Learn more about what statutes are in business.
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There are many ways to express an authoritative rule. Regulations, ordinances, and precepts are just a few of those ways. Yet statutes are probably one of the more common methods. In fact, statutes are one of the most common means of describing a binding rule. Both governments and corporations create and vote on statutes to express their authority.
Statutes cover every kind of topic and area of modern life, from criminal acts to environmental rules. So as a business owner, it’s vital for you to understand what statutes are and how they affect you.
Because they are so commonplace, it can be difficult for some people to define statues. The definition depends on the context.
In the government context, Merriam-Webster’s definition of statute is “a law enacted by the legislative branch of a government.” Within state and national legislatures, statutes start as a proposed bill. Assuming the bill receives the legislature’s vote, it is signed into law by the president or governor. At that point, the bill becomes a statute and carries binding authority. Once in place, statutes apply indefinitely until they are either repealed or struck down by a court or other judicial body.
In a business context, statutes are defined as “an act of a corporation or of its founder intended as a permanent rule.”
As a small business owner, you need to understand more than a statute’s basic text and meaning. You also need to grasp exactly how that statute impacts your business and your commercial prospects. Statutes offer people—including business owners—a wide variety of benefits. Let’s consider a few of those.
Many of the benefits of statutes are obvious. For instance, statutes serve as a clear source of authority that people can rely on. In doing so, they help society run smoothly and fairly. After all, we need laws. With the advent of the internet, statutes are also easily accessible. In fact, each state’s collection of statutes (usually called a code) can be found with a quick Google search. Finally, statutes provide both responsibilities and benefits to individuals and businesses alike.
The disadvantages of statutes are also clear. The biggest disadvantage is that they constrict and regulate business owners in various ways. Although many of the constrictions are beneficial for society, those restrictions can cost business owners time and money. Also, statutes are crafted by politicians and their legislative subordinates. This means that some statutes can be long, complex, and confusing. It’s not uncommon for statutes to be hundreds of lines long and require interpretation by highly specialized attorneys.
Here are a few notable real-world statutes that apply to businesses.
The Fair Labor Standards Act (FLSA) imposes a national minimum wage in the United States so that all businesses provide a decent wage to their employees. The FLSA also regulates other labor matters, including overtime rules, employee tips, and when children can work. Prior to the FLSA’s passage in 1938, there were few protections against oppressive labor standards and child labor.
The Civil Rights Act of 1964 imposed tremendous changes on American society. It outlawed discrimination based on a person’s race, color, religion, sex, and national origin. Title VII of the Civil Rights Act prohibited federal agencies and private employers from discrimination against people based on those factors. Title VII applies to all aspects of employment, including:
Subsequent laws have expanded upon Title VII, banning discrimination based on a person’s disability, age, and other factors.
The Affordable Care Act (ACA) significantly revised how employers provide health care to their employees. The ACA attempts to make healthcare more affordable for Americans by offering insurance subsidies to most American households and extending Medicare coverage. It also prohibits medical insurers from pricing plans based on a person’s pre-existing conditions, age, or smoking habits. Thanks to the ACA, all businesses with more than 49 employees have to provide affordable healthcare benefits to all full-time employees.
Statutes are important sources of law that strongly affect how your business operates.
Statutes create a lot of requirements for your business, and they aren’t always easy to satisfy. However, they don’t need to deprive you of your business dreams. We want to make your life as a business owner easier.
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Disclaimer: The content on this page is for informational purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.