Blog Post

3 Red Flags That Mean Your Business is in Legal Trouble

Jamie Florio • Apr 23, 2019

Just some things to be aware of to keep your business safe

As a business owner, your integrity is of paramount importance. If your business gets embroiled in legal trouble, it not only can sully your reputation and be bad for your bottom line, but it also could be bad for your employees if you have to lay them off in order to cut costs. The fact that just one dishonest employee can create such a ripple effect definitely means that you should be as vigilant as possible for looking out for the potential for legal trouble. Consider some of these red flags:

Employee Paperwork Doesn’t Check Out

It is important to have an organized system regarding all of your employee paperwork. This means that you should be able to account for all of the social security numbers, driver’s licenses, visas, passports and other documents for each and every employee. To put it mildly, you want to make sure that all of your employees are allowed to be in this country. Legal Match talks about how, as an employer, you have to make sure that all of the work authorization of anyone you hire checks out completely. You are required by the government to furnish this proof within 3 days or less.

Financial Record Issues

If your business appears to be having financial record issues, it can cause a lot of deleterious issues to say the least. Problems such as money laundering, embezzlement and fraud are all issues that you will need to look out for as a business owner. Law Office of Eric Harron describes that money laundering is sometimes referred to as employee theft- essentially taking funds earned by someone else. Some of the issues to look out for would include accounting issues such as the records not matching up appropriately. Moreover, if the numbers simply don’t “make sense” this could spell problems if not corrected immediately.

Wrongful Termination

Simply put, employees in America have a lot of rights in this country. However, there are times when you have to make a business decision to let somebody go. If this occurs, you really need to ensure that all of your documentation is as organized as possible. BusinessDictionary recommends that the employee needs to sign documentation prepared by a lawyer that makes the terms of dismissal as clear as possible. Otherwise you might have a wrongful termination suit on your hands.

As a business owner, it is up to you to do your due diligence so that you are not forced out of business due to these legal issues. An ounce of preparation is worth a pound of cure, and keeping these concerns in mind is sure to sure to help your business continue to prosper and do so legally.


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