How Do Government Regulations Affect Businesses?

by | Oct 15, 2015 | Business Law

Federal, state, and local governments all mandate certain regulations for small businesses. Governments issue regulations related to environmental practices, employee practices, advertising practices, and much more.

Furthermore, government regulations affect how companies structure their businesses, where companies decide to locate, how they classify their employees, and thousands of other things. Some of these regulations stand out and affect employers and their employees more than others.

Environmental Regulations

Environmental regulations for companies exist to reduce the negative impacts of manufacturing on the environment. The Environmental Protection Agency (EPA) administers federal initiatives passed by Congress.

For example, the EPA has passed many federal bills over the years in order to ensure that businesses have a minimal impact on the environment. One example is the Clean Air Act of 1990, which governs how businesses must do their part in the following:

  • Protect air quality
  • Clean up air pollution
  • Regulate vehicle emissions and smog levels
  • Protect the environment

Another example of federal legislation that applies to businesses is the 1972 Marine Protection, Research and Sanctuaries Act. This generally affects businesses that manufacture products, thereby creating waste. The act prohibits businesses from dumping nasty, harmful waste, and other materials into the ocean.

EPA regulations also require companies that dispose of their waste materials into hazardous waste sites to either pay the EPA to cleanup the site or provide their own staff to clean it up.

Also, when businesses seek to build or expand their facilities, they must seek permits from local authorities. Local authorities will ensure that no wetlands or other protected areas will be destroyed as a result of the construction.

Oftentimes, municipalities will grant land, zoning, and building permits in return for some proactive environmental protection promises on behalf of the business. For example, a town may grant a business a permit for a new building but may require the business to plant a certain number of trees and other landscaping in return.

Advertising Regulations

Obviously, marketing a business is crucial to expanding its network. Instead of giving businesses free reign to advertise and market however they wish, the federal government has imposed advertising laws to keep things in check.

Essentially, the goal of the regulations is to help keep businesses honest in their advertising and marketing campaigns. If the government determines that a company has omitted important information or blatantly lied in its advertisements to the public, then the business may be required to pay handsome penalties.

The Federal Trade Commission (FTC) was established for a number of reasons, one of which is to enforce businesses’ online advertising. The regulations are specific in preventing consumers’ private information during electronic commerce.

The Fair Packaging and Labeling Act requires that a business not only be truthful in listing the ingredients in products that are consumed by customers, it also requires businesses to all of the ingredients (in a specific order) and the products’ nutritional information. A product’s packaging must follow certain guidelines. Again, any information listed on a product must be truthful and accurate.

Consumers who have been misled by a business’ advertisements and thereafter suffer physical can sue the businesses for their irresponsible ads.

Employment Regulations

Regardless of the “workers” employment status—whether the company chooses to hire independent contractors, freelancers of full time, salaried employees—small business owners must familiarize themselves with employment laws in the state(s) where they conduct business.

Employment regulations cover fair wages and hours, retirement, and health insurance benefits, discrimination in the workplace, and unemployment and workers’ compensation compliance.


There are many more government regulations that affect companies, and it is important that company executives are aware of these regulations so as to effectively conduct business while staying within the limits of the law.

Violating local, state, and/or federal regulations can be severely detrimental to a business and may even lead to bankruptcy. If you require representation in this area, contact us at 561-469-0019.

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