With the abundance of business laws that are in place, it’s impossible for business owners to know every single one of them. Most businesses have a good idea of what not to do in order to avoid legal trouble, but there are certain cases wherein a business could be breaking the law unintentionally.
Unfortunately, lack of knowledge is not an acceptable excuse in court. To avoid legal trouble for your business, check to make sure you’re not breaking the law unintentionally through these ways.
Unintentionally destroying documents relevant to litigation
If your business is involved in litigation, you are legally obligated to refrain from destroying any relevant documents. This includes both physical and digital documents. Therefore, you must ensure that you and your employees do not accidentally delete documents that are relevant to the case. Any deletion of things that can be classified as evidence, even accidental, can be used against you in court.
Take a car accident involving your company vehicle as an example. Before you even get an experienced car accident attorney, refrain from deleting anything related to the incident, including documentation of the scene, text messages, and information of the other driver.
Not having workers’ compensation
Check with your local regulations regarding the workers’ compensation requirements and guidelines. Even if you have only one employee, you may still be required to have workers’ comp coverage. Failure to comply with state regulations can lead to penalties with the Department of Labor, which can be a big problem especially for small businesses with limited cash flow as it is.
A common mistake among business owners is misclassifying employees as independent contractors to avoid tax obligations. When caught, this can lead to hefty tax penalties and other legal consequences. The same is true for businesses that misclassify salaried employees as exempt from overtime wages when in fact, they are entitled to overtime pay according to the Fair Labor Standards Act.
Selling recalled items
It is the responsibility of a business to check the Consumer Product Safety Commission’s websites for product recalls regularly. If you unintentionally keep selling a recalled product, not knowing that the product has been recalled is not an excuse. To avoid this costly mistake, make it a point to check the CPSC’s list regularly, especially if you sell items that are used by high-risk populations such as the elderly and infants.
Failure to comply with new local laws
Business laws change all the time, and failure to comply with the changes can lead to liability problems that are often costly. Hiring legal counsel for your business is an excellent way to stay on top of these laws. In this way, you are immediately informed of significant changes in the law that apply to your business and can therefore make necessary changes soon after. As opposed to being caught by surprise by compliance issues, spending money on a business lawyer can save you more money in the long run.
Improper spending of investor funds
Dipping into investor funds for personal gain is more than just an unethical business practice; it’s a criminal offense. Hence, every time you take money from people in trust, never spend it on something that can make you look suspicious, such as a new sports car or a fancy new watch. If you get caught misusing investor funds, not only will you lose the trust of your investors, but you may also land in legal hot water.
Underpaying employees for by piece work
If you pay your workers by piece work, you are required to pay minimum wage whether or not they have done enough work to make that amount. Failure to do so is a violation of federal, municipal, or even state laws.
As you can see, there are more than a few ways that businesses can inadvertently break the law. The best way to avoid these issues is to be proactive in ensuring that your business is compliant, and this is best done with the help of a reliable business lawyer.