Small Businesses are in Greater Regulatory Danger from Government Agencies and from the Judicial Branch
Some of the promises made by President Obama included pledges to beef up regulation and employee and customer protections. He vowed to increase investigatory activity on the part of regulators and to force better compliance of the part of American businesses.
There are two ways to accomplish these objectives. First is through the agencies themselves. Congressional leadership cheered these proposals and set to arm agencies with the tools to fulfill the president’s goals. More money for personnel and equipment is being allocated. Expectations of the agencies’ results are being increased. The second avenue for regulatory compliance is through the judicial branch.
I have for some time held the opinion that the biggest danger to non-compliance comes from the courts, not the bureaucrats. Yes, OSHA can come in and levy large fines for the violations they find (and they always find something). The EDD (California’s Employment Development Department) can impose penalties far in excess of what we think is reasonable. We all know about the damage that the IRS can do to our pocketbooks and the California Franchise Tax Board is even more aggressive and less tolerant than the Internal Revenue Service.
So, I am not saying that governmental agencies are not able to bankrupt our businesses if the opportunities present themselves.
However, the fines allowed by regulatory charter are a mere percentage of the amounts that can be assessed by a judge or jury. Even a suit that does not go to trial will cost thousands, even hundreds of thousands of dollars. Add together the costs of the verdict, the defense, the time lost, the bad publicity, etc, etc, etc. and you have the makings of a major disaster. Congress and the President can pass laws that encourage additional lawsuits with longer statutes of limitation and extended caps on judgments so that more money can be awarded.
The President and Congress started out this New Year just that way. President Obama signed the Lilly Ledbetter Fair Pay Act on January 29th. This legislation – the first Obama has signed as President – makes it easier for women and others to sue for pay discrimination that may date back years or even decades. More of this type of legislation is being promised.
Additionally, we have the courts themselves getting into the act. The U.S. Supreme Court has just handed down a major decision that some attorneys worry will open the litigation floodgates for employees who believe they have suffered retaliation. In Crawford v. Metropolitan Government of Nashville and Davidson County, Vicki Crawford testified in an internal hearing on a sexual harassment complaint filed by a co-worker against Crawford’s boss.
Focus for a moment on the word “believe”. The retaliation does not actually have to have happened for an employee to believe that he/she was wronged. Who does not agree that discrimination is a bad thing? I am not arguing that companies should be allowed to break laws without consequences.
The new legislation always seems logical when examining the most egregious cases. The problem is that the same legislation is applied to fuzzier and fuzzier situations and eventually encompasses those who did not intend to be unfair to anyone. I am simply warning that we are all in danger of retaliation from activities that took place years ago.
Those activities may or may not have been violations and can come back to bite you. The only way your business will be protected from either the bureaucrats or the attorneys is to know what is expected of you and to have a system of compliance in place.
It is crucial in these economic times to focus on your business development, your current customers and the work that you do. If you are concentrating on regulations, you are not focusing on your job.
But, if you do not have the proper systems implemented, all of the business development in the world will be for naught if a regulator or plaintiff’s attorney comes in and forces you to shut down because you cannot afford the penalties from a violation (real or perceived).
There needs to be a balance. Running a business is not only about the work you do. It is also about being a business owner and knowing what you have to do to run that business correctly. The side benefit to knowing how to efficiently and effectively manage your business is that with the systems in place, you will have more time to do the work that you do best. The running of your business is on better autopilot and the stress will be reduced.
Your family depends on you. Your customers depend on you. The country’s economy depends on you. That you are also the target of the government’s attempt to protect all of us seems counterproductive.
The ultimate solutions are difficult to see but the practical, immediate answers are to defend your business now. Knowledge and implementation are keys. Learn what is expected of you and set up your systems and then get back to the work you do to make all of our lives better.
Karen Dennison is helping small business comply with state and federal regulations. For you free regulations checklist, visit http://www.icancomply.com
About the Author
Karen Dennison is widely recognized as the state’s leading authority in the area of regulatory expertise. In addition to providing education to business owners, she had been instrumental in putting those owners together with exactly the right professional they need to revamp their systems, bringing them into alignment with local, state and federal requirements. She gives them the piece of mind that they can withstand examination by the most diligent bureaucrat.
Being the founder of icancomply.com, Karen lives her passion of helping the small business community, many of whom have no idea of the precarious positions their livelihoods are in until it is too late and they are closed down. They have no way of knowing whether they are breaking the rules or are in complete compliance.
With over 25 years of experience in marketing, business planning, executive coaching and executive search, Karen has worked with law firms, information technology companies, banks, retail outlets, manufacturing concerns and others. Her clients have included multinational corporations, privately held small businesses and sole proprietor consulting companies.
Karen’s zeal and enthusiasm combined with her compassion for the small business community and her thorough knowledge of the perils of compliance ignorance makes her an outstanding interview.
Tell others about
this page:
Comments? Questions? Email Here