Private companies are small or medium-sized businesses that are privately owned by an entrepreneur, a partnership or a handful of investors. Although private companies are not required to be as transparent as a public corporation, most government guidelines are the same regardless of a company's size in order to protect consumers, employees and investors. Knowing federal guidelines for ethical business practices in your industry can help you prevent lawsuits, fines and possible jail time.
Labor and Safety Regulations
The U.S. government and many states have instituted federal and state laws over the past century to help ensure the safety, wages and well-being of private employees. These labor laws protect employees from unethical treatment, such as harassment, discrimination, unfair wages, excessive work hours, fraud and scams. The U.S. Department of Labor recommends first-time employers to consult with a FirstStep Employment Law Advisor to determine which federal and state labor laws apply to their businesses. For instance, the Occupational Safety and Health Administration may require employers in certain industries to abide by additional safety guidelines found in the Occupational Safety and Health Act. Other major labor laws include the Fair Labor Standards Act, which requires employers to pay wages above or at the national minimum wage, and the Civil Rights Act of 1964, which prohibits workplace discrimination based on race, color, religion, sex or national origin.
Environmental and Health Laws
Profit-seeking private companies hold an ethical, and often legal, responsibility to protect their employees, customers and local environment from potential health hazards. The Occupational Safety and Health Act requires employers to provide a safe work environment that will not likely cause illness or physical harm. Inspection agencies such as the U.S. Department of Agriculture's Food Safety and Inspection Service, and the Food and Drug Administration, protect consumers by examining production facilities, restaurants and food items to ensure that American households are consuming safe and nutritious products. Laws and regulations by the Environmental Protection Agency protect local residents and wildlife from the unethical dumping of pollutants that can cause fires, property damage, a toxic environment, disease, deformities, and even death.
Marketing and Privacy Guidelines
The government also has guidelines to protect consumers from unethical marketing and privacy practices, such as false advertising and the misuse of personal data. When marketing to potential customers, it is important that companies do not exagerate claims or mislead their audience. The Federal Trade Commission oversees and regulates marketing laws in the U.S. The agency ensures that businesses respect consumer privacy, are truthful in advertising and product labeling, follow industry guidelines, and refrain from e-mail and phone spam marketing. It also works to ensure the secure storage or disposal of private documents, including financial, legal,and customer data. Although it is not mandatory to alert customers to the use of their data, the FTC prohibits misleading claims regarding customer data usage and storage.
Unlike most ethical business guidelines, government requirements regarding public disclosure and transparency are distinctly unique for private companies. The Securities and Exchange Commission requires public companies to release financial and operational reports to the general public to protect investors and provide data for market analysts. Private companies are generally not required to make financial or operational information public. An exception to this rule would be when a private company begins to take on shareholders. When this occurs, the SEC requires the implementation of disclosure laws, just as it would with a larger public corporation.
- Small Business Administration: Employment and Labor Law
- Small Business Administration: Workplace Safety and Health Law
- Small Business Administration: Environmental Regulations
- Small Business Administration: Advertising and Marketing Law
- Small Business Administration: Privacy Law
- US Department of Labor: FirstStep Employment Law Advisor
- US Department of Labor: Summary of the Major Laws of the Department of Labor
- Cornell University Law School: Legal Information Institute: Employee Discrimination
- Food Safety: Inspections
- Inc: SEC Disclosure Laws and Regulations
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