The NFIB Small Business Legal Center has been busy vigorously defending small business at all levels of the judicial system. In the past year, the U.S. Supreme Court heard a number of cases that will impact businesses throughout the country. The NFIB Small Business Legal Center participated in seven of the Court's most critical cases and scored two important victories for small business.
Unfortunately, the 2007-2008 term is likely to receive mixed reviews from the business community. While the Court provided small business with several important victories, many of the Court's decisions in the area of employment law do not favor employers and will make it much harder for small business owners to defend themselves against allegations of discrimination.
Below are brief explanations of the most important decisions so from the term, which ended June 26. For the latest on our work, please visit nfiblegal.com.
NFIB victories
Employers' right to communicate with workers
The win: The NFIB Legal Center scored an important victory when the court rejected California's attempt to restrict employers' communication with workers during a union drive. NFIB's friend-of-the-court brief argued for a balance of rights between labor and management.
Small business benefit: Small business owners deserve the right to communicate with their workers, in a non-coercive manner, during a union organization drive. This decision will allow California small business owners the rights provided to them under the National Labor Relations Act, and serves as a warning to other state legislatures considering regulating employers' speech.
Testimony by “me-too” witnesses
The win: In a critical employment law case, Sprint v. Mendelsohn, the court ruled that courts are not required to admit “me-too” evidence – testimony by non-parties – in employment law discrimination cases.
Small business benefit: If trial courts were required to admit “me-too” evidence, then in every employment discrimination case, an employer would face litigating not only the decision being challenged, but also the circumstances of every termination or other adverse employment action taken against each of the “me-too” witnesses.
Court decisions negatively impacting small business
Despite the aforementioned victories, the court's employment law decisions proved disappointing and will make filing employment lawsuits even easier. These rulings are particularly troublesome when one considers that on average 550 employment lawsuits are filed in the United States every day and the cost to defend an employment case through trial can exceed $150,000.
Age discrimination lawsuits
The case: In Meacham v. Knolls, the court determined that when older workers are disproportionately affected by employment decisions, the employer bears the burden of showing that reasons other than age discrimination were responsible for the outcome.
Why it's bad for small business: The court's ruling will make it easier for workers to pursue age discrimination lawsuits.
The case: In Federal Express Corp. v. Holowecki, the court sided with employees who had argued that the filing of a simple intake questionnaire is tantamount to filing a charge of discrimination.
Why it's bad for small business: This decision may allow certain informal filings to be recognized as a charge for discrimination purposes – thereby increasing the number of claims allowed to move forward.
Retaliation claims
The case: In CBOCS West v. Humphries, the court provided workers with another bite at the apple when it ruled that retaliation claims can be brought under both Title VII and Section 1981 of the Civil Rights Act.
Why it's bad for small business: The court's ruling will be detrimental to employers because Section 1981 essentially prevents employers from fairly defending their actions against a retaliation claim. Safeguards such as timeframes for when a claim must be filed protect employers from defending themselves against stale claims and give employers an opportunity to address alleged acts of discrimination prior to a lawsuit being filed. These provisions are not found in Section 1981.
Arbitration
The case: The court's decision Hall Street Associates v. Mattel will preclude parties from contracting for expanded judicial review of arbitration decisions under the Federal Arbitration Act.
Why it's bad for small business: NFIB's brief argued that allowing parties the right to contract for expanded judicial review would have made arbitration a more attractive option for small business owners.
Tax law
The case: In a critical tax matter, U.S. v. Clintwood Elkhood Mining, the court sided with the Internal Revenue Service and ruled that taxpayers have just three years to file a claim for refund of an unconstitutional tax assessment.
Why it's bad for small business: NFIB had argued that taxpayers were entitled to six years under another federal law.
