Top Legal Mistakes Made by Foreign Companies in the United States
The great size and structure of the United States market make it a very promising expansion target for companies from various industries worldwide. Silicon Valley, New York, and other hotspots are ripe with new startups and products every single year, proving that there is plenty of profit to be made in the US. One of the factors that make US business appealing is that there is the heavy legal infrastructure that has been put into place over the years, which promotes transparency and makes investors feel their money is safe. These laws are strictly enforced which makes it difficult to find ways around and even attempting to exploit loopholes may land you in a fair bit of trouble. These regulatory requirements were implemented in order to protect both companies and consumers, but they often end up surprising overseas companies which are unfamiliar with them. To help, we’ve compiled a brief overview of some of the most common mistakes made by foreign companies, and although by no means exhaustive, it will provide insight into the legal complexity of US business practice and how to navigate through it.
Being Exposed To Legal Action
Recall the pages and pages of small print you often have to scroll through before you sign next to a company’s terms and agreements? Companies provide these extensive documents to protect themselves because litigation is a particularly serious matter in the US. A company needs to take specific and thorough steps to cover itself on all fronts, which includes protecting the company from any foreseen liability and preventing abuse of the company’s product. These documents may prove vital in any potential future lawsuits that the company finds itself in, and therefore it is vital that all companies have recorded consent to these terms from users to be legally prepared for worst-case scenarios.
Not all countries worldwide have as developed a legal system as there is in the US, so companies established overseas may not feel the need or have the foresight to protect themselves in legal terms. There are many places where suing is not an option for most people because there is not an established or rigorous legal process in place to do so. Even if the option exists, litigation might prove to be too lengthy or expensive a procedure that renders it infeasible. However, in the US, the right to a fair trial is available to everyone, so litigation is a relatively common practice. Lawsuits can be filed by any institution, corporation, and even individuals. Actions against corporations are not uncommon and there is a precedent of them being won by individual consumers against even the largest companies with the brightest lawyers. For instance, in 1994, there was a very famous case in which a woman sued McDonalds for a coffee burn and won the lawsuit for $3 million dollars in reparations. Lawsuits are a serious deal, and you don’t want unexpected hostile legal action to suddenly destroy a company you’ve worked so hard to build.
Unfamiliarity with Legal Proceeding
Once a judge makes a decision, it can be incredibly difficult to overturn; to do so, you would have to apply for a lengthy appeal process with another court. Decisions in court are also enforced strictly. Any attempt to bribe or threaten police/judges is highly illegal in the US and would lead to devastating repercussions. Overall, fighting against lawsuits is a difficult and unfavorable process, especially for a company that is from outside the US. It is better to minimize the risk of this by following a number of thorough preventative measures. Those from within the US that are best acquainted with local business legal protection and have done it before would be able to provide guidance on how to do so.
Unofficial Employee Documentation
Paying under the table can be commonplace and a relatively unexposed practice in foreign marketplaces, but it is an illegal, risky, and frowned upon practice in the United States. Keeping employees off the books can land your company in heaps of legal trouble and business-ruining negative publicity. Thus, the hiring process should be very well-documented, registered with the government, and follow all of the labor law regulations. Employee contracts should have verbal agreements in writing about duties, salaries, contract length, etc. This not only clears up miscommunications in the negotiation process but will be crucial information if conflicts arise in these professional relationships.
Getting the correct paperwork filled out is also crucial for international business expansion, especially since the United States has become more stringent with immigration laws in recent years. Employees without US citizenship or official work visas run the risk of getting deported to native countries, causing costly setbacks to the families of employees as well as the company.
Growing companies should be encouraged to expand into the US because there is plenty of untapped potential within the huge market. Laws here are quite different from other countries, but if you have a team that is familiar with the US, you will have a much easier time avoiding costly legal mistakes. By partnering with Alariss, we can connect you with highly motivated, intelligent talent that has US business experience, and we will take care of compliance, employee documentation, and other legal processes to make your US expansion timely and cost-effective.