Not all entrepreneurs have a team of trusted lawyers with them all the time to help them make decisions. You might think that knowing how to manage a business is enough, but there’s more to it than marketing and accounting. As an entrepreneur, you must understand the fundamentals of business law to avoid failure and expensive litigation.
Most business owners don’t have the legal experience to prevent such tragedies. As a result, they often feel lost and confused about the proper way to make decisions without putting themselves at risk of legal ramifications.
You don’t need to attend law school to learn the basics. You have to know what’s essential so you can make wise decisions whenever you need to. That said, here are the most critical areas of law every business owner should know:
It’s apparent that employers are responsible for their harmed employees and when their staff cause harm to their colleagues, so long as they are inside the company property or while they are using work equipment. But the truth is, it doesn’t end there.
Employers are still liable for their employee’s safety anywhere, anytime, given that the worker performs his tasks and duties.
For example, if an employee got in an accident on his way to a business meeting to discuss the importance of UPS for research centers, the employer can still be held liable. Even though the employee is using his vehicle, the company he works for is still responsible for the damages. This is a pretty common situation, but it can cause serious consequences for the business.
To protect your business from vicarious liabilities, explain your employee’s job descriptions clearly. Moreover, make sure to have a corporate general liability insurance policy that will cover workers at work and in their personal vehicles.
Rules for Overtime
Working overtime for extra pay is a part of life, especially for a new employee trying to build a career. In most countries, 40 hours is the average mandatory working hour per week, and if the employee worked beyond that, the company must pay for the extra hours.
Some companies are trying to evade overtime pay by categorizing employees as freelancers or contracts. Take note, this is illegal, and it can easily make you an easy target for wage and hour violation lawyers. Many startup companies are already facing legal repercussions over this unlawful practice, so make sure to classify your workers correctly.
If your employees need to work overtime often, pay them accordingly for the extra hours they worked for you. In addition, ensure that your payroll admin is updated on the latest wage and hour laws. You might feel like this is a bit too pricey, but doing so will save you from more expensive litigation costs if you ever get sued.
Exclusive Rights, Trademarks, and Copyrights
Most companies strive to be unique. They try to develop distinctive logos, images, and even company names. Still, if at least one of these things embodies another company’s intellectual property, they might take legal actions against you.
The law for intellectual properties also covers patents, which protect inventions, artistic creations, copyrights, and trademarks owned by different brands. The common punishments for violating intellectual property law include injunctions and monetary penalties, both of which can destroy a small company.
Knowing what comprises intellectual property could be helpful, but that won’t always be enough. However, you can prevent this from happening to you by retaining a lawyer. Yes, it can be costly, but a good lawyer can be the only one to save you from groundless accusations. Your lawyer can also warn you about possible violation issues due to your planned actions.
Why You Need to Understand the Law
Every entrepreneur faces various business problems all the time. And while some of these issues are unavoidable, there are ways to protect yourself from unanticipated legal lawsuits. Understanding how business law work is vital to ensure smooth business operation. Here’s why knowing these laws is beneficial:
- Reducing, or if not, avoiding legal costs.
- Give the company the recognition it deserves.
- Understanding the law is a helpful business strategy, especially for startups.
- Allows the company to strategize efficiently.
As mentioned, you don’t need to have a doctorate in law to manage your business effectively. But as a business owner, you have the responsibility to acquire sufficient knowledge to prepare yourself for potential legal affairs.
It’s also important to remember that the government has the power to change corporate policies and regulations once in a while, so it’s vital to stay updated about these regulations. Therefore, if you want to be one step ahead, stay updated with government laws.
Long-term and costly litigation can pull down even the most successful businesses. Learn, and educate yourself on applicable law so you can protect your company from such matters.