Most entrepreneurs or small businesses don’t have a team of lawyers following them around to help make every decision. Just as entrepreneurs need to know the basics of accounting and marketing, they also need to understand the basics of business law to avoid the potential liability and costs that follow costly litigation.
As a lawyer and business owner I have experienced the struggles of business on both sides. Most business owners are not also business attorneys, so they end up feeling lost and uninformed when making decisions.
You don’t need to go to law school to be a successful entrepreneur. As most things in life you must build a good community or team. In addition, any successful business person should not be afraid to ask questions whether it’s legal or otherwise. However, all business people should have a general understanding of the following when operating or starting their business.
1. Vicarious liability
Most business owners understand they’re responsible when employees cause harm to themselves or others while on-the-job or while using company equipment. That would make common sense, but did you know that employers can be liable for harm caused by an employee anywhere at any time if that employee caused harm within the course and scope of their employment.
Course and scope of employment is a fairly broad brush and could encompass a wide variety of situations. Asking your employee to stop at the UPS store or run an errand is the common example. This is a good situation is where having a good general liability policy would help protect your business. In addition, you should have a defined and concise job description contained in your employee manual that clearly defines the scope of employment of each employee.
2. Overtime and break rules
Working long hours for little pay is a part of life at a startup or most small businesses for that matter. Most business owners have the general understanding that working more than 40 hours entitles the employee to overtime. Did you know how that is calculated? There are certain rules covering different types of employees.
It is even more important to understand that you understand the law concerning rest periods/breaks. You should know when each employee is entitled to breaks (rest periods) and build your business in a way to allow those rest period to take place.
As you may know, a contract is a legally enforceable agreement between two or more people. As the statement says the contract is merely an agreement, it does not need to be in writing (with exceptions of course). However, you know verbal contracts are only worth the paper they are written on. When it comes to building and operating a business you should always put it in writing. Understanding the value and nuances of contracts is essential to being successful.
In conclusion, don’t be scared in operating your business; just be aware of how the law interacts with your daily operations and planning. Every business owner needs to be prepared for common legal situations. Extended, expensive litigation can drag down even the most promising business and the moral. Educate yourself on relevant laws as they pertain to your business. A moment of preparation is much less expensive than obtaining legal education via a long and protracted legal dispute. I wish you all success in the upcoming year!
Jeremiah Raxter, Esq.
27851 Bradley Rd, Suite 145
Menifee, Ca 92586