Business Record Violations

Business law, which is also known as commercial law, is the generic term for the body of laws that govern entities and commercial transactions. An example of this would be if you wanted to start a new retail business today, business law would dictate how to organize and register your company. It would also indicate how to pay your employees and how to legally ship your merchandise to customers overseas.

Business law applies to many different aspects of a business, and will vary based on:

• The type of business, such as private vs. public, for-profit vs. not-for-profit, etc.;
• Its structure, meaning corporation vs. general partnership; and
• By jurisdiction.

Some specific examples of business law include:

• The Sherman Antitrust Act of 1890: The majority of other antitrust laws originated from this Act. Antitrust law intends to regulate the organization and conduct of businesses, to ensure fair competition, and to protect consumers from oppressive business practices. The Sherman Act specifically is used to prevent monopolies, as well as to restrict business activities that affect interstate commerce, which in turn could hurt average consumers;
• The Lanham Act: The Lanham Act, also known as the Trademark Act of 1946, is a federal law regulating trademarks, service marks, and unfair competition. As such, if you created a trademark for your new retail company, you could register your unique trademark in order to receive certain legal protections under this Act;
• The Securities Act of 1933: The Securities Act of 1933 requires that businesses provide investors with specific financial information prior to investing in a company. This Act also applies when a company wants to go public, or initial public offering (“IPO”);
• The Federal Tax Code: Although the federal tax code also falls under standard tax law and is not only reserved for business law, the federal tax code is just as important for your business. The Federal Tax Code addresses everything from how to tax your employees to how to file federal income taxes for your business; and
• The Fair Labor Standards Act (“FLSA”): The FLSA is what sets the standards for employee wages and overtime pay. It applies to the majority of both public and private businesses. As such, if your new retail company has nonexempt employees, you will need to pay them at least the federal minimum wage and one-and-one-half times their normal rate of pay for overtime according to this Act.

What Are Business Records?

Business records are documents that are kept by a business over time. These can include a wide range of different papers, forms, and documents, such as:

• Records of sales, such as receipts and invoices;
• Expenditure sheets;
• Contract records;
• Tax records and other relevant tax information;
• Employee documentation information, which will be further discussed below;
• Bylaws and other related information; and
• Records of significant changes in the business, such as changes in bylaws.

Records can include a wide range of subjects. However, the term “business records” is generally associated with the accounting aspect of business operations. Businesses can sometimes be subjected to audits by government entities according to various business laws, as previously discussed. Businesses may have their records checked randomly or periodically in order to help prevent fraud and other violations.

Employee documentation is an especially important area of business records. In order to be lawfully employed in the United States, an employee is required to provide their employer with documentation showing their eligibility to work in the U.S. Form I-9 is required for every new employee, regardless of national origin or U.S. citizen status. The I-9 form verifies an employee’s eligibility; as such, if the employer fails to verify an individual’s identity, they will be subject to penalties.

In addition to the I-9 Form, which must be completed by all newly hired employees within three days of hire, there are various other forms of documentation that an employee must provide. This applies to business records, as employers must maintain records of all of this documentation. Some examples of such documentation include:

1. Documents that Establish Identity and Employment Eligibility:
   • U.S. Passport;
   • Certificate of U.S. Citizenship;
   • Certificate of Naturalization;
   • Permanent Resident Card;
   • Unexpired foreign passport with Form I-94;
   • Unexpired Unemployment Authorization Card;
   • Unexpired Reentry Permit;
   • Unexpired Temporary Resident card;
   • Unexpired Refugee Travel Document; and/or
   • Unexpired Employment Authorization Document from the Department of Homeland Security with a photo.
2. Identity Verification And Employment Eligibility: An employee may establish their identity by providing one document from List B, and one document from List C that establishes employment eligibility.

List B (Identity Verification):

• State-issued driver’s license or ID card;
• Federal ID card with photo;
• School ID with photo;
• U.S. Military Card, military dependent’s ID card, or U.S. Coast Guard Merchant Mariner
• Card;
• Native American tribal document; or
• Canadian government-issued driver’s license.

List C (Employment Eligibility):

• U.S. Social Security Card;
• Birth certificate;
• Certification of Birth Abroad (Form FS-545 or Form DS-1350);
• U.S. Citizen ID Card;
• Native American tribal document;
• Resident Citizen ID card (Form I-179); or
• DHS-issued employment authorization document.

What Are Some Common Business Record Violations?

Failure to maintain employee documentation is one of the most common business record violations. The penalties for violating employee documentation requirements vary, and are dependent on the offense; civil fines are more common, while criminal penalties may result if there is a pattern of violations. Other penalties for violating employee documentation requirements may include:

• Employers being barred from government contracts;
• In cases of discrimination, a court may order back pay or require the employer to hire the person who was discriminated against;
• Loss of employment; and/or
• Incarceration.

Another common business record violation would be falsifying documents. Falsification of documents generally refers to a criminal offense involving the:

• Altering;
• Changing;
• Modifying;
• Passing; and/or
• Possessing a document for unlawful purposes.

Some examples of common ways that documents can be falsified include:

• Altering or misrepresenting factual information, such as the profits and losses for a business;
• Forging the signature on a check or other document in order to receive services, or additional services that you are not entitled to;
• Using official letterheads without the authorization to do so;
• Concealing assets or property;
• Knowingly using or distributing a fake document in order to gain employment; and/or
• Destroying information that has been determined to be material to an investigation.

Business record violations in general may depend on the specific type of business, as well as state and local laws. Laws may be different depending on the size of the business, purpose of the business, and other factors. Some common business record violations include:

• Tax violations, such as failing to file tax returns or filing false information;
• Disclosing protected information without the consent of the information’s owner;
• Insider trading violations;
• Concealing assets, especially for the purposes of lowering taxes; and
• Tampering with business records.

Some of these violations are considered to be especially serious and could result in equally as serious legal penalties. In order to avoid violations, businesses should keep their records for several years, and periodically ensure that they are not being tampered with.

Some tax violations and other white-collar crimes can result in criminal fines, as well as jail time. Other violations can result in civil lawsuits, especially if the violations have caused losses to other parties involved. Additionally, some business record violations can result in class action lawsuits if enough people have been affected by the violation.

Do I Need An Attorney For Business Record Violations?

You should consult with an experienced and local business lawyer for any type of legal assistance with business records.

An attorney can assist in reviewing documents to ensure that your company is complying with business laws, specifically the business laws maintained by the state in which you operate your business. Your attorney will also be able to represent you in court, as needed.