Most business owners are familiar with the laws that impact their business – in logistics? Then you know laws about how long a driver can drive and weight limitations. In manufacturing? You know about bills of lading and various shipping terms. But the laws that could have the most impact on your business (meaning highest liability risk) you may not be as aware of. Business owners should familiarize themselves with the essentials of business law in order to avoid potentially devastating litigation. While some federal business laws only apply to businesses with 15, 20, 50 or even 100 employees, others apply to businesses with even a single employee. A brief overview of three areas of law that all business owners should be aware of will help business owners make lawful decisions that can help protect their company.
Family-Owned Business or Privately-Owned – You still need to be familiar with the FLSA – The Fair Labor Standards Act
Established in 1938, the Fair Labor Standards Act covers such topics as minimum wage requirements, overtime pay and limitations, record keeping requirements, and youth employment regulations that affect both part time and full time employees who are nonexempt. Nonexempt employees are those who are subject to timekeeping requirements as well as overtime requirements. Regulations pertaining to nonexempt employees include:
- Employees are required to keep track of the hours they work.
- Employees who work more than 40 hours in a work week must be paid overtime unless there are differing state regulations pertaining to daily overtime requirements.
- The rate of overtime pay for more than 40 hours worked in a workweek must be at 1 1/2 times the employees regular rate of pay.
The Act does not cover such topics as when raises must be payable, or that workers receive premium pay for holidays and weekends. Vacations, sick leave and rest/ meal breaks are not covered under this Act either. Additionally, it is illegal for employers to withhold charges or costs for company required uniforms, tools and other equipment under the Act.
While making a determination about which employees are covered under the Act is relatively simple, it is an area of the law that is commonly broken, whether business owners do so knowingly or not. While some employers attempt to dodge the requirements for timekeeping and overtime by classifying their employees as independent contractors, others are in violation of the law due to simple mistakes in the classification of their employees. Proper classification of employees is essential for business owners as well as for large corporations, and business owners should keep in mind that while the majority of salaried workers are exempt, some salary positions are actually covered under the Act. Business owners who are unsure about how to classify their employees can get advice from an experienced business lawyer to ensure that they are in compliance with the law.
Vicarious Liability (What Employer Liability Risks exist for things your employees do)
In certain situations, businesses can be held liable for injury or property damage caused by their employees. Most business owners are aware of the risk when an employee is using company equipment or if the employee was on company property at the time of the incident. What if the employee was off site but “on the job” at the time of the incident? Many business owners don’t realize they may be held responsible for accidents or injuries that occur while the employee is performing job duties off the premises as well. What if an employee is just picking up lunch for some coworkers, is texting and driving and gets into an accident? Under the “Distracted Driving Act” it is illegal to text and drive in Illinois. The business could be held liable for any injuries or damages that are incurred by the employee, his or her vehicle, and that of anyone else involved.
Employers can lower their risk of being the victim of a vicarious liability lawsuit by purchasing workers’ compensation insurance (which is required by law), clearly defining their employees’ job descriptions and opting for a commercial general liability insurance policy that covers employees who conduct work in private vehicles. Alongside these options, Employers should consider having their employees sign agreements promising to not “drive distracted” and to hold the employer harmless for any liability if they do.
Closely-Held Businesses or Start-Up Businesses are at risk when they don’t protect their Intellectual Property
Patents, Copyrights, Trademarks and Trade Secrets
Using someone’s intellectual property without permission can result in significant consequences down the line. Intellectual Property Law covers the use of trademarks, patents and copyrights. It protects such things as inventions, artistic creations, and brands. Punishments for violating Intellectual Property Law can range from severe monetary penalties to injunctions.
While understanding what constitutes intellectual property is essential, it isn’t necessarily sufficient to protect your key business assets. The world is filled with individuals and companies who register as many patents and trademarks as possible in order to file frivolous lawsuits against businesses. While many small businesses wish to avoid the expense of retaining a business lawyer who can advise them about researching and filing trademarks and patents and warn them of potential conflicts, doing so could cost a business thousands in the end.
Many businesses are familiar with copyrights and patents – but neglect their Trade Secrets. Information that your business has created in order to function may be trade secrets. Examples of trade secrets include customer lists, supplier lists, pricing and margins, formulas, and other methods of operation. This type of intellectual property (IP) is valuable to you only as long as you keep it secret. The Small Business Association has provided examples of steps to take to help protect these assets. But just learning more about the laws can be the most important first step.
Even the most successful family-owned business can be devastated by expensive litigation and baseless lawsuits. Familiarizing themselves with the basic essentials of areas of the law that could affect their business, however, is the first step for small businesses to achieve the protection necessary to avoid being sued.
Should you have any questions about FLSA, Employer Liability, Intellectual Property or any other law that may affect your business, or would like to schedule a free initial consultation, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.
This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.
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