Elizabeth Milito is the Executive Director of the National Federation of Independent Business (NFIB) Small Business Legal Center. She has been with NFIB for 18 years as NFIB’s Senior Executive Counsel.
The following has been edited for context and clarity.
Federal Newswire:
What is the Small Business Legal Center?
Elizabeth Milito:
We are NFIB, the nation's largest small business advocacy group, and we represent about 300,000 small businesses across the country, and in all industries. Every state, all industries. I always say NFIB members do everything.
The Legal Center is the voice of small businesses, and we also are an educational resource for small business owners. I do litigation in the courts, and then I do a lot of compliance assistance with small business owners, which is very important.
Federal Newswire:
Is it true that 90% of NFIB's members have 20 employees or less? How do regulations impact these small businesses differently?
Elizabeth Milito:
You are right. Our average member actually probably has 10 employees or less. So we are the small of the small. We are the flower shop, the pizza parlor, the dry cleaner, the auto repair shop, and as I said, our members do everything. They're in every industry, but they are small and they're independently owned and operated. That's the only criteria to belong to NFIB. We do represent franchisees, because they are independently owned and operated. So Subway, McDonald's, Merry Maids, the list goes on and on.
But by and large, our members are very small and they do not have in-house counsel, certainly not with 10 employees or less. They don't even have a professional dedicated human resource employee. So employment issues, like when you're hiring a new employee and all the paperwork you have to fill out, the tax forms that you have to send in, who is that done by? Well, more times than not it's the business owner or the business owner's partner, or it's the person who works in the office who is kind of the jack of all trades. So they're the compliance officer, they're keeping up with any OSHA requirements, they're keeping up with any tax requirements and all that. So it really is challenging for business owners.
Federal Newswire:
When agencies create new rules, why don’t they coordinate to help lessen the burden on small businesses?
Elizabeth Milito:
I think it's because a lot of the bureaucrats and a lot of our elected representatives have never owned a small business. That is why they don't understand. They've worked for government agencies or bigger companies that had HR departments. I always remember shortly after I started at NFIB a meeting over at the Department of Labor with the wage and hour administrator, and it was one of the deputies there who was [saying], "Oh, this new paperwork, well, that's just going to be handled by HR." So this was a Republican, but… it was somebody who's never owned or worked in a small business.
Federal Newswire:
How did COVID affect small businesses?
Elizabeth Milito:
It showed the resilience of small businesses. When that started in March of 2020, I started getting calls from members on the West Coast in Oregon, Washington, because those states were shutting down first. And I [thought], "Oh, this is going to be bad."
I think people in our office here thought I was the Henny Penny running around, "The sky is falling, I think this is going to be pretty bad." And then it was. But at the end of the day, they came through it and the creativity, the flexibility, the resilience shown by small businesses was amazing.
Federal Newswire:
Were there any examples where government flexibility might have helped?
Elizabeth Milito:
I think the restaurants are the greatest example, allowing the outdoor dining. In Maryland, DC and Virginia, we saw [local government] allowing the alcohol takeout, which really helped a lot of restaurants. So you can see how, when necessary, the government bureaucracy could be flexible. I wish that we had seen more of that.
Federal Newswire:
What concerns are you hearing from small businesses at the federal and state level.
Elizabeth Milito:
When I was first at NFIB, we had so much focus [on federal issues]. So you had the federal wage and hour law and now you've got more and more states enacting wage and hour laws and restrictions and benefits and those sort of things. Death by a thousand cuts.
Federal Newswire:
What do people contact the Small Business Legal Center about?
Elizabeth Milito:
It's a lot of uncertainty, uncertainty over what's coming down the pike and how enforcement's going to fall out, [and] with the rules that are on the books too. For instance, we saw in the news how the IRS got more money for enforcement. They're going to hire more agents to scrutinize business taxes. Well, that just creates a lot of uncertainty for small business owners who already [struggle with] taxes. They don't have an in-house accountant, they've got the person in the office who does the books, and they may have an accountant file their annual taxes. But [they are thinking], "Oh my goodness, I'm not sure all my I’s are dotted and T’s are crossed, and now there's even more likelihood that I'm going to be audited. What is this going to cost?" It's just very frightening for a business owner.
Federal Newswire:
What have been NFIB’s biggest successes or highlights over the last 20 years?
Elizabeth Milito:
Our challenge to Obamacare, and unfortunately we can't term it a success. But we really took a stand there. We were the only business group willing to go out there and sue over the law. We were not hesitant. Our members were all in support of that. So that for me was definitely the highlight of the 20 years.
I think more recently, our challenge to the vaccine mandates in 2021, challenging the private sector vaccine mandate requiring that employers have their employees vaccinated or tested. We got that decision just this year. Other business groups were a little bit more hesitant. Our members were all in, "This is something you need to do."
I think the other thing that NFIB really has done well over the last 20 years..is work in all three branches of the government. Our role is so critical to fighting bad regulations, where the rubber meets the road.
Federal Newswire:
Can you explain the relationship between the regulations proposed and the challenges that can be filed if a final rule is not what NFIB members want it to be?
Elizabeth Milito:
That's kind of going back to elementary school where the bill becomes a law and then the law becomes a rule, and then worse becomes worst. That's where the legal center comes in. The middle component there is the regulations. Congress passes a law, and sometimes at NFIB or other associations, you fight against something and it gets passed, and then that's where it is so important for an advocacy group like NFIB to come in and watch carefully and comment on and engage in the rulemaking process. So how is this law going to play out with EPA's rule? How are they going to enforce it? How many enforcement agents are they going to put on the case? Are they going to set up a compliance office? Is there going to be somebody dedicated there to help take calls from small business owners? All those sorts of things are where NFIB and other advocacy groups can weigh in during the rulemaking process.
Federal Newswire:
How about the gig economy rulemaking under the Fair Labor Standards Act? Where do you see it going?
Elizabeth Milito:
Many small business owners started off as a independent contractors. They started off as a consultant. They had one client. That's how they got into business for themselves; they went out on their own.
And I don't know a small business that doesn't use independent contractors for the resources that small business owners don't have. They can't afford to keep a website designer on staff. They just need Bob, their website designer, to come in one or two times a month to update the website there. So they use independent contractors all the time.
It's very important that we have a firm grasp as to who is an employee and who is an independent contractor, and that the definition works in such a way that it's flexible enough for small businesses to engage contractors when they need to do so and that not everybody is classified as an employee. We saw in California, they went too far and then they had to come back with all these exceptions.
Federal Newswire:
Do you have any idea how many small businesses are impacted?
Elizabeth Milito:
I don't have a number, but I know just in talking with members and polling our members too, they use consultants. And they’re outsourcing more. The website example is the greatest example. But [also] payroll. If you're a contractor, you might outsource certain specialized tile work. When you do a high-end bathroom, you only need this high-end tile guy when you're doing these high-end bathrooms. So [that’s] not somebody you're going to keep as an employee year round. So it does come up more times than not in a small business.
Federal Newswire:
How is the joint employer rule proposal important to franchise members?
Elizabeth Milito:
The joint employer proposal is coming from the National Labor Relations Board. And it would make it more likely that two businesses who work with an employee would both be liable for [any] employment law violations. It comes up in the franchise or franchisee, but it also comes up in the contractor, subcontractor context too.
Let me use the example of a big box store. [They] outsource landscaping at many of their stores. So the landscapers are contractors for them. How likely is it now that the big box store is going to exert more control over the contractors because they're concerned about labor violations? Is it likely in situations like that that larger companies are going to say, "You know what, too much risk working with these little guys. They don't have enough policies, procedures, we're just going to bring it all in-house."
Federal Newswire:
If a big box store employs a landscaping company on a contract basis, and one of the employees in the landscaping company is injured because of an OSHA violation, is the contractor that owns the landscaping company liable for the violation, or is the big box store liable? Will they go after the big box store because they've got deeper pockets?
Elizabeth Milito:
That's exactly it. The big box store is going to look at this and say, "Gee, we really need to exert more control over our contractors. Now, anyone who wants to contract with us is going to need to do A, B, C, D. E."
It gets to the point where it's not going to be just small contractors, it's going to be some big operation. Nothing against a larger landscaping business, but we want to look out for the smaller guys who are just getting started, that maybe just operate in one town or one city and aren't necessarily going to have all these policies and procedures.
Federal Newswire:
NFIB recently filed an amicus brief in the case of Glacier Northwest versus International Brotherhood of Teamsters. Can you explain this case?
Elizabeth Milito:
This pertains to damage allegedly caused by some striking workers at a cement plant in the Pacific Northwest. The union called a strike, the workers left the cement trucks full of cement, and walked off the job. The question becomes, is the company–the employer–permitted to sue the union for all the loss of this concrete?
Lots of money is at stake there and the company did all it could to get the machines going with the managers who were on site. But when all your workers go, there [are going to be problems]. So it's a question as to whether a property rights claim can be exerted against a union. We're arguing in this instance, yeah, absolutely. It's not unreasonable for a company to be able to recover damages in an instance like this.
Federal Newswire:
Is your organization planning on filing any other amicus briefs?
Elizabeth Milito:
We are waiting on the Sackett case. This involves the waters of the US and EPA's authority. This is a big one and I think this was argued in the fall.
Federal Newswire:
Will there be certainty in waters of the US issues?
Elizabeth Milito:
I think it's probably going to keep going back and forth. The EPA just released another rule on the waters of the US in December. Of course everybody [thought], "Why are you doing this? You've got to wait till the Supreme Court rules on Sackett. So it really is adding to the uncertainty of any farmer, contractor, or small home builder. [They wonder] "When am I going to need to get a Waters permit?" And they're expensive to get as you know.
