Today’s business owners have a wide array of concerns, not the least of which is turning a profit in what can be a volatile economy. However, financial success is of little consequence if the government compels you to dissolve your company for failing to comply with legal requirements.
Corporate compliance involves adhering to a wide range of laws and standards designed to protect a business’ agents, employees and other stakeholders. From obeying safety guidelines, to following standards for payment of wages and pensions, businesses must comply with local, state and federal laws at all times.
Because of the vast number of government guidelines for compliance, it can be easy for business owners to find themselves in violation, leaving their companies open to penalties and even dissolution. Having a complete and thorough understanding of corporate compliance is crucial to protecting your business in the years to come.
Consequences for Failing to Comply
Failing to meet all state and federal guidelines for compliance can result in serious consequences for your business. Along with altering your company’s legal status, which may leave you vulnerable to lawsuits, government agencies may conduct audits, enact fines or even dissolve your business entirely.
Below are just a few areas of the law in which failing to comply can cost your business.
Employers who neglect to pay workers appropriate wages may risk violating compliance with their states. Along with ensuring that employees receive a fair wage for every hour they work, many businesses are required to pay a higher price for overtime hours. Failure to adhere to all wage-compliance laws can result in audits and fees among other consequences for the business in question.
Example: The Department of Labor’s Wage and Hour Division (WHD) recently obtained a consent judgment of nearly $1 million to secure the payment of back wages from Manna, a restaurant chain operating in New York.
No one expects companies to hire every person they interview. However, asking inappropriate questions, engaging in inappropriate conduct and discrimination during a job interview can leave companies vulnerable to many negative consequences. For example, candidates who are asked how old they are may opt to sue for age discrimination in the event that they don’t get the job.
Following all hiring-compliance guidelines is the best way to avoid unpleasant legal action in the future.
Example: Businesses that are found to have discriminated against an applicant’s protected class (e.g. religion, national origin, sex, etc.) can expect to pay up to $300,000 in compensatory and punitive damages, depending on the size of the offending company.
Hiring Employees Under 18
If your business employs minors, federal regulations govern the age at which they can be hired and the lowest minimum wage you can offer. When it comes to underage hiring, regulations govern all jobs, with substantial differences between agricultural and non-agricultural jobs, and violations can cost a business thousands of dollars in fines.
Example: In 2012, the WHD fined Ultra Mart Foods $20,000 in violation of federal labor laws. The store allowed eight minors to operate scrap paper balers. It was the second time that the organization was fined for this offense.
As a business owner, you have a responsibility to ensure the safety of everyone you employ. Not only does failing to meet safety guidelines expose you to lawsuits by employees who were injured on the job, but it may also result in crippling fines from the Occupational Safety and Health Administration.
It’s also critical to ensure that your company has thorough workers’ compensation coverage to remedy workplace injuries and insulate yourself from lawsuits. Workers’ compensation is required in every state except Texas, and it covers all medical costs and a percentage of lost wages. Failure to provide workers’ compensation can result in steep fines and/or stop work orders. For a simple and effective way to set up your workers’ compensation program, check out QuickBooks Workers’ Comp Payment Service.
Example: If you are alerted to an OSHA violation, don’t hesitate to correct it. Allegations of blocking exits and hazardous conditions at a Boston location led to Dollar Tree Stores facing a fine of $177,800.
For many businesses, staying compliant requires holding various business licenses and permits. For example, a restaurant that sells alcohol must possess a license from the Alcohol and Tobacco Tax and Trade Bureau in addition to a current health permit.
Example: Requirements will vary across jurisdictions, but Los Angeles County’s Food Facility Closure List details a few of the common reasons that a restaurant can be shut down.
Labor Law Posters
All U.S. businesses are required to display current federal and state labor law posters in a conspicuous area visible to all workers. Federal and state labor law is constantly changing, and your posters must reflect the most recent changes at all times.
For a service that automatically creates and ships both federal and state compliance posters for a one-time fee, see QuickBooks Poster Compliance Service.
Protect Your Business From Non-Compliance Claims
Compliance requirements can be complex, and business owners may not always be fully educated about the latest rules and regulations. Nonprofits in particular are held to high standards by the government. If you’re concerned about your company’s compliance status, consider hiring a human resources expert to protect your business’ legal and financial standing. After all, when it comes to non-compliance issues, ignorance of the law is no defense.