvania, Harrisburg ABC27 interviewed Elizabeth Milito after she testified in September 2018 in opposition to a package of employment law bills introduced in the Pennsylvania legislature. Watch the Interview at: http://bit.ly/2XZ6Lcl

Senior Attorney Luke Wake Provided Expert Commentary on SCOTUS and Property RightsVolokh Conspiracy Volokh Conspiracy covered Luke Wake’s amicus brief in an important property rights case before the Supreme Court. Read More: http://bit.ly/2Od77rc

Elizabeth Milito Discussed Impact of the Dynamex Decision on California EmployersNorthern California Record Ms. Milito discussed the impact of a California Supreme Court decision that reduced the number of reasons a worker can be classified an independent contractor. According to Milito, the decision “caught members off-guard, it was a surprise because there was always a presumption of the status of independent contractors. I know businesses are calling their lawyers and asking what they should do. And NFIB members who do not have lawyers are calling up.” Read More: http://bit.ly/2Gsk2PQ


Publications and BlogsIn addition to bringing the voice of small business to the nation’s courts, the NFIB Small Business Legal Center strives to be the pre-eminent legal resource for small business owners, policy makers, and media sources. To that end, the Legal Center continues to produce publications and compliance resources for the small business community. Our publications in 2018 included The Brief, our quarterly newsletter, the NFIB Legal News & Review, the NFIB Legal Resource & Compliance Forum, The Legal Ease Video Series, the California Legal Eagle, and Karen Harned’s Facebook Update.

NFIB LEGAL EASE VIDEO SERIES

KAREN HARNED’S FACEBOOK UPDATE

THE BRIEF

NFIB SMALL BUSINESSLEGAL CENTER ON NFIB.COM

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Publications and Blogs Outreach, Member Events & Testimonies

January – Elizabeth Milito taped a podcast for the ADA National Network on small business Americans with Disabilities Act compliance.

February – Elizabeth Milito presented an independent contractor update to the Joint National Committee for Languages in conjunction with the association’s national advocacy day.

March – Karen Harned testified before the House Committee on Small Business on regulatory reform.


April – Elizabeth Milito and Luke Wake presented at Small Business Day at the Capitol events in Harrisburg, Pennsylvania and Sacramento, California.

May – Karen Harned presented a Federalist Society teleforum discussing Department of Labor’s PAID program.

Elizabeth Milito presented a webinar to NFIB members on Social Media in the Workplace.

June – Elizabeth Milito presented at the Littler Mendelson Mid-Atlantic Employment Conference.

July – Karen Harned presented a Federalist Society teleforum regarding the Department of Labor’s Persuader rule.

August – Luke Wake presented on 10 Ways to Stay Out of Court to small business owners in Orange County, California.

September – Karen Harned spoke at the Oklahoma City Chamber of Commerce DC Fly-In, regarding Business and the Supreme Court.

Elizabeth Milito testified before the Pennsylvania House Labor & Industry

Committee on harassment in the workplace.

October – Elizabeth Milito presented at a Department of Labor listening session discussing proposed revisions to FLSA overtime rules.

Luke Wake presented on a panel discussing environmental regulation at the State Policy Network Annual Conference.

November – Karen Harned was a panelist at the American Bar Association Administrative Law Conference, discussing the impact of regulation on small business.

Elizabeth Milito and Luke Wake presented a webinar to NFIB members providing guidance on how to avoid sexual harassment claims in the #metoo era.

December – Elizabeth Milito and Luke Wake presented a webinar to NFIB members on drugs in the workplace.

Luke Wake spoke to small business owners in Southern California on the impact of the California Supreme Court’s decision in Dynamex v. Superior Court.


The Legal Center cannot offer legal advice, but we can be a legal resource and help point you in the right direction.

If you have a question, a story of government abuse of small business, or a precedent-setting case, please give us a call.

Our Number is 1-800-552-NFIB

To make a donation, please send checks, payable to NFIB Small Business Legal Center at the following address: NFIB Small Business Legal Center1201 F Street, NW, Suite 200Washington, DC 20004

What Can You Do To Help?

NFIB Small Business Legal Center 1201 F Street, N.W., Suite 200

Washington, D.C. 20004 NFIB.com/legal-center

1-800-552-NFIB

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