Legal problems can arise in all businesses for many reasons. It could be due to a misunderstanding in the company or a conflict between partners and clients. A business can also face legal problems if it fails to comply with state laws and other government-mandated regulations.
Getting involved in a legal matter can be expensive and time-consuming for many companies—even established ones. Facing legal trouble can also damage a company’s reputation, especially if it is broadcast. As a business owner, you must ensure that your business operates in accordance with government laws and public policies.
The more you know about the legal issues your business may face, the better prepared you can be to deal with them. That said, read the key points below to learn about the most common legal issues and challenges businesses may face in 2022.
1. Legal Issues Related to Employees
Labor-related issues include layoffs, discrimination, and health and safety issues. To avoid termination disputes, write a notice and give reasonable reasons to the employee concerned. The reasons should be clear to them, and should be based on existing company policies and guidelines.
If you do business in high-risk industries such as construction, mining, and even warehousing, it pays to strictly follow the workplace safety guidelines established by your state. Apart from that, make sure you equip your employees with the right protective gear and other equipment that can ensure their safety.
If you are running your business in Perth, Western Australia, it is good practice to consult with law firm in your area that will help you understand and comply with all health and safety guidelines established for your workplace or specific industry.
2. Class Action Cases
Class action lawsuits occur when many people have suffered the same type of loss or injury from a single company or defendant. Often, class action lawsuits can reach millions of dollars in damages that can cause significant financial hardship—especially for a small business owner.
Class action lawsuits often arise when products are defective, dangerous, or dangerous to the health or safety of consumers or the general public. A class-action suit may arise if your business is found to have caused significant damage to the environment. Shipping companies that cause oil spills and factories that fail to filter waste and pollutants are examples of this.
Even multinational companies like Pfizer and Shell are not safe from them class action lawsuits. Small to medium business owners should protect themselves from this legal risk early. Consider hiring an attorney so you know what steps you can take to avoid this. This is very important, especially if you are involved in the cosmetics, food and beverage industry, or the manufacturing industry in general.
3. Lack of Required Permits or Licenses
Every company needs a license, registration, or permit to operate legally. Businesses that do not meet these government-approved requirements can receive heavy fines, penalties, and may be temporarily or permanently closed by the appropriate authorities.
Accordingly, if you are not sure whether you need a specific permit, consider consulting with an attorney or official from a local government agency. The right license can help you build credibility. It is also easier to make and distribute your products and provide services to the general public if you have permits and licenses to operate legally.
4. Shareholders disputes
Shareholder disputes are disagreements between shareholders in a company. Common causes of shareholder disputes include violations of shareholder agreements, disagreements about corporate direction, fiduciary misconduct, and differences in compensation or contribution.
Although existing agreements and corporate bylaws can help resolve shareholder dispute within the company, this is not a complete defense against intra-company or derivative suits. In shareholder disputes, arbitration should be the primary resolution option. The second best option is mediation if all parties cannot reach an amicable resolution after mediation.
If the dispute is not resolved at the arbitration level, the parties may take the matter to court. In this case, the last and least desirable option is a trial, where the judge will decide the outcome.
For most people, running a business is about maximizing profits, managing day-to-day operations, and expanding (if necessary). Small business owners often overlook the fact that a business can face various legal issues all the time. It can be from within the company itself, such as concerns related to labor and shareholders, or external forces such as consumer safety. Seeking guidance from the right business attorney or law firm can help you avoid or deal with legal issues—even before they arise.