Marketers, accountants and software developers all have their own jargon – common industry words that others might not readily understand – but the legal field is also well known for its complex lingo.
While there’s no need to go to law school if you’re not pursuing a career in this field, it’s important for business owners to have a basic understanding of the legal terminology they’re likely to encounter. You don’t have to know everything, but you do need to know enough to stay compliant. It’s also essential to know when you should hire an attorney. Consider this your crash course on legal terminology – no Bar exam necessary.
Below are more than 30 legal terms you’re likely to come across relating to employment; sales and marketing; intellectual property; contract law; and general laws affecting all businesses. With these words in your vocabulary, you’ll be better prepared to address legal matters as they arise.
When federal and state employment laws compete, state employment law almost always has supremacy. State laws normally extend upon federal employee protections and rights on issues such as drug testing, workers’ compensation and hiring practices. At the very least, make sure you know your state’s employment laws.
Here are five employment law terms you need to be familiar with:
Employment law in the U.S. is complex. You should keep all contracts, correspondence and records of conversations with employees to defend yourself in the event a current or former staffer raises a complaint. Keep the number of an employment lawyer close at hand in case of such instances. If an employee files a complaint, don’t immediately defend yourself against it – reach out to your lawyer instead. And, if you do want to fire a team member, get your attorney to draw up a termination contract to ensure your legal bases are covered.
Federal employment laws are enshrined in seven different acts: the National Labor Relations Act (NLRA), the Employee Retirement Income Security Act (ERISA), the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA), the Occupational Safety and Health Act (OSHA), the Immigration and Nationality Act (INA) and the Fair Labor Standards Act (FLSA).
One major area of business law relates to protecting consumers from false or deceptive advertising. These laws have been kept pretty much up to date as the internet continues to transform how companies find new customers.
Here are some key legal terms for sales and marketing:
Keep records of all your promotions and advertising campaigns as a matter of course. Ideally, you should do this anyway to determine which campaigns are successful so you can run the best ones again. Beyond that, you should take notes on how each campaign complies with legislation to the best of your knowledge. If you later believe you made a mistake, keep a record of when you found out and what you did to make it right. Authorities are likely to go easy on you for a first violation, but you should engage a lawyer if an advertising recipient or government body threatens to sue you.
When the CAN-SPAM Act was passed in 2003, critics called it the “You Can Spam Act” because it did not place any requirement on businesses to seek permission before sending email marketing campaigns to individuals’ email addresses. There is still no such stipulation today.
Intellectual property (IP) is an idea, process, design, invention, service, product or other item of work that you’ve developed over time and that belongs to your company. U.S. law protects the owners of intellectual property so they have an opportunity to profit from the hard work involved in its creation.
IP falls into the following four categories, and business owners should know these legal terms:
If you use others’ intellectual property without permission for any reason, this is intellectual property theft. The same can be argued if, for example, you brand your burger restaurant as “McDougall’s,” your primary logo is a joined pair of incomplete ovals in the shape of an “M” and you call your signature dish “Bigger Mac.” McDonald’s would contest that you are mimicking their intellectual property for profit and thus reducing the value of the company’s trademark.
If a company makes an IP accusation against you, claiming you are using or mimicking their intellectual property, they will usually send you a warning letter from their lawyer before taking formal action. Get in touch with your own attorney immediately for advice on how to proceed.
For your client list to be considered a trade secret, it needs to contain more than clients’ names and contact details. It also must include detailed information on customers who have resulted from previous contacts and orders that no competitor could acquire without going through the same processes. You must also demonstrate the value of its secrecy by, for example, showing how it gives your company a competitive edge.
Contracts often govern your relationship with clients and suppliers and your responsibilities to each other. Sometimes, the parties in a contract can disagree because the wording in the agreement is ambiguous and open to interpretation. Other times, one party changes their mind unilaterally and wants to get out of the contract.
Here are some terms you’re likely to come across in contract law:
If possible, always use a lawyer for any activity requiring contracts. For example, you should get your own terms and conditions checked before asking customers to sign them, to make sure they’re legal and enforceable. Also ask your lawyer to review the terms and conditions your suppliers, especially business loan providers, want you to sign.
In the statute books, there are tens of thousands of laws covering business behavior. You should be aware of the following six laws and their associated terminology:
Listen to your lawyer. Their job is to keep you out of court whether you’re bringing an action against someone else or someone is bringing one against you. It’s much cheaper, faster and easier to come to an out-of-court settlement than it is to take the dispute before a judge.
As a business owner, you need to be prepared to work with lawyers regularly. They’re a necessary expense, and you’ll come to appreciate what they do when you need them to defend you. You’ll need to hire a lawyer to start your business and set up your company, which includes applying for any necessary permits and licenses and drawing up the governing agreement that defines the roles of all shareholders in the business.
Try to hire a business lawyer who has experience with your sector. They may be able to see risks and opportunities you’re unaware of, particularly if this is your first business. On more specific matters, like intellectual property or environmental laws, seek specialists. They may be more expensive than standard lawyers, but you’ll receive better advice.
Many law firms now offer fixed-fee monthly consultation services with unlimited calls to attorneys on employment and HR issues. This will probably be cheaper than using an employment lawyer on an ad-hoc basis. If you are sued, most flat-fee service providers offer big discounts on fees to defend you. At any rate, by at least understanding the terms highlighted above, you’ll be better equipped to comprehend whatever legal predicaments you face as a business owner.