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Expert Answers to Biz Questions
Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
Why Interpreting Business Law Without A Lawyer Is A Bad Idea
When you run a business, you need a lawyer, especially at the startup stage. For example, when forming your business, you can incorporate without a lawyer. When you decide to have multiple founders, equity, and investments, your situation becomes complex. When complexity is introduced, making decisions without a lawyer becomes dangerous.
The law isn't straightforward
The law is difficult enough for lawyers and judges to agree on; the average person without formal training in law doesn't stand a chance. Ten people can read the same statute, and they'll provide ten different interpretations of what they've read. A judge might provide a different interpretation as well.
Attempting to interpret business-related laws without a lawyer is a bad idea. Still, many businesses do quick research online, read what they believe to be the law, and take action accordingly. It doesn't always work out well.
You might unintentionally misinterpret a law to be in your favor
If you're researching laws online to see what you can and can't do, you risk unintentionally misinterpreting statutes in your favor. Looking for a way around a regulation or trying to understand statutes so you can comply with the bare minimum are quick ways to unintentionally cherry-pick information.
For instance, when a business owner discovers employees can waive their 30-minute unpaid meal break, they might want to encourage employees to sign a standing waiver to keep the business running smoothly. The business owner might not know there are specific requirements that make a waiver legal. Still, the business owner might proceed based on what they've read online. They'll have everyone sign a waiver, thinking they're covered, because that's what other businesses have done.
When one employee files a complaint with their local labor office for missed meal breaks, the company's operations will be scrutinized. If the waived meal breaks don’t meet the legal requirements, especially in California, the company could be forced to compensate the employee for every missed meal break going back several years.
The absence of a law doesn't mean the absence of consequence
Some regulations aren't a legal obligation, but that doesn't mean you won't face consequences for ignoring them. There are thousands of regulations in every county across the U.S. that haven't become law. Consequences for not following regulations can include fines and jail time, and your business license might get revoked. Also, if failure to comply results in damage to customers, word will spread and your reputation could be destroyed.
PCI compliance, for instance, regulates how credit card information is handled, stored, and processed. PCI compliance isn't a legal obligation, AnswerFirst points out, but being out of compliance comes with fines.
The purpose of PCI compliance is to secure the networks used for storing and transferring cardholder information. This security includes mandates for firewalls, encryption, anti-virus and anti-spyware software, restricted access, network monitoring, and written security policies. PCI compliance has been around since 1994, but some still ignore it.
General Data Protection Rules (GDPR) is another security compliance regulation you can't afford to misinterpret.
Many IT professionals don't realize their contracts with cloud providers must meet GDPR requirements. Amazon, Microsoft, and Google have gone to great lengths to secure their cloud-based services to meet GDPR requirements, although each business is responsible for ensuring nothing falls through the cracks. Rather than try to sort out the details on your own, you should hire a lawyer to help.
It's not uncommon for businesses to seek legal counsel to maintain compliance with data security regulations. ITProToday points out that 73% of U.S. and EU recruiting processionals preparing organizations for GDPR are working with internal legal counsel.
Copyright law is a widespread misunderstanding
Of all the laws that affect businesses, copyright law is the most misunderstood. Many businesses unknowingly violate intellectual property rights by using images without permission. Rumor has it that any image found on Google is in the public domain, but that's not true. Crediting the author doesn't make an image legal to use, either.
Only accept advice from a qualified legal professional
When researching state and federal laws pertaining to your industry, be careful not to dismiss regulations or jump to conclusions based on other people's opinions. Even when the person giving advice has been in your situation, take what they say with a grain of salt. Having experience with the law isn't equal to being a lawyer. People love providing advice based on their victories in court, but that doesn't mean your situation will turn out the same.
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