the official believes items will be removed prior to obtaining a warrant). The Fourth Amendment protects
individual organizations and places of business, as well as residences. However, under the terms of the
pervasive-regulation exception, administrative agencies can conduct warrantless searches of businesses
attached to industries that have a long history of pervasive regulation. For example, public health agencies are
allowed to conduct warrantless searches of stone quarries, as authorized by the Federal Mine Safety and
Health Act of 1977.
The Fifth Amendment
For commercial enterprises and businesspeople, it is the due process clause of the Fifth Amendment that
offers the most extensive protection. The clause states that the government cannot take an individual’s life,
liberty, or property without due process of law. Specifically, there are two types of due process:
•
Substantive due process means that laws that will deprive an individual of his or her life, liberty, or
property must be fair and not arbitrary. Laws passed should not affect fundamental rights, and
regulations are required to meet the rational-basis test. In other words, the government must
demonstrate that the law bears a rational relationship to a legitimate state interest. Many regulations
affecting commercial activity, such as banking regulations, minimum wage laws, and regulations
inhibiting unfair trade, have been tested against the rational-basis test.
•
Procedural due process means that governments must use fair procedures when depriving an individual
of his or her life, liberty, or property. This status quo does not only apply to federal criminal proceedings.
For example, if a government employer discharges an employee from his job, or if the government
suspends the driver’s license of a worker, the employer must follow procedural due process.
Another clause contained in the Fifth Amendment that is relevant to commercial enterprises is the takings
clause. According to this clause, when the government seizes private property for public use, it is required that
the government pay the owner just compensation for the property. Just compensation is understood to be
equivalent to the market value of the property. This clause has been broadly interpreted. For example, if
environmental or safety regulations significantly impact the way in which a property owner can use his or her
land for economic gain, the regulation can essentially be deemed as depriving the owner of his or her land,
and the owner is entitled to compensation.
It is important to note that the privilege against self-incrimination, established under the Fifth Amendment
(usually interpreted as the right to remain silent), only applies to sole proprietorships that are not legally
distinct from the individual who owns them. Custodians and agents of corporations do not enjoy this privilege.
50
Chapter 4 Business and the United States Constitution
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