Table of Contents · Administration’s attempt to dramatically change federal overtime wage rules....

MISSION: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.

2016 ANNUAL REPORT

Table of Contents

Executive Director’s Message

Staff

2016 Donors and What Can You Do to Help?

About NFIB Small Business Legal Center

Publications and Blogs

In the News

2016 in Review

Outreach and Member Events

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NFIB Small Business Legal Center Annual Report

9-2017

NFIB 2015 | Small Business Legal Center Annual ReportNFIB.com/legal-center

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To Our Donors, Supporters and Associates, For the NFIB Small Business Legal Center, 2016 was our busiest and most successful year to date. With lawsuits challenging (1) the Department of Labor’s “overtime,” “persuader,” and “union walk-around” rules; (2) the Environmental Protection Agency’s “waters of the U.S.,” and “clean power plan” rules, (3) a Colorado tax, (4) a minimum wage increase in St. Louis, Missouri; and (5) a paid leave mandate in Minneapolis, Minnesota, it was all hands on deck all year.

In the end, we were very successful in stopping the rules that were most damaging to small business from taking effect. For example, we closed out 2016 with a critical, although temporary, win in our challenge to the Department of Labor rule that would have more than doubled the salary threshold for administrative employees eligible for overtime. A federal district court in Texas issued a Preliminary Injunction stopping the rule from taking effect just a week before small businesses across the country would have been forced to comply with it. That case, like many of our other lawsuits, will continue in 2017 as we proceed with litigation to eliminate those rules altogether.

In the U.S. Supreme Court, the NFIB Small Business Legal Center continues to wield great influence – successfully urging the Court to take cases important to small business. And when the Supreme Court hears a case important to small business, our briefs continue to make a difference. Although we don’t win them all, we definitely are having a positive impact before our nation’s highest court.

Our amicus program continues to thrive, with the Legal Center filing 61 briefs in state and federal courts across the country to ensure that judges know where small business stands in cases that will have a big impact on their bottom lines and freedom to do business going forward.

And we provided critical direction to over 700 small business owners who called us throughout the year with questions about regulations and other laws that were directly impacting them. Although our staff cannot provide legal advice, we do encourage you

Executive Director’s Message

5NFIB 2015 | Small Business Legal Center Annual ReportNFIB.com/legal-center

to reach out with your questions. Unlike you, we have the time to hunt down a law or regulation that is plaguing your business 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.

But none of the work we do could happen without your support. Just like you, we operate on razor thin margins at the Legal Center. 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


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About the NFIB Small Business Legal Center

What is the NFIB Small Business Legal Center?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.

NFIB Small Business Legal Center as LitigatorThe 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.

NFIB Small Business Legal Center as Educator 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 to understand the most vital issues affecting their business.

! 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.


• NFIB Guide to Independent Contractors

• 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 Developing a Document Retention Policy (DRP)

• NFIB Guide to Taxes

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

Download Guides at NFIB.com/guideseries


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PUBLICATIONS & BLOGS

NFIB SMALL BUSINESS LEGAL CENTER BLOG

The Legal Eagle is a state-focused regulatory newsletter for California.

In addition to bringing the voice of small business to the nation’s court, the NFIB 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 2016 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 social media engagement.


NFIB LEGAL EASE VIDEO SERIES

NFIB SMALL BUSINESS LEGAL CENTER ON NFIB.COM


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Highlights of the Legal Center 2016 Victories: Here is a look at some of our most important wins over the last 12 months. For the latest on our legal work, please visit www.NFIB.com/legal-center.

NFIB Secures Critical Win in Blocking Implementation of EPA’s Clean Power Plan The Environmental Protection Agency’s “Clean Power Plan” would have proven rather messy if it had gone into effect as planned by the Obama Administration in 2016. The CPP would have forced a radical transformation of the energy industry, which would have meant higher energy costs for small business operators, and a serious strain on the national economy. But in conjunction with other industry groups, and 26 states, NFIB helped secure a major victory in prompting the U.S. Supreme Court to temporarily block implementation of the CPP regulation. This allowed for a chance to sort out the complicated legal issues presented, and fortuitously signaled the end for the CPP—as the Trump Administration has henceforth begun work to rescind the CPP entirely.

Legal Center Successfully Blocks DOL Overtime Rule The NFIB Small Business Legal Center led the court fight to block the Obama Administration’s attempt to dramatically change federal overtime wage rules. In May 2016, the Department of Labor issued its new overtime rule, under which salaried workers making below $47,476 would need to be paid overtime. That new figure would have nearly doubled the previous threshold of $23,660, potentially making more than 5 million employees suddenly eligible for overtime. The rule was set to take

Highlights NFIB Small Business Legal Center 2016 Litigation Highlights.

in Review2016


effect on December 1, 2016. But in a dramatic decision issued just days before the deadline, a federal district court in Texas issued a nationwide preliminary injunction sparing employers across the country from the devastating new rule. NFIB argued in the lawsuit that DOL stepped far beyond its statutory authority when it made millions more employees potentially eligible for mandatory overtime.

Legal Center Strikes Down Labor “Persuader Rule” The NFIB Legal Center won a big victory against the Obama Administration’s burdensome labor regulations when it got a federal court order permanently blocking the Department of Labor’s union “persuader rule.” The Legal Center sued to stop this rule because it represented an effort by DOL to favor labor unions in organizing campaigns. NFIB’s lawsuit argued that small business owners must have the right to seek legal advice, when facing a union election, without going through burdensome, expensive and intrusive public reporting requirements. Labor law is extremely complicated, and small business owners rely on the advice of experts to help them navigate through unfamiliar territory. This ruling prevented small businesses from being subjected to yet another burdensome labor mandate under the Obama Administration.

Carrying on the Fight for Property Rights From Coast to Coast Once again, in 2016 the NFIB Small Business Legal Center lead the charge for small business property rights in amicus filings throughout the country. For example, in UFCWU v. Wal-Mart, the Legal Center helped secure a significant victory for small business owners in Maryland, with a decision affirming the right of businesses to bring trespass suits against disruptive union agitators. In the Midwest, the Legal Center played a critical role in prompting the Kansas Supreme Court to strike-down an illegal tax imposed on developed properties in Heartland v. City of Mission. And, in the far west, the Legal Center prompted the Hawaii Supreme Court to take-up and reverse a problematic decision in County of Kauia v. Hanalei River Holding Ltd., which had previously authorized a condemning authority to pay a low-ball valuation for property taken through eminent domain.

“It’s obvious that the Department of Labor did not fully consider the impact on small business when it raised the overtime threshold and imposed an arbitrary deadline.” Karen R. Harned, executive director, NFIB Small Business Legal Center.[

[


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Gains for the Small Business Community in the U.S. Supreme Court The NFIB Legal Center helped secure two victories over the Equal Employment Opportunity Commission with briefs filed in CRST v. EEOC and McClane v. EEOC—therein modestly leveling the playing field for small business defendants targeted by overly aggressive EEOC enforcement actions. Meanwhile small business landowners can breathe a sigh of relief after the Supreme Court’s decision in U.S. Army Corps of Engineers v. Hawkes, wherein the Legal Center explained the vital importance of allowing landowners an opportunity to contest illegal assertions of Clean Water Act jurisdiction. Additionally, the Legal Center successfully prompted the Supreme Court to grant review in BNSF Railway Co. v. Tyrrell, a case in which the high court squarely repudiated expedient forum shopping games employed by the plaintiffs’ bar in suits against industry defendants.

Legal Center Fights Back Against Municipal Labor and Employment Laws Throughout the country, we are seeing a troubling trend. Where state lawmakers are unwilling to further raise minimum wage or impose mandatory paid sick leave requirements on employers, labor activists in cities and towns are pushing for municipal ordinances that increase burdens on employers. In 2016, NFIB sued the city of Minneapolis over its paid sick time ordinance arguing that the ordinance was unlawful on the grounds that it conflicted with existing state law. NFIB also joined in a lawsuit challenging St. Louis’ minimum wage, which went all the way to the Missouri Supreme Court. And in the Keystone State, NFIB Legal Center led a coalition of industry groups in an amici filing, that helped prompt the Pennsylvania Commonwealth Court to invalidate Pittsburgh’s paid leave ordinance. Striking at OSHA’s Illegal Union Walk Around Rule Following-up on a NFIB Legal Center exposé on illegally adopted rules coming out of the federal bureaucracy in Washington D.C., NFIB filed suit, in the fall of 2016, in a challenge to an especially disconcerting pro-Union rule pronounced by the Occupational Safety & Health Administration. In a mere letter, OSHA announced that employers must allow union officials to accompany OSHA inspectors—even on non-union worksites. Thereafter, OSHA incorporated this “Union Walk Around Rule” into an official manual, which OSHA agents use in the field. But as argued in NFIB’s lawsuit, in conjunction with Pacific Legal Foundation, this rule was illegally adopted without allowing the small business community an opportunity to voice objection.


Case Involvement2016 See the cases the NFIB Small Business Legal Center is fighting in across the US.

D.C. Circuit (nationwide implications) – 4Ninth Circuit (CA, OR, WA, AK, HI, AZ, NV, MT) - 2Federal Circuit (nationwide implications) – 1Fourth Circuit (SC, NC, VA, MD, WV) – 1Fifth Circuit (TX, LA, MS) – 1Sixth Circuit (MI, OH, KY, TN) – 1Eighth Circuit (AR, MO, IA, MN, ND, SD, NE) – 1Eleventh Circuit (GA, AL, FL) – 1

California – 5New York – 3Louisiana – 2Pennsylvania – 2

Wisconsin – 2Georgia – 1Hawaii – 1Kansas – 1

State Court Filings

Federal Court Filings

Maryland – 1Mississippi – 1Oklahoma -1Tennessee – 1


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NFIB SMALL BUSINESS LEGAL CENTER’S AMICUS PROGAM

There really is no secret to the incredible success the NFIB Small Business Legal Center enjoyed in 2016 — it comes from our generous donors who want to ensure that the voice of small business is heard in the courts across the country. In the past year, thanks to its generous supporters, the Legal Center brought the voice of small business to federal and state courts across the country by filing 61 amicus briefs in cases nationwide.


Tort & Lawsuit Abuse20%

Labor & Employment

37%

Property Rights & Tax28%

Other Regulatory 15%

AMICUS BRIEFSFILINGS BY SUBJECT

State Court filings35%

Federal Court of Appeal20%

SCOTUS Cert28%

SCOTUS Merits17%

STATE V. FEDERAL STATE v. FEDERAL

AMICUS BRIEF FILINGS BY SUBJECT


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IN THE NEWS

Federal appeals court: Clean power plan can proceedUSA Today Karen Harned, executive director of the National Federation of Independent Business’ small business legal center, called the ruling “disappointing.” “It allows the EPA to turn the screws on states even though the regulation may be ultimately invalidated.”

Read More: http://goo.gl/gspLFP

Ban the Box: What It Means for Your IT Hiring PracticesInformation Week “According to Elizabeth Milito, senior executive counsel at NFIB, existing statues already protect job applicants, and Ban the Box adds unnecessary administrative expenses to business owners.”Read More: http://goo.gl/4flZBb

Supreme Court blocks Obama climate change rulesCNN Politics Karen Harned, executive director of the National Federation of Independent Business Small Business Legal Center, celebrated the Supreme Court’s action: ”What the court said today is that states cannot be forced to comply with a regulation that it may ultimately decide is unconstitutional. This is a temporary but important victory for small businesses, which were facing substantially higher energy costs.”Read More: http://goo.gl/sAHyCa

Tie goes to the unions: Supreme Court leaves ‘fair share’ fees intact Business Journals “Forcing public employees to finance union activities even when they disagree with those activities is an obvious violation of the First Amendment,” said Karen Harned, executive director of the NFIB Small Business Legal Center.Read More: http://goo.gl/Gb6tJ1

2016 Media Highlights


House Small Business chairman pushes Senate to take up regulatory billThe Hill “The nearly $750 million DOL’s initial regulatory flexibility analysis estimates small businesses would face in new costs during the rule’s first year underestimates the true compliance costs for small business,” said Karen HarnedRead More: http://goo.gl/01hWEH

For peat’s sake: Justices uphold property rights in Clean Water Act disputeUSA Today “The Obama administration’s position would have effectively forced landowners to treat their properties as nature preserves,” said Karen Harned of the National Federation of Independent Business, which represents small businesses. “We are relieved to see the court affirmed the fundamental right of citizens to challenge regulatory overreach.”Read More: http://goo.gl/BvLCek

Appeals court upholds labor union election ruleThe Hill “Small businesses everywhere are extremely disappointed by the decision, which puts employers at a severe disadvantage,” said Karen Harned, executive director of NFIB’s Small Business Legal Center.Read More: http://goo.gl/H3uSjf

New overtime rule probably applies to your small businessThe Chicago Daily Herald “Inevitably, when speaking [at small-business events], I hear, ‘This is the first I’m hearing about this,’ “ says Elizabeth Milito, senior executive counsel.Read More: https://goo.gl/LSEsSn

Overnight Regulation: Obama to halt new Arctic drilling; Judge blocks union ‘persuader’ ruleThe Hill “Small business owners today are relieved that they will still have the right to seek legal advice when facing a union election,” said Karen Harned, executive director of the NFIB’s Small Business Legal Center.Read More: https://goo.gl/FzPr9e


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OUTREACH, MEMBER EVENTS & TESTIMONIES February – Beth Milito presented at a House Education & Workforce roundtable on employment law mandates. February – Beth Milito presented a webinar to IL/NFIB members on unemployment compensation reforms. Karen Harned was a speaker during Georgia Small Business Day at the Capitol. March – Beth Milito was a speaker at the American Bar Association’s Annual OSHA Committee Meeting, Santa Barbara, CA.


April – Beth Milito was a speaker at the PA/NFIB Small Business Day at the Capital, Harrisburg, PA. April – Beth Milito testified before the Senate Small Business Committee on regulatory reform, Washington, DC. May – Beth Milito was a panelist at the Senate Small Business Committee listening session on labor & workforce regulations, Washington, DC. July – Karen Harned was a panelist at Jones Day discussing presidential power as it relates to judicial appointments and executive regulation. August – Beth Milito was a panelist at the National Conference of State Legislatures 2016 Legislative Summit, Chicago, IL. August – Beth Milito was a key note speaker at the Shenandoah Valley Small Business Development Council’s Annual Meeting, Harrisonburg, VA. Luke Wake spoke at an ADA compliance workshop in Sanger, California. September – Karen Harned was a speaker at the Business in the Roberts Court Symposium held at Case Western Reserve University School of Law. November – Beth Milito presented a webinar viewed by over 400 NFIB members on forthcoming DOL overtime rule changes.


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STAFF Karen Harned, Executive DirectorKaren Harned serves as Executive Director of the National Federation of Independent Business (NFIB) Small Business Legal Center, a post she has held since April 2002. Prior to joining the Legal Center, Ms. Harned was an attorney at a Washington, D.C. law firm specializing in food and drug law, where she represented several small and large businesses and their respective trade associations before Congress and federal agencies. She also served as Assistant Press Secretary to U.S. Senator Don Nickles of Oklahoma from August of 1989 to March

of 1993. Ms. Harned received her B.A. from the University of Oklahoma in 1989 and her J.D. from The George Washington University National Law Center in 1995. She is admitted to practice in the District of Columbia.

As Executive Director of the NFIB Small Business Legal Center, Ms. Harned has testified before Congress on the small business impact of regulation and the civil justice system. She also comments regularly on small business cases before federal and state courts, as well as the U.S. Supreme Court on numerous television, radio and print outlets across the country.

Elizabeth Milito, Senior Executive CounselElizabeth Milito serves as Senior Executive Counsel with the National Federation of Independent Business Small Business Legal Center, a position she has held since March 2004. Ms. Milito came to NFIB from the Department of Veteran’s Affairs where she defended the agency in employment and labor lawsuits and was responsible for training and counseling managers on fair employment and HR practices.

Prior to serving as an attorney at the Department of Veteran’s Affairs, Ms. Milito worked as a trial attorney at Nationwide Insurance Company. At Nationwide, she completed over 100 trials to verdict. Ms. Milito was the editor of notes and comments for the Maryland Law Review at the University of Maryland School of Law where she earned her Juris Doctor degree in May of 1996. Following her education, she served as a clerk to the Honorable Alan M. Wilner on the Maryland Court of Appeals, the state’s highest court.


Luke Wake, Senior Staff Attorney Luke A. Wake is a staff attorney at the NFIB Small Business Legal Center. Wake has particular expertise on environmental and land use issues, and has worked on numerous other constitutional issues and matters of importance to small business owners. He is an ardent defender of private property rights, which he believes are essential to the free enterprise system and the foundation of American liberty. As a strong advocate of individual rights and economic liberties, he has built his career defending small business interests.

Since joining the NFIB Legal Center, Wake has focused on a whole host of issues, from employment law matters to regulatory compliance. In addition to serving as a resource for small business owners, Wake remains committed to the Legal Center’s pledge to ensure that the voice of small business is heard in the nation’s courts. As an appellate practitioner, Wake has focused particularly on informing the courts on matters of administrative law and on issues under the Fifth Amendment’s Takings Clause. He is also working to advance small business interests in law review articles, and was recently published in the Georgetown International Environmental Law Review. See Luke A. Wake and Jarod M. Bona, Legislative Exactions After Koontz v. St. Johns River Management District, 27 Geo. Inlt Envtl. L. Rev. 539 (2015). Before joining the Legal Center’s team, Wake completed a prestigious two-year fellowship as an attorney in the Pacific Legal Foundation’s (PLF) College of Public Interest Law. Wake is a graduate of Case Western Reserve University School of Law in Cleveland, Ohio, and is admitted to practice in both California and the District of Columbia. He completed his undergraduate studies at Elon University in North Carolina in 2006 where he focused on political theory and corporate communications.


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2016 DONORSTHANK YOU, from the NFIB Small Business Legal Center.


Activities and Changes in Net Assets 2016 2015 2014 Revenue and Support Contributions $566,287 1,001,837 744,230 Support from NFIB and Other Income $574,434 532,995 405,668 Total 1,140,721 1,534,832 1,149,898

2016 2015 2014 Expenses Program Services $879,839 1,230,360 873,989 Administrative $36,290 39,263 41,311 Fundraising 241,926 232,850 251,712 Total 1,158,055 1,502,473 1,167,012

Revenue Less Expenses (16,742) 32,359 (17,114)

2016 Financials

What Can You Do To Help?

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

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NFIB Small Business Legal Center by making an estate or planned gift to ensure that the Legal Center remains a steady voice for small business in the nation's courts. Such gifts include, but are not limited to, bequests by will or living trust, charitable gift annuities, and a designation in a retirement plan or life insurance policy.

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To make a donation, please send checks, payable to NFIB Small Business Legal Center, to the

following address: NFIB Small Business Legal Center

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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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