10 Common Legal Mistakes Businesses Make
Delaying medical records review in a WC claim can lead to unhappy workers and legal issues. Here are some other legal mistakes businesses make.
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Legal hassles are a real setback for any business organization and can severely hurt the business’ bottom line. Businesses need to stay compliant with all applicable laws to avoid getting into legal trouble because they will be held accountable even for inadvertent breaking of some law or another. It is therefore important to be aware of some common issues that carry the risk of possible litigation. For example, workers’ compensation is an employee benefit program that must be fastidiously implemented and supervised to ensure that the workers are kept happy and protected. To ensure that an injured worker receives the benefits due to him/her without delay, all procedures including medical records review should be performed in a timely manner. Disgruntlement among employees arises when undue delays occur in procedures associated with workers’ compensation and appropriate medical services are not received in time. There are some other aspects as well that hold legal risks for businesses. •
Ignoring State Statutes: Often employers ignore applicable state statutes and avoid their workers’ compensation obligations. This is very likely to invite audit penalties from the Department of Labor (DOL). In addition, such practices will also have a negative impact on employee morale.
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Misuse of Company Funds: Sometimes business owners utilize the company funds to cover their personal debt.
If personal expenses are written off as
business expenses, it may invite strict penalties from the IRS that usually do not tolerate such practices. To prevent IRS penalties, business owners must be able to properly document their business expenses with reasonable arguments. •
Patent Issues: Patent litigation is another issue that organizations in the tech industry often face.
It is important to ensure that your research and
development teams carefully research the patents and copyrights of your current product to avoid legal trouble from competitors. •
Wrongly Classifying Workers: Business owners must classify their workers accurately because wrong or improper documentation of employees can prove costly.
Some
employers
improperly
classify
employees
as
independent
contractors, and this is sure to lead to trouble with the Department of Labor (DOL) for non-compliance. The DOL requires that employers who have assent, benefit, and control over their workers to be W-2 employees. When businesses misclassify workers, they are making themselves vulnerable to risks such as huge penalties for unpaid wages and taxes, on top of potential lawsuits. Misclassifying employees as exempt from overtime is also a risky practice. •
Intellectual Property Issues: Using intellectual property that is registered under someone else is another mistake companies usually make. Infringing on
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the copyright of another can happen accidentally and cause severe legal hassles. Businesses must distinguish the different types of intellectual property and determine how best to protect each type early in the operation of the business. •
Improper Registration of Capital Gains: Another mistake business owners make is not properly registering capital gains taxes. Writing off corporate investments such as stock purchases as business expenses even though it is an asset purchase is a legal offense that can lead to trouble with the IRS. Penalties may be imposed when the IRS finds out that the capital gain is not properly registered and taxes have not been paid on it.
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Illegal Labor: All employees hired to work in the company must be able to legally work in the U.S. Therefore background checks must be thoroughly performed to identify illegal immigrants with falsified documents. The government may conduct extensive surprise immigration audits and companies can run into serious trouble if they are found to be using illegal labor.
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Not Paying Minimum Wages: Another legal trap lies in not paying minimum wages to employees when paying by piece work. All non-exempt hourly workers must be paid minimum wage regardless of whether or not they have completed sufficient piece work to earn that amount.
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Non-compliance with Local Laws: Not staying compliant with dramatically changing local laws can also present significant challenges to employers.
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Discrimination in the Workplace: Ethnic, sexual, age or other kinds of discrimination can cause serious problems for a business owner. In case such issues arise, the company’s HR and legal departments must be able to efficiently handle them. It is best to hold regular meetings to oversee co-worker relations and ensure that there are no issues of discrimination on any basis whatsoever.
It is clear that the best way for business owners to prevent expensive lawsuits and subsequent damage is by maintaining compliance with the laws pertaining to their business. Hiring an attorney can prove to be highly beneficial in this regard because businesses will be ensured solid legal advice. Other strategies that will help prevent legal issues are a proactive approach to management and excellent communication in the workplace.
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