Shakespeare in Henry VI said “Let’s kill all the lawyers,” and I bet many people still agree. But you can’t escape the impact that lawyers and courts have on our businesses and our lives. The U.S. Supreme Court is, as the name implies, supreme…the final word on the legality of a matter. The Court meets from the beginning of October through the end of June. During this period—the Court’s 2024-2025 term—a number of important decisions were handed down that affect small businesses. While these decisions did not directly involve small businesses, owners should pay attention. This blog covers decisions through June 15, 2025, and apologies for some legalese that can’t be avoided. Additional decisions are covered in Part 2.
No discrimination in discrimination actions
Employees who are discriminated in the workplace on the basis of sex or sexual orientation have grounds for an action again their employers under Title VII of the Civil Rights Act of 1964.
Case: A heterosexual employee who’d received positive performance evaluations was demoted while a gay employee received a promotion. The straight employee sued on the grounds of discrimination, but a lower court ruled against her saying she lacked “background circumstances” necessary to establish her case based sexual orientation.
Decision: The Court held unanimously in her favor. The Court made it clear that a majority-group plaintiff does not have to prove anything different from a minority-group plaintiff to establish a case of discrimination.
Retirement plan fiduciaries beware
Fiduciaries of qualified retirement plans are prohibited from engaging in certain transactions with “parties of interest” (e.g., owners, officers, and relatives of parties-in-interest). But this prohibition doesn’t apply to any transaction involving contracting or making reasonable arrangements with a party in interest for office space, or legal, accounting, or other services necessary for the establishment or operation of the plan, if no more than reasonable compensation is paid. The question was raised whether a suit against a fiduciary must allege that the exception does not apply.
Case: Employees and former employees at Cornell University sued the fiduciaries of their defined contribution plan claiming that fiduciaries paid unreasonable recordkeeping fees but didn’t specifically say whether the exception applied.
Decision: A unanimous Court said a plaintiff need only plausibly allege the elements of a prohibited transaction, without addressing potential exceptions. This decision makes it easier for employees to sue their employers for retirement plan violations.
Prove exemption from overtime pay rule
The Fair Labor Standards Act (FSLA) requires employers to pay time-and-a-half to employees who work more than 40 hours a week. But this rule does not apply if employees are “exempt.” Exempt employees include executive, administrative, professional, computer, and outside sales employees receiving compensation over a set amount. What does an employer need to show in order to prove that employees are exempt: preponderance of the evidence or clear and convincing evidence? The first is a lesser standard.
Case: Three sales representatives of a company sued their employer, claiming they were entitled to overtime pay. The employer said they were exempt employees because they were outside sales employees. The question for the court was the standard used to make a determination.
Decision: A unanimous Court said that the preponderance of the evidence standard applies. This is so even though the lesser standard of clear and convincing evidence applies in some other employment-related situations. This case is a win for employers; they only need to meet the lesser standard of preponderance of the evidence in demonstrating that employees are exempt from minimum wage and overtime rules.
TikTok is still here
The social media platform has about 170 million U.S. users, and more than 7.5 million businesses, many of them small businesses, use TikTok for promotion. Nonetheless, there are serious national security concerns about the platform, and a 2024 law—the Protecting Americans from Foreign Adversary Controlled Applications Act—required the platform to divest from foreign ownership. It was supposed to take effect on January 19, 2025 (and there was a brief shutdown), but the ban was extended for 75 days, and then another 75 days (through June 19, 2025), and then yet another (through September 17, 2025).
Case: TikTok and 8 individual TikTok creators, among others, claimed the law violated their First Amendment Right to free speech.
Decision: The Court said the law does not violate their rights to free speech. By not blocking the legislation on the grounds of free speech, the ability of the government to shut down TikTok remains.
Final thought
A decision by the U.S. Supreme Court becomes the law of the land. It’s up to businesses to live with these decisions, unless and until Congress passes new laws.
Other blogs written concerning legislation affecting small businesses can be found here.
