An estimated 45% of small businesses don’t make it past five years. Shawn Alexander’s passion to run his own engineering firm outweighed any concerns over those odds, and in 2016, he started TWISM Enterprises, LLC, in Cincinnati, Ohio.
Two years after launching his business, the State Board of Registration for Professional Engineers and Surveyors notified Shawn that TWISM hadn’t yet obtained a “Certificate of Authorization” required under state law for engineering services.
Shawn immediately halted all business operations so he could apply for, and secure, a certificate from the board. Shawn filled out the application as instructed, designating the Ohio-registered engineer he had hired as the firm’s full-time engineering manager.
The board, however, denied the application because Shawn’s designated engineer was an independent contractor and not an employee. While the license law requires a full-time engineer, nowhere does it state the word “employee.” The board itself defines “full-time” as working substantially all of a firm’s engineering hours.
Because TWISM’s engineering manager met the legal requirements and because, as a small, startup company, it had to economize, Shawn challenged the board’s denial in court. There, his efforts to run his business instead ran into another roadblock.
Judicial deference, as it’s known, is a dubious legal doctrine through which judges defer to an agency’s interpretation of supposedly ambiguous laws, essentially rubber-stamping agency decisions. In Shawn’s case, courts leaned on judicial deference to adopt the board’s interpretation, according to which, that Ohio law did not allow independent contractors to serve as a company’s engineering manager.
Ohio’s unfair deference doctrine has a federal counterpart known as “Chevron deference” that requires judges to defer to federal regulators’ interpretation of laws they carry out. Agencies win nearly 80% of cases when Chevron applies, compared to 38% when courts don’t put a thumb on the scale in the government’s favor.
Whether it’s the state or federal level of government, such deference violates the constitutional separation of powers, whereby the judiciary alone says what the law is.
For Shawn, it’s meant three years of lost business opportunities and ongoing regulatory limbo.
So he fought back – and won! Represented at no charge by Pacific Legal Foundation, Shawn appealed his case to the Ohio Supreme Court, which ultimately sided with Shawn. The court confirmed that, under the Ohio Constitution’s separation of powers, judges are obligated to independently review questions of legal interpretation. The Court ended Ohio’s unfair deference doctrine and restored Shawn’s right to earn an honest living.
“We reaffirm today that it is the role of the judiciary, not administrative agencies, to make the ultimate determination about what the law means,” wrote Justice R. Patrick DeWine in the opinion. “Thus, the judicial branch is never required to defer to an agency’s interpretation of the law.”
Ohio joins at least eleven other states that have taken steps to end deference. From Mississippi to Utah, state supreme courts have struck down deference as confusing and against the principles of separation of powers.
PLF was assisted in this case by attorney Dale A. Stalf, from Wood + Lamping.