The Impacts and Effects of Specified Laws and Regulations on a Given Firm

Every country has its own regulations, laws and regulatory bodies or agencies governing the manufacturing, sales, marketing and distribution of products within the country. Laws and regulations are purposely made for human beings and other institutions as a guide to bring order and sanity into the society. Because of this, it is likely that their application will impact upon the plans of firms; their effects on a given firm are also inevitable.

An attempt would be made to discuss specified regulations and laws with particular reference to aviation and airline, environmental regulations, stock market regulations, banking regulations, research (and development) co-operation regulations, stock options regulations, labour regulations, intellectual property and social security regulations industry by industry and effects on the plans of firms where necessary.

For example, the Airport High Density Rule (HDR) in the aviation industry was considered as controversial. This rule requires that no more than 155 flights take off and land at O’Hare Airport and at three other major airports in the country between 6.45am and 9.15p.m.That restriction was expected to keep number of airline operations at O’Hare during that timeframe and also to keep the amount of noise generated by aircraft. When this failed, a law was proposed to abolish the rule.

On the tobacco industry, for example, the Food and Drug Administration (FDA), an agency of the US government published a rule on tobacco in the federal register to regulate the sale and distribution of cigarettes and smokeless tobacco to children and adolescents based on the health consequences of tobacco use. The rule specifies that anyone younger than 18years of age should not be sold cigarette and smokeless tobacco. The rule further requires manufacturers, distributors, and retailers to comply with certain conditions regarding the sale, distribution and promotion of tobacco products. Thus, vending machines and self-service displays were banned; billboards within 1,000feet of schools and playgrounds were also prohibited. This might have adversely affected firms who engage in such businesses.

In financial terms, however, the rule is expected to produce significant health-related benefits, ranging between $28 billion to $43 billion each year based on the premise that many adolescents would not start smoking because of the rule; with the FDA estimating that the rule will impose one-time costs of around $187 million.

With firms of all sizes, access to capital is of great importance especially when it comes to start-ups.Laws and regulations may affect the amount of investment available either from foreign or local investors or financial institutions. The most important regulations on capital are usually set by governments. These rules or regulations mainly affect the development of venture capital even though they are meant to guard against defaults. In the UK for example, the introduction of the business angel networks by the government to co-ordinate the flow of SME investment capital is proving successful-a positive effect. Also due to lack of access to pension fund capital in the European Union there is a limited institutional investment. In the case of the United States, most capital venture firms prefer to make investments larger than $3 million, while most entrepreneurs are unable to obtain more than $250 000 from own source and close relations.

The impact of regulations on plans of firms especially those who are technology-based limits the venture capital funding for these firms and affect what they can or intend to do and eventually limiting their capabilities to employ new hands thereby affecting the socio-economic fibre of the society. For example, some government regulations even specifies the type of investors eligible to fund venture capital because of the high risks for certain classes of investors.

In some countries, most firms’ source of financing is through the stock markets. In the UK for example apart from the London Stock Exchange, there is Alternative Investment market( AIM); purposely established to assist SMEs. Quite often, the rules on the registration, listing and IPO in terms of size, age ,profit and management set up are too costly and unnecessarily complicated for small and start-ups. This is known to hamper access to finance for most firms and invariably making it impossible for certain firms to pursue their plans and invariably their growth needs. Ghana Sugar Estate is an epitome of firms which are denied needed funding as a result of controversial restrictions on listing to the Ghana Stock Exchange. The effects of this is seen in the overgrown plantations of the newly formed sugarcane company in the Eastern Region of Ghana, loss of about £2,000 a day in revenue to the company and loss of jobs, and raw materials for most industries which depend on processed sugarcane for their work. The impact on the firms planning process is that funds will not be available to pay and maintain most of its qualified personnel.

With technology-based firms like which need constant innovations, source of financing is key to their planning and so any regulations or laws meant to provide adequate source(s) of finance is welcomed.

The NYSE has come under intense scrutiny to reform as there had been spates of irregularities in the exchange in terms of trading practices. Up till 2001, stocks traded in fractions of eighths and sixteenths i.e. 12.5 cents and 6.25cents respectively enabling a specialist buying a stock to sell to make at least 12.5cents.That has narrowed to a mere penny. This is as a result of decimalisation; a rule set up to change trading from fractions to decimals.Decimalisation reduces spread. The largest specialist firm LaBranche & Co., has been affected with a reduction of its market capitalization being halved to $474million in the past year. The effect of this regulation on LaBranche’s plans could be felt in its budget as funds might not be available. It will also have effect on its investors.

Notwithstanding this, the impact of this decimalization rule is felt on NYSE which in the long term can tear the Exchange apart thereby affecting the very people the rule seeks to eliminate that is the brokers and specialists on the floor. The effect on NYSE’s plan is to start perform its 1.4b shares daily electronically. It is believed that if NYSE does not match its rivals like NASDAQ on automatic trading, investors can take their trades elsewhere and that means a lost of huge annual fees in revenue to NYSE and possibly lost of jobs.

Until recently when it was announced on the TV a proposed credit regulation to improve transparency, the credit or loans market has been shrouded with secrecy that most firms were paying too much interest which affects their operations. Even though to the large firms the unavailability of the transparent credit regulation seem to benefit them i.e. their profit, on the whole it costs the SMEs to the extent that the US government has introduced new types of regulations that requires banks to report their lending to SMEs which are ranked and publicised by the government as a guide for potential lenders. In addition, in the United States, reforms to reduce paperwork, speed up loan approval and reduce costs have led a number of commercial banks to create new departments specialising in the origination and sale of small business advice and other guaranteed loans. At the moment some 60% of SMEs now rely on some form of bank credit.

In Ghana, the government has put in place certain regulations which are believed to be in favour of small firms like First Allied Loans and Savings Bank. This company posted a profit before tax of about $2m, a lot of money for a new bank. The impact on the plans of this firm is the recruitment of the best human resources in the industry culminating in a position to compete favourably with old and big banks in the Ghanaian banking industry.

However ,after deregulation in Britain, competition between banks and stock markets and among banks rose with loan increases to SMEs.Nationwide Building Society was one of such banks to benefit from deregulation. It can now compete favourably with other high street banks. Nationwide is creating more employment as a result of the deregulation law. The impact on the firm is that profit has increased and its members are satisfied and thus growth is imminent.

In a world nowadays with improved, challenging and competitive immense technology innovation and know-how, new businesses spring up in this sector as a result of its dynamism. It is also another sector that has a strong interest in research and development in co-operation. These technology-based firms or enterprises, however, are incapable to engage themselves for in-house research activities. To this end, therefore, there are as well numerous regulations most popularly the antitrust law. Known also as the Sherman Act, this is meant to prevent monopoly. Microsoft was accused of using its position in the software market to maintain its monopoly in operating systems. It was also accused also accused of using its operating system monopoly power to dominate the browser market and that Microsoft bundled its browser into its operating system to try to force Netscape out of the browser market. By antitrust standards, a judge gave an extraordinary ruling describing Microsoft’s dominance of the PC operating system market as “applications barrier to entry” and by that Microsoft held its prices substantially above the competitive level. The effects of this law on the plans of Microsoft is that consumers will now have more choice and so Microsoft will have to come out with more innovations to attract more customers and maintain its position in the industry now that there seem to become a competitive market place where all kinds of innovation can thrive. Regulators now appear more powerful and Microsoft will have to reconsider other related laws when planning. The impact on Microsoft’s plans in the long run will in my opinion be positive bringing about more improvements in the PC operating market.

Another area with regulations of concern is intellectual property laws or intellectual property rights (IPR).The reader’s digest word power dictionary defines intellectual property law or rights (IPR) as ”an intangible property that is the result of creativity, e.g. patents or copyrights.” Just as research findings are commercially traded by the owners or universities, patents and copyrights are also traded. Although, the filing of patents is generally known to be inefficient, slow and costly with the system usually in favour of larger firms, its absence could have brought about chaos in industry. For example a French court ruled against internet search powerhouse Google Inc.in an IPR case for linking a trade marked search terms and ordered Google to stop. The impact on Google is yet to become significant but it is obvious that it immediately sent a message to them to review their plans on their IPO which will in effect affect their business plans leading indirectly to a fall in profit as a result of the effect of the restriction on the search services they provide.

It is widely accepted amongst academics and executives in the business world that, the main assets of most firms is their personnel in other word their human resources. There are a number of employee-related regulations and laws in terms of labour, on recruitment and hiring of workers; social security with regard to retirements, pensions and health benefits; and the newly introduced stock options to compensate employee.

The costs and benefits of such regulations are enormous considering the fact that employee-related issues are somewhat at the fabric of the organisation.In many countries the regulations ranging from fee-charging recruitment services, working hours to social benefits limit the freedom of business executives and entrepreneurs to operate usually in terms of hiring and retaining qualified workers. Some regulations on labour also restrict the recruitment and dismissal of personnel, payment of overtime and use of part-time and temporary workers. Coyne (1998) writes that The European Union Directive on the Organization of Working Time which establishes a maximum 48-hour working week including overtime is considered by smaller firms to be interpreted in an inflexible way thereby restricting their ability to make best use of their labour resources. These really affect the firms because they are unable to recruit the best of personnel they might be looking for which could indirectly affect its operation(plans) as most banks choose to deal with firms with most well- qualified personnel. However, to those on the other end of the spectrum, the limitation on the maximum hour regulation is of great benefit and has had positive impact on the plans of the firm. London United Busways Ltd. for instance has recently recorded its lowest accident rates as a result of the ceiling of EU maximum driving hours a day (and week as well) thereby preventing tired but money-seeking drivers from driving. The company can now rely on the services of recruiting agencies to cover for the extra hours. The long-term benefit to LUB is that it can employ few workers, give them overtime to cover the needed hours and save some costs on pensions and sick pay to workers. The impact on the plans of LUB is that customers’ confidence in the company will increase and enhances its corporate social responsibility stance.

It must be emphasized here that, the introduction of stock options, which are a new and valuable approach to compensate employees, are prohibitive, excessively regulated or heavily taxed in a number of OECD countries.However, as a result of securities rules governing it, the issuance of stock incentives and fiscal rules for their taxation makes it popular with most US small or start-up firms. It is widely used by firms like Yahoo and Google in the early stages to recruit and or keep employees in the company. Even though research into this area is ongoing, it is claimed that they have helped in the high growth of the IT and software sector at the Silicon Valley with particular reference to Google which has managed to keep its best human resources over the years, the impact on the firm is even on the brand image and attributes that it has acquired for itself giving it a competitive advantage over the likes in the IT sector and also generating employment for a lot of new ambitious graduates.

Certainly health insurance market is another area which is of great concern to most governments as a result of sandals and fraud.Recent studies into health insurance regulations have concluded that state regulation of insurance issue, renewal and rating in general either reduces health insurance coverage or, on net, has no impact on coverage. Some of these regulations, however, presume that regulations may change the risk distribution of the insured population, raising coverage among high-risk groups and individuals but lowering coverage among low-risk groups and individuals, with no significant impact on overall coverage. The studies also assumed that insurance markets are competitive, and therefore, that higher price is an inevitable effect of regulation. Smaller insurers with increasing returns to scale may respond differently to regulation than larger insurers with relatively constant returns to scale.

The effects and impacts of laws and regulations on the plans of businesses cannot be overemphasized as the above indicate. Recent insurance scandal in Britain’s oldest insurance company, Equitable, nearly caused its demise.Equitable’s crisis is alleged to have started as a result of loopholes in regulation governing British insurance industry when it emerged that it did not have sufficient funds to honour guaranteed annuity policies to a large group of policyholders. The immediate impact on the Equitable insurance was that a court ruled that it closes all new businesses meaning a fall in services leading to huge debts and also lost of trust and market position to the insurance community and public as a whole which will inevitably force the mutual company to change its business plans and operations.

Throwing more light on this article, a brief look of recent stories and reports might be appropriate.

An Oxfam report in Metro of February 9, 2004 edition, reports that some companies particularly Tesco, Taco Bell and Wal-mart were accused of exploiting workers especially women in the name of lower production costs with unpaid overtime, low wages and unhealthy conditions as a result of lack of regulations.

In the UK, the recent spate of financial scandals leading to loss of pensions for retired workers has prompted the government to put forward a bill in parliament to avoid future loss of pension funds to retired workers.

Another story filed by Georgina Littlejohn in Metro of February, 23, 2004, alleges that UK’s crumbling infrastructure is holding back British businesses. It is claimed that new Government measures announced in July 2004 to help boost transport efficiency in the road and rail sectors have failed to be an effective solution resulting in loss of “man-hours” with 37% saying that lost time has a significant impact on their businesses. This costs the UK firms at least 15 billion pounds each year with each firm losing an average of 27,000 pounds.

This is a pointer to the fact that regulations could also be costly to businesses and firms and can negatively or otherwise affect their business plans in the long run.

Nevertheless, it is important to say here that the empirical results presented here, rest on few observations of laws and regulations and it is suggested that further studies must be conducted to confirm these findings and opinions.

As the interests of business do not always coincide with the broader interests of society, governments might still have to intervene with laws and regulations to achieve goals other than profits.

Employment Law and Equal Pay Act

The Industrial Revolution has brought radical changes in the working place. This historical phenomenon swept much of the world, especially Europe where it started and the Americas. One radical change it brought to the working place is the deterioration of working conditions as the number of workers or employees rose meteorically. In this regard, the government would need to pass laws protecting the rights of workers. These protective laws paved the way for the creation of modern employment law in the United States.

What is Employment Law?

The Employment Law protects employees or workers from any kind of mistreatment on the workplace. The poor working conditions that resulted from Industrial Revolution led to the creation of laws establishing fair wages, limiting the number of working hours in a week and prohibiting child labor. Other labor related laws also include laws regulating the cleanliness of the workplace, protection of employees from any kind of hazardous accidents.

Employment Laws have been passed standardizing the provision of benefits by the employers for the employees.

Employment Law includes health insurance that benefits workers if medical problems arise due to poor work condition or unsanitary workplace. In addition, Employment Law also covers protection against discrimination in the workplace based on religion, race, gender and other factors.

Let us focus more on employment discrimination laws that protect employees from discrimination in the workplace. The US Equal Employment Opportunity Commission (EEOC) enforces several employment discrimination laws that protect employees from compensation discrimination. One of these laws is the Equal Pay Act of 1963. The passage of this law is milestone in labor history as it ensures that there shall be no wage discrimination based on sex in the workplace.

The Equal Pay Act

As stated above, this law requires that no wage discrimination shall take place based on gender. This law requires that men and women be given equal wage for the same work rendered in the same workplace. The jobs need not to be the same, but they must be essentially equal.

Further, the EPA states that it is not the job titles that matter in determining whether jobs are substantially equal but the job content. Men and women alike are protected by EPA as it prohibits unequal wages to both genders that perform a job that requires substantially equal amount of work, skill and responsibility in the same workplace and same working conditions. Pay differentials are only allowed when they are based on merit, seniority, quantity or quality of production or other factors than gender.

Employees expect that their employers will adhere to the Employment Laws discussed above. Moreover, basic standards of fairness in terms of employment decisions shall be observed in the workplace, like equal page for equal job for both sexes. Sometimes, however, these labor laws are not adhered to by employers. If you are a victim of unfair labor practice, do not hesitate to fight for your rights. An experienced civil rights lawyer or employment lawyer might help you build a strong case against your abusive employer.

Freedom of Association Law and Employment Contracts

One of the most important international labor standards is the freedom of association. This is expressed in Article 41 of the original constitution of the International Labour Organisation and it is considered, in that document and its successors to be at the level of a fundamental human right which in the context of labour law is associated with the right of the workers to assemble and form labor organisations. It also appears to be universal that there must be a level of respect and observance of the right to freedom of association by employers for workers in order for economies to function effectively in developed and developing countries.

Interestedly, also at the international level there is the operation of the international labour organisation’s special procedures for inquiring into an alleged failure to respect these principles. The first of these procedures is the Fact Finding and Conciliation Commission on Freedom of Association. This first procedure appears to have suffered from under utilisation and now appears to have been relegated to the role of dealing with complaints against countries that are members of the United Nations but not of the International Labour Organisation. The second major procedure in operation is the Committee on Freedom of Association. This committee has remained active and engaged in the purpose that it was originally envisaged for. It has 9 sitting member states and has examined nearly 3000 complaints since its establishment in 1951. The committee has heard a number of complaints relating to the breach of the principle of freedom of association. The committee will hear the complaints from a variety of sources including employers and employee organisations. However, there is a need to notice that a state is only bound by the terms of the committee’s decision if the State has ratified conventions number 87 and 98. However, the United States has not ratified these conventions and is therefore only subject only to the jurisdiction of the committee rather than the conciliation commission.

The United States has always had an active interest in the International Labor organisation from the time of its formation to the present time. However, there are a number of issues which prevent the deep implementation of the principles of the International Labor Organsiation in the United States. The bulk of the jurisdictional requirements for labor laws in America are dealt with at state level with only a handful of employment matters, most notably in the area of discrimination on the grounds of race, sex and age at federal level. There is therefore only limited application of the principles of freedom of association as a human right in the labor laws of the United States.

When Employment Law and Employment Regulations Interfere with Workplace Safety

Federal and state employment laws dictate that you cannot deny someone employment due to their religion, race, age, or medical conditions. And yet, we all know that people who are older may not do so well in various types strenuous physical activity, in this case work. They can get easily hurt, or perhaps even cause injury to another employee. Some employers have complained that the political correctness involved in federal and state employment law is causing more harm than good, and their opinions go something like this;

If I hire an employee that has ADHD, and they are driving the forklift, they may take risks that other employees wouldn’t. Therefore I should be able to ask someone on the employment application, if they are taking ADHD drugs, or if they have this condition. However, as you may realize you are not allowed to ask anything of this nature to employees this during the hiring process. And if you use the answers to these questions, or in some cases if you ask the question at all, and you fail to hire the individual, or even if you ask the question and hire the individual anyway, you could be opening your company up to a lawsuit.

Further, whether or not a business person’s opinion in this matter is valid, or whether it is actually relevant is beside the point, as we have employment laws to protect employees from prejudicial hiring practices. Now then, there are issues of physical endurance and physical strength which do come into play. And someone who is in their 50s perhaps would have a tough time collecting the garbage in the event that the machinery they were operating stopped working, such as the garbage truck did not have an automatic system which picked up the trashcan to load it into the garbage truck.

They might easily become injured trying to pick up trashcans, and therefore they can cause a physical injury to themselves. They might blow out a knee, hurt a disk in their back, or once they are fatigued they may not follow proper ergonomic procedures in lifting. This is a common problem in warehouses as well. Obviously corporations and small businesses want to prevent such workplace safety incidents from ever happening. And a prudent person might take that into consideration during the hiring process. However that prudent individual using what they believe to be common sense, whether it is or not, could be breaking employment laws.

This is why every good business person needs a good employment lawyer, and to hire trained human resource personnel who have gone through the ongoing education classes, and understand all the rules. And those rules are constantly changing, and the corporation’s liability is constantly being challenged by case law. Indeed I hope you will please consider all this and think on it.

Federal Job Discrimination Laws and Employment Discrimination Protections

Employment Discrimination Protections in the United States Constitution The U.S. Constitution prohibits job discrimination by federal, state, or local government.
Federal employment discrimination laws prohibit employers from discriminating based on race, sex, religion, national origin, physical disability, or age. The laws protect workers from unlawful discrimination, bias, or prejudice, in the following areas of employment:

Hiring
Harassment
Promotion
Job assignment
Termination
Compensation

The Fifth Amendment to the Constitution states that the federal government may not deprive an individual of life, liberty, or property, without due process of law. It also assures each person of the right to equal protection under the law.

The Fourteenth Amendment to the Constitution explicitly prohibits states from violating an individual’s right to due process and equal protection. In employment, the right to due process requires a government employer to provide a fair procedural process, before deciding to fire a worker, if the termination relates to a “liberty interest” (like the right to free speech) or a “property interest” (like the right to retain a position, if dismissal or demotion is only allowed for “just cause”.)

The right to equal protection prevents state and local governments from discriminating, by treating employees, former employees, or job applicants unequally, because of membership in a protected group (such as race or sex).

Federal Statutes
Federal laws prohibit various types of discrimination in private sector employment.

The Equal Pay Act prohibits the establishment of different wage rates for the same tasks, based on the gender of the employees. This law requires that workers doing jobs involving “equal skill, effort, and responsibility and performed under similar working conditions,” must be provided equal pay.

Title VII of the Civil Rights Act of 1964 (Title VII) prohibits discrimination in many more aspects of the employment relationship. An employer may not treat workers differently, based on race, color, religion, national origin, or sex (including pregnancy, childbirth, or related medical conditions). Title VII prohibits discrimination in hiring, termination, discipline, compensation, or terms, conditions, and privileges of employment. Employment agencies cannot discriminate in hiring or referring job applicants. Labor organizations may not base membership, classification, or other union privileges, on race, color, religion, sex, or national origin.

The Federal Civil Rights Act of 1991 provides a worker with the right to file a lawsuit against his or her employer, and seek financial compensation for having suffered job discrimination.

The Age Discrimination in Employment Act (ADEA) prevents an employer from discriminating, based on the age of a worker who is 40 years or older. The prohibited practices are nearly the same as those outlawed in Title VII. The ADEA explicitly applies to pension, retirement, and benefit plans.

The Americans with Disabilities Act (ADA) prevents an employer from discriminating against an individual, because of his or her disability. In addition, the law requires that an employer make certain accommodations in the workplace for a person with a disability, who is otherwise qualified and eligible to do the job.

The Purpose of the Rehabilitation Act is to “promote and expand employment opportunities in the public and private sectors for handicapped individuals,” through elimination of discrimination and through affirmative action. This law applies to federal government agencies, contractors, and other programs receiving federal financial assistance.

The Federal Equal Opportunity Employment Commission (EEOC) interprets and enforces the Equal Pay Act, Age Discrimination in Employment Act, Title VII, Americans With Disabilities Act, and sections of the Rehabilitation Act. The agency’s enforcement powers are in section 2000e-5 of Title 42 of the United States Code, and its regulations and guidelines are in Title 29 of the Code of Federal Regulations, part 1614.

For victims of job discrimination, both federal and state laws provide protections, rights, and remedies. If the employer is a government agency or the government took significant steps to foster the discriminatory practice of a private employer, the U.S. Constitution, may protect the worker.

Unfortunately, an act of unlawful discrimination may be only the beginning of the emotional and financial hardships for the employment discrimination victim and his or her family. While struggling to cope with job discrimination, a victim may not realize that time is running out to protect his or her rights. Do not make this mistake. Employment discrimination laws are complex. If you or a loved one has experienced employment discrimination, it is important to talk with an employment discrimination lawyer with federal employment law experience.