CHAPTER 5: BUSINESS LAW When you have completed this chapter, you will be able to: Identify the different kinds of laws that affect businesses. Describe the different kinds of laws that protect workers on the job. Explain how tax laws affect business profits. Explain the differences between copyrights, patents, and trademarks. Describe the different laws that protect workers on the job. Explain the importance of the National Labor Relations Act.

CHAPTER 5: BUSINESS LAW Government Regulation of Business Congress and state legislatures pass laws that regulate business. Regulations are rules that government agencies issue to implement the laws. Businesses have to make sure that they comply with laws and regulations.

LAWS THAT REGULATE BUSINESSES 5.1 CHAPTER 5: BUSINESS LAW LAWS THAT REGULATE BUSINESSES 5.1 Government Regulation of Business There are six important areas of law that affect business operations. Corporate Law Tax Law Intellectual Property Law Consumer Law Commercial Law Licensing and Zoning Law

CHAPTER 5: BUSINESS LAW Government Regulation of Business Corporate Law Corporate law regulates how businesses can set themselves up to operate as companies. Regulations are rules that government agencies issue to implement the laws. Businesses have to make sure that they comply with laws and regulations.

CHAPTER 5: BUSINESS LAW Government Regulation of Business Corporate Law. The three kinds of business entities or legal forms of ownership are: Sole proprietorship Partnership Corporation

CHAPTER 5: BUSINESS LAW Government Regulation of Business Corporate Law A sole proprietorship is a business run by a single individual. Advantages: Control entire business Keep all profits Make decisions quickly Pay fewer taxes Disadvantages: Full responsibility for the business Full liability for all debts Owner could become ill or disabled

CHAPTER 5: BUSINESS LAW Government Regulation of Business Corporate Law A partnership is an association of two or more persons who jointly own a for-profit business. According to The Uniform Partnership Act, a “person” can be a corporation, an organization, or an individual. Advantages: Combine their talents and financial resources Share decision making responsibilities Pay less taxes than a corporation Disadvantages: Full responsibility for business debts Disagreements Bind each other to contractual agreements with others

CHAPTER 5: BUSINESS LAW Government Regulation of Business Corporate Law A corporation is a business formed under state or federal statutes that is authorized to act as a legal person. A corporation exists apart from its owners and can be taxed and sued like an individual. Advantages: Stockholders receive a share of the profits No management responsibilities Raise money by selling stock Easier time getting credit Disadvantages: Must comply with more federal laws Register with a state gov’t. agency Double taxation (taxes on profits and also to state and federal government)

CHAPTER 5: BUSINESS LAW Government Regulation of Business Tax Law Tax law regulates how much money businesses must pay the government to help provide services for the public. Taxes are monies paid by corporations and individuals and are used to fund gov’t. programs and services (e.g., highways, the military, and schools). We will look at three types of taxes: Income Tax Property Tax Withholding Federal Taxes

CHAPTER 5: BUSINESS LAW Government Regulation of Business Tax Law Income Tax is a tax levied against a business’s profits. Property Tax is a tax levied against property, buildings, or land owned by a business; they are based on an assessed valuation. Withholding Federal Taxes is money that businesses collect from workers; income taxes are withheld from employees’ earnings. Managers make location decisions based on taxes in a particular area.

CHAPTER 5: BUSINESS LAW Government Regulation of Business Intellectual Property Law Intellectual property law regulates how businesses can protect inventions and new products. Protections include: Patents Trademarks Copyrights

CHAPTER 5: BUSINESS LAW Government Regulation of Business Intellectual Property Law Patents: gives exclusive right to make, use, and sell an invention for 17 years. Trademark: a word, name, symbol, or slogan a business uses to identify its own goods and set them apart from others. Copyright: protection for creative works (literature, music, plays, dances, paintings, movies, maps, computer programs…); confers sole right to reproduce, sell, or allow use by others; lasts for the holder’s life plus 70 years.

CHAPTER 5: BUSINESS LAW Government Regulation of Business Consumer Law Consumer law protects individuals against business activities that might be harmful to them. Regulatory agencies include: Federal Trade Commission (FTC) takes action against companies when there is a “pattern of wrong doing.” Food and Drug Administration (FDA) protects consumers against problems with mislabeled and impure foods, drugs, cosmetics, and medical devices; approves new drugs before they can be sold.

CHAPTER 5: BUSINESS LAW Government Regulation of Business Commercial Law Commercial law regulates how businesses enter into contracts with other businesses and with consumers. The basic law document that governs these dealings is called the Uniform Commercial Code. A contract is an agreement between two parties to carry out a transaction, such as the sale of goods from a seller to buyer; a contract creates an obligation between the agreeing parties.

CHAPTER 5: BUSINESS LAW Government Regulation of Business Licensing and Zoning Law Licensing laws regulate who can go into certain businesses. Zoning laws regulate where they can establish operations. Local governments establish building codes (ordinances) that may regulate such things as maximum height, minimum square feet of space, or types of materials used for construction.

CHAPTER 5: BUSINESS LAW WORKERS AND THE LAW 5.2 The Importance of Employment Laws In this section you will learn: The five major kinds of employment laws The three major federal equal employment opportunity laws The importance of occupational safety and health laws How the Fair Labor Standards Act protects workers Five benefits laws with which companies must comply How labor relations laws protect workers’ rights

CHAPTER 5: BUSINESS LAW WORKERS AND THE LAW 5.2 The Importance of Employment Laws In the early part of the twentieth century, employees were at the mercy of companies with respect to amount of salary, dangerous working conditions, and discriminatory hiring practices. In the 1930’s Congress and state legislatures passed employment laws that regulated the relationship between companies and their workers, and give workers significant rights and benefits.

CHAPTER 5: BUSINESS LAW WORKERS AND THE LAW 5.2 The Importance of Employment Laws Companies must comply with five major kinds of employment laws: Equal Employment Opportunity (EEO) laws prohibit discrimination against workers. Occupational safety and health laws require compliance with federal, state, and local government standards. Wage-hour laws establish minimum wage, overtime, and child labor standards. Benefits laws guarantee certain benefits. Labor relations laws protect the right to organize unions to bargain collectively for better wages and working conditions.

CHAPTER 5: BUSINESS LAW WORKERS AND THE LAW 5.2 The Importance of Employment Laws Equal Employment Opportunity (EEO) Laws : The Civil Rights Movement of the 1960’s resulted in Title VII of the Civil Rights Act of 1964. Under Title VII, companies were prohibited from discrimination on the basis of race, color, religion, sex, or national origin. Title VII created the Equal Employment Opportunity Commission which could sue employers on behalf of workers.

CHAPTER 5: BUSINESS LAW WORKERS AND THE LAW 5.2 The Importance of Employment Laws Equal Employment Opportunity (EEO) Laws : The Age Discrimination in Employment Act protected employees between ages 40 and 70 against discrimination. The Americans With Disabilities Act (ADA) prohibits discrimination against persons with disabilities.

CHAPTER 5: BUSINESS LAW WORKERS AND THE LAW 5.2 The Importance of Employment Laws Occupational Safety and Health Laws : The Occupational Safety and Health Act created the Occupational Safety and Health Administration (OSHA). OSHA sets for keeping workplaces clean and free of hazards. OSHA routinely visit workplaces to ensure compliance with government regulations. Employees can request an OSHA inspection due to suspected violations.

CHAPTER 5: BUSINESS LAW WORKERS AND THE LAW 5.2 The Importance of Employment Laws Wage-Hour Laws : In 1938 Congress passed the Fair Labor Standards Act (FLSA) also known as the Wage-Hour Law. It addresses overtime, minimum wage, and child labor standards. Employing children under age 14 is prohibited.

CHAPTER 5: BUSINESS LAW The Importance of Employment Laws WORKERS AND THE LAW 5.2 The Importance of Employment Laws Benefits Laws There are five different benefits laws: Social Security Act (1935): retirement income and health insurance (Medicare) Employee Retirement Income Security Act (ERISA):protects retirement fund money Unemployment Insurance Laws: financial assistance during unemployment; 2 criteria Worker’s Compensation Laws: workers are insured against illness, injury, or death on the job Family and Medical Leave Act (FMLA): employees get up to 12 weeks of unpaid leave

CHAPTER 5: BUSINESS LAW WORKERS AND THE LAW 5.2 The Importance of Employment Laws Labor Relations Laws : The National Labor Relations Act (NLRA) give employees the right to form unions. Unions are groups of workers that collectively bargain for higher wages and better working conditions. The NLRA says that companies must bargain “in good faith.” Three of the most powerful unions are the Teamsters (diverse group; started with freight drivers), the National Education Association, and AFL-CIO (The American Federation of Labor and Congress of Industrial Organizations) which is a federation of over 50 labor unions from pilots to teachers.

CHAPTER 5: BUSINESS LAW THE END