Are You Making These Top 5 Legal Mistakes At Your Business?

Many business owners/leaders wonder why they are having trouble growing their business and keep having legal issues. Sometimes they keep having the same legal issues again and again. It is hard for the owners/leaders to determine how to prevent the issues as they are always putting fires out and cannot determine why they keep popping up because they are not legally trained.

Here are some common legal issues that business owners/leaders seem to have that cause problems:

1. Your business has a lot of sexual harassment issues or discrimination issues and claims are filed with the Equal Employment Opportunity Commission (EEOC). While there may be a particular employee who has caused some of these issues, the culture in your business may be at fault. It takes a lot of training for your employees to know what conduct is acceptable and what is not. Also, some companies have managers that are originally from foreign companies who bring with them a culture that they had been used to where they came from. Some of the things that were acceptable in the foreign country are not considered acceptable here.

2. Your team signs a number of vendor contracts without having a proper legal review. This results in legal surprises later. For instance, there may be a clause for an auto renewal of the contact for the same term as the original unless you opt out in writing six months before the end of the contract. Another issue is that you may have no options but to continue paying on a contract, even when the vendor fails to deliver as promised. All these surprises are bad surprises!

3. You open new business locations in other states. You fail to file as a foreign business doing business in that state. You have a customer who does not pay the balance when due and you must sue them in that state, but the state does not allow you to sue, as you never registered. Another issue is that you fail to register for sales taxes that may be due for product sold in that state.

4. Every business has a lot of information that may be considered trade secrets. These may include formulas, our-firm/customer lists, pricing, marketing plans, etc. Many times, companies do not have a policy of how the trade secrets are handled and do not enforce the protection and confidentiality for the trade secrets. If the company does not protect their own trade secrets, the courts will not protect the trade secrets for that company.

5. Your company makes all your employees execute a noncompete agreement, without regard to what the job position of the employee is. This agreement may be not enforceable, as it may restrain a worker who is not an executive from finding alternate employment. The courts frown on such agreements. In addition, the scope of the agreements may be too broad in scope or in geographical location to be enforceable. This area of the law has changed over time, which means that your agreements may need to be reviewed. If you have team members in other states, make sure your general counsel checks the law in those states to make sure that the agreement is enforceable.

Of course, this is not an exhaustive list, but a few things that seem to rise to the surface when I’m helping businesses get their legal affairs in order. Hopefully, you have a great general counsel who will monitor these things to keep these legal issues from rising to the surface for you.

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Denice Gierach

Gierach Law Firm

Denice Gierach is an attorney, CPA, Northwestern University business master's graduate, and has owned several businesses from real estate to manufacturing. She is the lead attorney at Gierach Law Firm in the Chicago area. With more than 30 years of experience, she has been a respected and sought-after resource for businesses looking to grow, sell, solve problems, and succeed long term. Her insights across business areas gives a fuller lens to business issues and solutions, and helps businesses grow and succeed with less time spent on legal issues and other time-consuming problems.

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