This Article is written by Mayank Khichar, Intern under Legal Vidhiya
Abstract:
This research article provides an in-depth analysis of the business laws in the United States, which is crucial for businesses to operate in a compliant and profitable manner. The article begins by discussing the background information and the significance of understanding business laws in the US. The purpose of this study is to provide an overview of the various federal and state-level laws that impact businesses operating in the US. The article provides a comprehensive overview of the US legal system, types of business laws, and major federal laws that affect businesses. It also covers state-level business laws, including employment and labour laws, taxation laws, IP laws, and contract laws.
Moreover, the article delves into the details of federal and state-level employment and labour laws, tax laws, intellectual property laws, and contract laws. It examines the compliance and enforcement mechanisms for US business laws and the roles of federal and state agencies in enforcing these laws. This article provides insights into the various business laws in the US and the importance of complying with them to avoid penalties and legal complications. The article concludes by highlighting the need for businesses to have a thorough understanding of US business laws to operate in a compliant and profitable manner.
INTRODUCTION:
Business laws plays a vital role in the United States’ economy by ensuring that businesses operate legally and ethically. These laws are designed to provide a fair and transparent environment for business transactions, protect consumers, and promote competition in the market. The United States has a complex legal system that includes federal, state, and local laws, as well as regulatory agencies that oversee specific industries. This research article aims to provide a comprehensive overview of laws that govern business in US , including the legal framework, key regulations, and their impact on businesses operating in the country. By exploring the various aspects of business laws in the United States, this article will help readers understand the legal environment in which businesses operate and provide insight into the challenges and opportunities that businesses face in complying with these laws.
BACKGROUND OF BUSINESS LAW IN US:
The legal framework for business in the United States comprises federal, state, and local laws. Federal laws, such as the “Securities Act of 1933” and the “Federal Trade Commission Act”, govern the conduct of businesses across the country, while state laws regulate specific business activities, such as licensing, taxation, and contracts. Moreover, the legal environment is constantly evolving due to changes in legislation, court rulings, and regulatory guidelines. As a result, businesses need to stay abreast of these developments to avoid legal liabilities and to take advantage of opportunities.
Importance of understanding business laws in the US:
Compliance with business laws is critical for a company’s success, as noncompliance can lead to fines, lawsuits, and reputational damage. In addition, understanding the legal framework can help businesses to mitigate risks, negotiate contracts, and protect their intellectual property. Moreover, knowledge of business laws is essential for entrepreneurs who are starting a new business, as they need to comply with legal requirements to avoid legal disputes and to obtain financing.
PURPOSE OF THE RESEARCH ARTICLE:
This research article aims to provide an overview of business laws in the United States, focusing on federal laws and their impact on businesses. The article will examine the legal requirements for business formation, contracts, employment, and intellectual property, among other topics. The article will also discuss the challenges that businesses face in complying with legal requirements and strategies for mitigating legal risks.
RESEARCH QUESTIONS:
- What are the federal business laws in the US, and how do they impact business operations?
- What are the legal requirements for business formation, contracts, employment, and intellectual property?
- What are the challenges that businesses face in complying with legal requirements, and how can they mitigate legal risks?
- How can businesses stay up to date with changes in legislation, court rulings, and regulatory guidelines?
BUSINESS LAWS IN THE US:
The US has a complex legal system that governs business activities. The US legal system is a federal system, meaning that there are both federal and state laws that businesses must comply with. This overview will provide a brief explanation of the US legal system, the types of business laws that exist, major federal laws that affect businesses in the US, and an overview of state-level business laws.
THE US LEGAL SYSTEM:
The US legal system is based on the common law tradition, which means that judges make decisions based on past court decisions, rather than on written statutes. The US legal system is divided into two main branches: federal and state. There are three level of courts at the federal level : district courts, circuit courts of appeals, and the US Supreme Court. The state court system is made up of trial courts, appellate courts, and state supreme courts. Both federal and state courts have the power to interpret and enforce laws.
Types of Business Laws
There are several types of business laws in the US, including:
- Contract law: Contract law governs the creation and enforcement of contracts between parties. This includes agreements related to the sale of goods, employment contracts, and lease agreements.
- Employment law: Employment law governs the relationship between employers and employees, including issues related to wages, benefits, discrimination, and harassment.
- Intellectual property law: Intellectual property law governs the protection of patents, trademarks, copyrights, and trade secrets.
- Securities law: Securities law regulates the sale of stocks, bonds, and other securities.
- Antitrust law: Antitrust law promotes competition and prohibits anticompetitive practices, such as monopolies.
- Environmental law: Environmental law regulates the impact of businesses on the environment, including pollution and resource depletion.
- Tax law: Tax law governs the taxation of businesses, including income taxes, sales taxes, and property taxes.
State-Level Business Laws
In addition to federal laws, every state consists of their own business laws that apply to businesses operating within that state. State-level business laws can cover a wide range of topics, including business formation, taxation, employment, and contract law. Some common state-level business laws include:
- Business formation: Each state has its own laws governing the formation of businesses, including requirements for registering a business and obtaining necessary licenses and permits.
- Employment law: States have their own minimum wage, overtime, and workers’ compensation laws that businesses must comply with.
- Taxation: Each and every state have their own tax laws which apply on individuals for application of various taxes, such as income tax, wealth tax and taxes on property.
- Contract law: State laws govern the creation and enforcement of contracts, including employment contracts and lease agreements.
Key Federal Employment and Labour Laws:
- Fair Labour Standards Act (FLSA)[1]: The FLSA establishes the minimum wage, overtime pay, recordkeeping, and child labour standards for private and public employers. The current federal minimum wage is $7.25 per hour, and employers must pay overtime wages of at least one-and-a-half times the regular rate for work exceeding 40 hours per week. The FLSA also prohibits the employment of minors in hazardous occupations.
- Title VII of the Civil Rights Act[2]: Title VII prohibits employment discrimination on the basis of race, colour, religion, sex, or national origin. Employers must provide equal opportunities to all employees in hiring, promotion, compensation, and other employment practices. Title VII also requires employers to provide reasonable accommodations for employees with disabilities.
- Americans with Disabilities Act (ADA)[3]: The ADA prohibits discrimination against individuals with disabilities in employment, public accommodations, transportation, and telecommunications. Employers must provide reasonable accommodations to qualified individuals with disabilities unless it imposes an undue hardship on the employer’s business.
- Family and Medical Leave Act (FMLA)[4]: The FMLA requires covered employers to provide eligible employees with up to 12 weeks of unpaid leave for certain family and medical reasons. The employer must maintain the employee’s health benefits during the leave period and restore the employee to the same or equivalent position upon return.
- Occupational Safety and Health Act (OSHA)[5]: OSHA sets safety and health standards for workplaces and requires employers to provide a safe and healthy work environment for employees. Employers must comply with OSHA regulations, provide training, and report workplace injuries and illnesses.
State-Level Employment and Labour Laws:
In addition to federal laws, every state have their own laws that govern their labour and employment related issues that employers must follow. Here are some examples:
- Minimum Wage Laws: Laws that provide for min. wage that is higher than federal state. For instance, the minimum wage in California is $15 per hour, while in Georgia, it is $7.25 per hour.
- Anti-Discrimination Laws: Many states have their own anti-discrimination laws that provide additional protections beyond the federal laws. “For instance, California’s Fair Employment and Housing Act (FEHA) prohibits discrimination based on gender identity, sexual orientation, and marital status”.
- Workers’ Compensation Laws: All states have workers’ compensation laws that provide benefits to employees who are injured or become ill due to their job. Employers must carry workers’ compensation insurance and provide benefits to eligible employees.
- Employment Termination Laws: Some states have laws that regulate how employers can terminate employees. For instance, in California, employers must provide written notice to terminated employees and pay their final wages immediately.
TAXATION LAWS IN THE US:
Taxation is an essential component of the US economic system. The central government, with the state and local governments, rely heavily on tax revenue to finance their operations and provide public goods and services. The taxation laws in the US are complex and involve a variety of tax types, such as income tax, sales tax, property tax, and payroll tax.
Federal Tax Laws for Businesses
Businesses in the US are subject to federal tax laws that govern their tax obligations. The federal tax system for businesses includes several distinct types of taxes, including income tax, employment tax, excise tax, and self-employment tax. Here are some key points regarding each tax type:
- Income Tax: “Each and every business in the US are required to pay income tax on their profits. The income tax rate for businesses varies depending on the type of business entity, such as sole proprietorships, partnerships, S corporations, and C corporations”.
- Employment Tax: Employment taxes are paid by employers on behalf of their employees. These taxes include Social Security tax, Medicare tax, and federal unemployment tax (FUTA). Employers are responsible for withholding these taxes from their employees’ wages and paying them to the federal government.
- Excise Tax: Excise taxes are imposed on certain goods and services, such as tobacco, alcohol, gasoline, and air transportation. Businesses that produce or sell these products are responsible for collecting and remitting the excise tax to the federal government.
- Self-Employment Tax: Self-employed individuals, such as freelancers and independent contractors, are subject to self-employment tax. This tax is a combination of Social Security and Medicare taxes and is paid by the self-employed individual on their own income.
State-Level Tax Laws
In addition to federal tax laws, businesses in the US must also comply with state-level tax laws. State tax laws vary widely and can include income tax, sales tax, property tax, and other taxes and fees. Here are some key points regarding state-level tax laws:
- Income Tax: Most states impose an income tax on businesses and individuals. The income tax rates and regulations vary by state.
- Sales Tax: Sales tax is a tax on goods and services sold to consumers. Most states require transfer of indirect taxes from consumers to the state.
- Property Tax: This is a tax on real estate and other property. Businesses that own property are responsible for paying property tax to the state and/or local government.
INTELLECTUAL PROPERTY LAWS:
Intellectual property refers to creations of the mind, such as inventions, literary and artistic works, symbols, names, images, and designs used in commerce. Intellectual property laws in the United States aim to protect the rights of creators and owners of these intangible assets. This article provides an overview of intellectual property laws at the federal and state levels in the US.
Key Federal Intellectual Property Laws
- Patent Law: The US Patent and Trademark Office (USPTO) is responsible for granting patents, which protect new and useful inventions, processes, machines, manufactures, or compositions of matter. Patents give the holder the right to exclude others from making, using, selling, or importing the invention for a limited period of time, usually 20 years from the date of filing. The patent owner can also license or sell the patent to others.
- Copyright Law: The US Copyright Office is responsible for granting copyright registrations, which protect original works of authorship, such as literary, musical, dramatic, and artistic works, as well as software and other digital content[6]. The copyright owner can also license or sell the copyright to others.
- Trademark Law: The USPTO is also responsible for granting trademark registrations, which protect distinctive words, phrases, symbols, designs, or combinations thereof used to identify and distinguish goods or services from those of others[7]. Trademarks can be renewed indefinitely as long as they are in use.
- Trade Secret Law: Trade Secrets are protected by state and federal laws that prohibit misappropriation or unauthorized disclosure of valuable information that is not generally known or readily ascertainable. Examples of trade secrets include customer lists, formulas, processes, and designs that give a business a competitive advantage.
State-Level Intellectual Property Laws
In addition to federal intellectual property laws, many states have their own laws that provide additional protections or remedies for intellectual property owners. For example:
- Right of Publicity: Some states recognize a person’s right to regulate the commercial use of their name, image, likeness, or other personal attributes. This right can be used to prevent unauthorized use of a celebrity’s image in advertising, or to license the use of a famous athlete’s name and likeness in merchandise.
- Unfair Competition: Some states have laws that prohibit unfair or deceptive business practices, such as false advertising, trade dress infringement, or passing off goods or services as those of another. These laws can be used to prevent a competitor from using a confusingly similar mark or trade dress, or from making false or misleading statements about a product or service.
- “Employee Inventions: Some states have laws that govern the ownership and compensation of inventions made by employees in the course of their employment. These laws may require employers to compensate employees for their inventions, or to assign ownership of the inventions to the employer”.
CONTRACT LAWS IN THE US:
“A contract is a legally binding agreement between two or more parties that creates an obligation to perform certain duties or obligations. In the US, contract law is primarily governed by the Uniform Commercial Code (UCC), which is a set of model laws developed by the National Conference of Commissioners on Uniform State Laws and adopted by all 50 states. The UCC provides rules for the formation, performance, and enforcement of contracts for the sale of goods and other commercial transactions”.
“Under US contract law, a contract must include certain elements to be legally enforceable. These elements include offer, acceptance, consideration, and mutual assent. Offer refers to the expression of willingness to enter into a contract, while acceptance is the expression of agreement to the terms of the offer. Consideration refers to the exchange of something of value between the parties, while mutual assent is the meeting of the minds of the parties to the contract”.
Key Federal Contract Laws
The US government has enacted several key federal laws that govern contracts, including:
- The Federal Acquisition Regulation (FAR)[8]: This regulation governs the acquisition process for all federal agencies and sets forth the policies and procedures for federal procurement. The FAR includes rules for contract formation, performance, and termination.
- The Contract Disputes Act (CDA)[9]: This act provides a process for the resolution of disputes between the government and contractors. Under the CDA, contractors must submit claims to the contracting officer for resolution, and disputes may be appealed to the appropriate board or court.
- The False Claims Act (FCA)[10]: This act prohibits the submission of false claims to the government and provides penalties for violations. The FCA also provides for qui tam lawsuits, in which private citizens can file suit on behalf of the government.
- The Competition in Contracting Act (CICA)[11]: This act requires federal agencies to use competitive procurement procedures to the maximum extent practicable and to provide opportunities for small businesses and disadvantaged businesses.
State-Level Contract Laws
In addition to federal contract laws, each state has its own contract laws that govern contracts entered into within its jurisdiction. While these laws are generally similar, there may be some differences in the requirements for contract formation and the remedies available for breach of contract.
One notable difference between state contract laws is the statute of limitations, which is the period of time within which a party must file a lawsuit for breach of contract. In most states, the statute of limitations for breach of contract is between three and six years, but some states have longer or shorter limitations periods.
PENALTIES FOR NON-COMPLIANCE[12]:
Compliance And Enforcement Mechanisms For Us Business Laws
Business laws in the United States are designed to regulate and govern the activities of businesses to ensure they operate in a fair and ethical manner. Compliance and enforcement mechanisms are put in place to ensure that businesses adhere to these laws. Compliance refers to the act of following laws, regulations, and guidelines, while enforcement is the process of ensuring that businesses adhere to these rules.
Penalties for non-compliance with business laws in the US can vary based on the severity of the violation and the agency responsible for enforcement. Penalties may include fines, cease, and desist orders, injunctions, and criminal charges. The following are some examples of penalties for non-compliance:
- The SEC can impose fines and penalties for violations of securities laws, such as insider trading or accounting fraud. In case of any violation, fines are imposed upon the violator, and they may vary in their magnitude based on the level of violations.
- The FTC, DOL and IRS can impose civil penalties for violations of consumer protection laws, such as false advertising or deceptive trade practices. In case of any violation, penalties are imposed upon the violator and they may vary in their magnitude based on the level of violations.
- State agencies can also impose fines and penalties for violations of state-specific business laws. The penalties can vary depending on the severity of the violation and the state in which the violation occurred.
CONCLUSION and THE WAY FORWARD:
Business laws in US are a complex and multifaceted area of legislation that can have significant impacts on businesses of all sizes and types. Federal laws governing businesses in the U.S. are curated to foster free trade and competition, protect consumers, and ensure that businesses operate within the bounds of ethical and legal standards.
Some of the key federal laws that impact businesses include the Americans with Disabilities Act (ADA)[13], the Fair Labour Standards Act (FLSA)[14], the Occupational Safety and Health Act (OSHA)[15], the Securities Act of 1933[16], the Civil Rights Act of 1964[17], and the Federal Trade Commission Act[18]. Each of these laws imposes specific requirements on businesses related to issues such as labour practices, workplace safety, consumer protection, and financial disclosures.
In addition to federal laws, there are also numerous state and local laws that businesses must comply with, including laws related to business formation, contracts, employment, and intellectual property. For example, in many states, businesses are required to obtain certain licenses or permits before they can operate legally. Similarly, businesses must adhere to state and federal laws related to employment practices, including minimum wage laws, anti-discrimination laws, and worker safety regulations.
One of the biggest challenges that businesses face in complying with legal requirements is the complexity of the laws themselves. The legal landscape is constantly changing, with new regulations and court rulings impacting businesses on a regular basis. Moreover, different industries may be subject to different laws and regulations, making compliance a difficult and ongoing process.
To mitigate legal risks, businesses can take a number of steps, including conducting regular internal audits to ensure compliance with relevant laws and regulations, seeking legal advice when necessary, and establishing robust policies and procedures that are designed to promote compliance and minimize the risk of legal violations.
To stay up to date with changes in legislation, court rulings, and regulatory guidelines, businesses can rely on a variety of resources, including legal databases, industry associations, and professional organizations. Businesses can also engage in ongoing training and education programs to ensure that their employees are aware of the latest legal requirements and best practices. Ultimately, staying up-to-date with legal requirements is essential for businesses that wish to operate ethically and sustainably in today’s complex and ever-changing business environment.
REFRENCES:
- “Taxation in the United States,” Wikipedia, https://en.wikipedia.org/wiki/Taxation_in_the_United_States
- “Business Taxes,” IRS, https://www.irs.gov/businesses/small-businesses-self-employed/business-taxes
- “State Taxation of Businesses,” Nolo, https://www.nolo.com/legal-encyclopedia/state-taxation-businesses-overview-30155.html
- Uniform Commercial Code, Cornell Law School Legal Information Institute, https://www.law.cornell.edu/ucc/
- Federal Acquisition Regulation, Acquisition.gov, https://www
- Securities and Exchange Commission. (n.d.). Enforcement. Retrieved from https://www.sec.gov/enforcement
- Federal Trade Commission. (n.d.). About the FTC. Retrieved from https://www.ftc.gov/about-ftc
- U.S. Department of Labour
- United States Code. (n.d.). Retrieved from https://www.law.cornell.edu/uscode/text
- United States Department of Labour. (n.d.). Employment Law Guide. Retrieved from https://www.dol.gov/general/topics/business-law
- United States Securities and Exchange Commission. (n.d.). Laws That Govern the Securities Industry. Retrieved from https://www.sec.gov/about/laws.shtml
- United States Department of Justice. (n.d.). The Foreign Corrupt Practices Act. Retrieved from https://www.justice.gov/criminal-fraud/foreign-corrupt-practices-act
- “Business Law Basics.” SBA. Accessed March 29, 2023. https://www.sba.gov/business-guide/manage-your-business/business-law-basics.
- “Employment Law Guide.” Department of Labour. Accessed March 29, 2023. https://www.dol.gov/general/topic/labor-relations.
- “Tax Information for Businesses.” IRS. Accessed March 29, 2023. https://www.irs.gov/businesses.
- “Intellectual Property.” USPTO. Accessed March 29, 2023. https://www.uspto.gov/learning-and-resources/intellectual-property.
- “Contracts and Commercial Law.” Cornell Law School. Accessed March 29, 2023. https://www.law.cornell.edu/wex/contracts.
- “Antitrust Laws.” FTC. Accessed March 29, 2023. https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws.
- “Compliance Assistance Quick Start.” OSHA. Accessed March 29, 2023. https://www.osha.gov/compliance-assistance/quick-start.
[1]Supra note 2.
[2]42 U.S.C. S. 2000e (United States).
[3]Supra note 1.
[4]Family and Medical Leave Act (Act of February 5, 1993) (United States).
[5]Supra note 3.
[6]“Copyright gives the holder the exclusive right to reproduce, distribute, display, perform, and create derivative works based on the original work, for a limited period of time, usually the life of the author plus 70 years”.
[7]“Trademark gives the holder the exclusive right to use the mark in connection with the goods or services, and to prevent others from using a confusingly similar mark in the same or related field”.
[8]48 CFR (Code of Federal Regulations) Chapter 1 (Parts 1-51) (United States).
[9]41 U.S.C. § 7101 et seq. (United States).
[10]False Claims Act (FCA), 31 U.S.C. §§ 3729 – 3733 (United States).
[11]Competition in Contracting Act (Act of April 1, 1984) (United States).
[13]Americans with Disabilities Act (Act of July 26, 1990) S.7 (United States).
[14]Fair Labour Standards Act (Act of June 25, 1938) S. 18 (United States).
[15]Occupational Safety and Health Act (Act of December 29, 1970) S. 5(a)(1) (United States).
[16]Securities Act (Act of May 27, 1933) S. 24 (United States).
[17]Civil Rights Act (Act of July 2, 1964) S. 703 (United States).
[18]Federal Trade Commission Act (Act of 1914) (United States).
