What Small Business Owners Should Watch for in the Supreme Court's New Term

Date: October 17, 2017

Here are the major Supreme Court cases that could affect you in the 2017-2018 term.

The Supreme Court is back in session with Justice Neil Gorsuch’s highly anticipated first full term on the bench, after filling Justice Antonin Scalia’s seat in April. There are many high-profile cases to watch out for in this 2017-2018 term that could affect small business operations. In the coming months, NFIB will be asking the Court to hear more cases for small business owners. Here are the top issues small business owners should be following in the Supreme Court’s new term—many of which are already underway:

Arbitration Agreements
On the first day back in session, the Supreme Court considered three consolidated cases about whether employers can require their workers to sign arbitration agreements in employment contracts. The Federal Arbitration Act guarantees the right to enter and enforce arbitration agreements, but some lower courts have ruled that employers cannot require employees to enter into these agreements because they waive the right to class action lawsuits. In those rulings, the arbitration agreements were ruled in violation of the National Labor Relations Act because it limits legal options for employees.

NFIB argues that the Federal Arbitration Act protects the freedom of contract, and that there is no legal basis for denying employers the right to use arbitration. Class action lawsuits are very costly and time-consuming, and arbitration can serve as a much more effective way to settle disputes.

Public Employee Unions
The Supreme Court has agreed to hear a case that could overturn a four-decade-old precedent, which authorizes states to require that public employees financially support public employee unions. NFIB believes that labor unions shouldn’t have the authority to force workers to pay for union representation or services. Workers also shouldn’t be coerced into affiliating with a union with which they disagree.

Overcriminalization of Tax Law
In a case that would affect any small business taxpayer, the Court is considering whether federal prosecutors went too far in charging a business owner with obstruction of justice for failing to keep records that were not affirmatively required by law. The government has argued that business owners can be prosecuted for making a potential Internal Revenue Service audit more difficult. NFIB argues that the provisions outlining what constitutes obstruction should be construed more narrowly, so that only acts intended to interfere with a pending legal action or audit are considered a crime.

Karen Harned, Executive Director of the NFIB Small Business Legal Center, says that this is a big issue that could affect many small business owners. “It could subject a lot of NFIB members and other small business owners to criminal charges, not trying to do anything illegal,” says Harned. “But, if they happen to get rid of a receipt or other paperwork that the IRS subsequently wants for an audit, they could be subjected to criminal prosecution if the court doesn’t rule our way.” The Court will hear arguments on this issue on December 5, says Harned.

Clean Water Act Jurisdiction
A lawsuit filed by NFIB challenged a proposed expansion of the Clean Water Act regulation, which would have burdened many small business landowners. The Supreme Court heard the case on October 11, and will need to decide which court determines the limitations of the CWA. NFIB argues that the challenges should be heard in local courts that better understand local topography and are closest to affected landowners, not appeals courts that could be hundreds of miles away. 

Car Dealer Service Advisors
The Supreme Court has agreed to consider whether car dealer service advisors qualify for overtime pay under the Fair Labor Standards Act. Because service advisors are often able to make commissions, many car dealers exempt these workers from overtime pay. However, depending on how the Supreme Court rules, service advisors across the country could be eligible for overtime pay. NFIB is planning to file a brief at the end of October, according to Harned.


Reason for Optimism as the Supreme Court Winds-Down its Term? 

NFIB Legal Center Urges Supreme Court to Reverse a Three Decades Old Precedent

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