Business law, which is also called commercial law, is a body of laws that govern business entities as well as commercial transactions. These laws are the regulatory compliance laws that businesses must comply with in order to legally operate.
For example, if an individual wanted to open a clothing company today, business laws would dictate how the individual would organize and register their company as well as how they would pay their employees. Business laws would even regulate how the individual would legally ship their clothing merchandise to their customers overseas.
Business laws govern numerous different aspects of a business. In addition, the business laws that apply may vary based upon the type of business, for example, whether it is private or public or a for profit or a non-profit business.
These laws may also vary depending on the business structure, for example, whether it is a corporation or a general partnership as well as by jurisdiction. Examples of specific business laws include, but are not limited to:
Most of the antitrust laws originated from The Sherman Antitrust Act of 1890. Antitrust laws are laws that assist in regulating the organization and conduct of a business in order to ensure fair competition as well as to protect consumers from any oppressive business practices.
The Act is used to prevent monopolies and to restrict business activities that affect interstate commerce and could potentially harm consumers. The Lanham Act, also referred to as The Trademark Act of 1946, is a federal law that regulates:
- Service marks; and
- Unfair competition.
If an individual created a trademark for their clothing company in the example above, they could register their unique trademark to receive certain legal protections under this act. The Securities Act of 1933 requires that a business provide its investors with certain financial information prior to investing in the company.
This act also applies when a business wants to go public, for example, with an initial public offering (IPO). The Federal Tax Code falls under standard business laws and tax laws.
This code governs 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 as well as overtime pay.
This act applies to the majority of public and private businesses. Therefore, if the clothing company in the above example has non-exempt employees, it 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 hours worked.
What is Regulatory Compliance?
Regulatory compliance refers to the concept that all businesses need to follow certain business guidelines and laws when conducting their business operations. These laws, in general, have to do with practices that involve:
- Wage and hour issues;
- Health and safety codes;
- Stocks and other corporate security interests; and
- Business property.
Compliance laws help ensure that a business is operating fairly and that the public is not being exposed to dangerous or misleading practice. The failure to comply with these statutes and laws may result in negative consequences for an organization.
What is Business Non-Compliance?
Business non-compliance arises when a business fails to comply with the requirements that are outlined in:
These areas of law are commonly referred to as regulatory compliance laws. These laws help ensure that all businesses are engaging in fair, reasonable, and honest practices.
Business non-compliance may happen in many different ways and may involve multiple areas of law. Many businesses hire professional individuals who work internally to ensure that the company maintains compliance with all of the laws that apply to the business.
What are Some Examples of Non-Compliance?
Non-compliance usually refers to conduct that is illegal under state laws or federal business laws. Common examples of non-compliance may include, but are not limited to:
- Tax evasion;
- Altering financial accounts or records, known as cooking the books;
- 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 and hour violations.
How is Compliance Enforced?
Business regulatory compliance is a broad area of law. Enforcing the numerous regulations and laws requires the involvement of many lawmakers, agencies, and individuals.
Compliance may be enforced through:
- Compliance agents who are hired to work internally for the company;
- Government departments and agencies such as the SEC, or the U.S. Securities and Exchange Commission;
- Acts and statutes including the Sarbanes-Oxley Act; and
- State and federal enforcement authorities.
Enforcement of compliance laws may involve:
- Injunctions to change policies; and
- Other remedies.
In certain serious cases, criminal charges may also be filed against the individuals or businesses responsible for the non-compliance.
What is The Sarbanes-Oxley Act of 2002?
The Sarbanes-Oxley Act of 2002, also called SOX, is a securities law that was passed by Congress in response to the high-profile financial scandals at Worldcom and Enron. SOX was implemented to protect the general public as well as stockholders of companies from accounting errors and fraudulent practices in the finance world.
SOX provides rules that outline how and when businesses are required to keep their financial records. SOX also places regulations upon the professional behavior of executives and upper management in companies.
SOX is enforced by the Securities and Exchange Commission (SEC).
If a business fails to comply with SOX, it can face:
- Hefty fines;
- Imprisonment for the individuals who did not comply; or
- A combination of fines and imprisonment.
What are Some Legal Consequences of Non-Compliance?
There are numerous legal consequences that a business may face for non-compliance. These consequences are often very strict and may include:
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 a business operating license; or
- Criminal charges, for example, for white-collar crime violations.
If a business is found to be non-compliant, it may also be required to take additional steps to fix the issue. This may include revising employment hiring policies or revising their accounting procedures.
In many non-compliance cases, a supervisor or a manager may be replaced if they are found to be responsible for the non-complying conduct.
Do I Need a Lawyer for Help with Regulatory Compliance Issues?
Regulatory compliance is a very important aspect of running any business. It may be helpful to consult with a business lawyer if you need assistance with compliance matters or simply to ensure your business is in compliance with all of the applicable laws.
Your attorney can provide you with advice and information regarding how the laws may affect your business practices. If you are required to file a lawsuit involving compliance issues, your attorney can represent you in court.
In addition, if your business is facing consequences for non-compliance your attorney can defend your business in court. As compliance issues involve multiple complex laws, it is in your best interest to have a lawyer defending your business.