Business law, also referred to as commercial law, is the body of laws that govern business entities and commercial transactions. For example, if an individual wanted to start a shoe company today, business laws would dictate how they would organize and register their company as well as how they would pay their employee. It would even regulate how they would legally ship their shoe merchandise overseas to their customers.
As can be seen from the previous example, business laws apply to many different aspects of a business. Additionally, business laws vary based on the type of business, such as private vs. public, for profit vs. non-profits, etc., the business structure, such as a corporation vs. a general partnership, and by jurisdiction.
Specific examples of business laws include:
- The Sherman Antitrust Act of 1890;
- The Lanham Act;
- The Securities Act of 1933;
- The Federal Tax Code; and
- The Fair Labor Standards Act (FLSA).
The majority of antitrust laws originated from The Sherman Antitrust Act of 1890. Antitrust laws assist in regulating the organization and conduct of businesses to ensure fair competition and protect consumers from any oppressive business practices. This Act is used to prevent a monopoly and to restrict business activities that affect interstate commerce and could harm consumers.
The Lanham Act, also called The Trademark Act of 1946, is a federal law that regulates trademarks, service marks, and unfair competition. Therefore, if an individual created a trademark for their shoe company discussed in the example above, they could register their unique trademark and receive certain legal protections under this act.
The Securities Act of 1933 requires businesses to provide investors with specific financial information prior to investing in the company. This act also applies when a company wants to go public, such as with an initial public offering (IPO).
The Federal Tax Code falls under standard tax law and business laws. It is very important for any business. It covers many aspects of the business from how to tax employees to how to file federal income taxes for the business.
The Fair Labor Standards Act (FLSA) outlines the standards for employee wages and overtime pay. This act applies to most public and private businesses. Therefore, if the shoe company in the above example has nonexempt employees, they will be required to pay them at least the federal minimum wage as well as one and a half times their normal rate of pay for any overtime.
What are Different Types of Business Law?
As previously noted, there are many different types of business laws that affect many aspects of any business. Business law includes federal, state and local laws and regulations. Under the large category of business law are multiple specialized subcategories. Common examples of subcategories of areas of law that may apply to businesses include:
- Business formation or dissolution;
- Commercial law;
- Contract law;
- Securities law;
- Intellectual property law;
- Antitrust laws;
- Corporate law;
- Bankruptcy laws;
- Employment law;
- International business laws; or
- Tax law.
Within each of these subcategories exists even more subcategories. Given the amount and intricacies of such laws, it is essential to consult with a local business attorney for advice on any business issues.
For example, the specific area of business law known as employment law would cover issues such as:
- Paying employees;
- Providing employee work benefits; and
- Arranging employee work schedules.
If an individual is starting a new business, this would involve business laws such as state statutes regarding business formation and structures, state tax laws, and the Federal Tax Code. Both state and federal laws would apply if the business owner decides to register intellectual property, including copyrights or trademarks of the business.
Large portion of business law involves commercial law and contract law. Commercial law and contract law governs many aspects of business, including:
- Business deals;
- Sales transactions; and
- Employee non-disclosure agreements.
Contract law is arguably the most important subcategory of business law because it regulates so many aspects of a business. Contract law regulates business operations, including:
- Merging with another business;
- Forming agreement with distributors to sell products; or
- Providing a service to customers.
What is Business Non-Compliance?
Business non-compliance occurs when a business fails to comply with requirements contained in:
- Business laws;
- Guidelines; or
These areas of law are often referred to as regulatory compliance laws. These laws help to ensure that businesses are engaging in fair, reasonable, and honest practices.
Business non-compliance can occur in many forms and involve multiple areas of law. Many businesses hire professionals to work internally to ensure the company maintains compliance with laws that apply to the business.
Regulatory compliance laws refer to the concept that all businesses need to follow certain business laws and guidelines when conducting business operations. These laws generally involve aspects of the business, including:
- Wage or hour issues;
- Health or safety codes;
- Stocks or other corporate security interests; or
- Business property.
Regulatory compliance laws are in place to ensure that a business is operating fairly and that the public is not being exposed to dangerous or misleading business practices. If a business fails to comply with these laws and statutes, it may face negative consequences.
What are Some Examples of Non-Compliance?
Non-compliance typically refers to conduct that is illegal in light of state or federal business laws. Common examples of non-compliance may include:
- Tax evasion;
- Cooking the books, or altering financial accounts or records;
- Unfair or discriminatory hiring practices;
- Violations of health or safety laws;
- Financial non-compliance;
- Unfair competition; or
- Deceptive trade practices.
Other, less common examples of non-compliance may include slander or defamation, false advertising, or wage or hour violations.
What are Some Legal Consequences of Non-Compliance?
There are legal consequences that businesses may face for non-compliance which can often be very strict. These may include:
- Civil fines;
- Suspension or loss of business operating licenses; or
- Criminal charges, for example, for white-collar crime violations.
A business found to be non-compliant may also be required to take additional steps. These may include changing employment hiring policies or reworking their accounting procedures. In a large number of non-compliance cases, supervisors or managers may be replaced if they are found responsible for the non-complying actions.
How is Business Compliance Enforced?
Business regulatory compliance is a major and complex area of law. Enforcing these laws requires the involvement of many different individuals, agencies, and lawmakers. Business regulatory compliance enforcement may occur through:
- A compliance agents who is hired to work internally for the company;
- A government department or agency, such as the U.S. Securities and Exchange Commission (SEC);
- An act or statute such as the Sarbanes-Oxley Act; or
- State or federal enforcement authorities.
Enforcement of business compliance laws may include fines, an injunction requiring the business to change its policies, or other remedies. In more serious cases, criminal charges may be filed against the individuals responsible for the non-compliance.
Do I Need a Lawyer for Help with Non-Compliance Issues?
Yes, it is essential to have the assistance of a business lawyer with any non-compliance issues. Compliance laws can be very complex and have a major effect on a business. As noted above, they may cover multiple areas of law. An attorney can review your case, provide advice on resolving any legal compliance issues, and represent you during any court proceedings, if necessary.
Your lawyer can also help you prior to any disputes or issues arising. A lawyer can review the policies and procedures that are in place and ensure your business is compliant with all relevant and applicable laws.