What Can Happen to Your Business for Noncompliance?

What Can Happen to Your Business for Noncompliance?

Businesses must comply with specific laws and regulations, which vary at local, state, and federal levels. They also differ according to industry, entity type, and business location and activities. However, the most common form involves adhering to standards for the payment of wages and salaries, following guidelines provided by the Occupational Safety and Health Administration (OSHA), and paying taxes. It also entails holding shareholder meetings, maintaining proper licensing, and ensuring customer privacy.

Knowing this, it would do you good to understand what regulatory requirements are in place that apply to your business. Aside from OSHA guidelines, these can include the Health Insurance Portability and Accountability Act (HIPAA), General Data Protection Regulation (GDPR), Fair Labor Standards Act (FLSA), and Federal Information Processing Standards. Your business may be included in the list of highly regulated industries such as transportation, health care, and medical, energy, construction, and finance.

While business laws and regulations were designed to ensure a company operates legally while protecting itself, its workers, customers, and other stakeholders, it’s not easy to maintain compliance. Regulatory bodies constantly change regulations, making it even more challenging for businesses to comply. Global brands have the means to hire HR professionals and legal teams to help them remain compliant, while small and new businesses often lag. No matter the size of your business, though, it’s crucial to follow the law. Noncompliance can lead to serious legal consequences that may, at worst, result in the closure of your business.

Common Parts of a Business Where Compliance Is Compulsory

It will help you understand corporate compliance better if you know which common areas in your business require adherence to basic business laws and regulations. Some of the most common areas include:


Specific types of businesses are required to acquire licenses and permits to operate. If you need them for your business, you may have to file them at the local, state, and federal licensing and authorization agencies. Often, federal agencies have regional or local offices at municipalities. Do check them out at your local business formation center.

Workplace Safety

Workplace safety is required for all businesses to ensure that workers and customers are safe against harm and illnesses. This may involve providing a safe workplace, recognizing hazards, installing safety equipment, preventing fires, and educating employees about workplace safety. To comply, you might also have to install integrated hollow metal doors for fire safety, put up an early warning system, and provide an evacuation and emergency plan for the sole purpose of ensuring the safety of all people involved.

The OSHA regulates workplace safety, but there are also local and state workplace safety regulations you need to follow.


There are also rules and regulations to follow during the hiring process. You’ll need to comply with proper questioning during the job interview considering there are specific questions that you are not allowed to ask.

Regulatory bodies are also on the lookout for discrimination and improper conduct during the hiring process. You’ll also need to comply with rules that govern the employment of minors.


Most importantly, you’ll need to follow the rules and regulations that ensure your workers get fair wages. Wage laws also cover payment for overtime hours and health insurance. Worker’s compensation, which covers hazard pay and medical expenses, is also included in high-risk industries.

Labor Law Poster

All businesses in the US must put up posters about state and federal labor laws. These posters must be placed in areas that all employees can easily see.

Legal Consequences of Noncompliance

Failure to comply with business laws and regulations will result in varying legal consequences depending on the severity of the violation. In general, though, legal repercussions of noncompliance can result in any of the following:


When a violation by your business is discovered, regulatory bodies will inspect your company’s finances and processes. Even after an audit is done, they’ll continue to pay closer attention to your business, always on the lookout for impending faults.

Fines and Penalties

Noncompliance can also result in fines and penalties imposed on violating businesses. In an example, according to the Department of Labor, violators of the FLSA can be fined as much as $10,000. In some cases, fines take a substantial amount of a company’s revenue, negatively affecting business finances.

Lawsuits and Imprisonment

When a violation is severe enough, way beyond what audits and fines can handle, regulatory bodies will file a damaging lawsuit against businesses. Aside from this, those affected by the violation, such as customers and employees, can also file a lawsuit against the violating company.

In the worst-case scenario, business owners and company leaders can also be imprisoned for criminal negligence.

Comply and Protect

In a sense, while business laws and regulations aim to protect workers, customers, and other stakeholders, compliance protects your business against legal consequences. It’s also worth noting that any business will find it more reasonable to adhere to rules and regulations. You’ll avoid reputational damage and costly fines. For all of this, make sure to always comply with business laws and regulations.

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