The story of Joe the plumber illustrates how regulators detect violations

I’m so busy doing a few things in the day that when someone tells me something else I have to do, my response is, “Okay, get in line, but I probably won’t contact you either.” This is especially true if the new priority is not generating income.

When it comes to government regulations, I am even more resistant. What I really need are requirements that will not produce any revenue, but will cost me money and time that I don’t have to implement systems that I believe are inefficient and sometimes disruptive to my business.

To add to the discontent, I think if I ignore these rules the worst that can happen is a slap on the wrist and I’ll take care of the problem then. Anyway, how are regulators going to find out that I haven’t done the million things the government says I’m supposed to do? There are more than 20 million small businesses in the United States. No one can control all of them, not even half of them. They definitely won’t catch me.

There are not many incentives to comply.

Now comes reality check. Regulators do not need to go looking for a company that does not comply. Offenses come to them.

Every time a business has a customer who is dissatisfied with some aspect of their experience with them, every time a business has a competitor who thinks they can gain an advantage in the marketplace, every time a business has a disgruntled former employee who wants revenge, every time the company has an ex-employee who has trouble at a later job, every time a plaintiff’s attorney sees an opportunity to make a quick or substantial dollar on some perceived violation, that company is in danger of an expensive and often devastating journey through the jungle of regulations.

Unfortunately it is not a slap on the wrist. Often it involves heavy fines, lawsuits, and notifications to other agencies about violations, and the nightmare begins to spiral out of control.

I recently spoke with an attorney who scoffed at thinking I was in danger. “No one will ever come knocking on my door.” Amazing! I shook my head knowing that his company had been involved in not one, but three separate regulatory fights that had cost them tens of thousands of dollars. All these circumstances took place in the last five years.

Oh, the problem with the franchise tax board regarding contract employees? Yes, that is a regulatory issue. A former contractor made a complaint.

The problem with the IRS and the pension plan? That would be a regulatory problem. A retirement brought to light this confusion and the subsequent IRS investigation.

And how about the subpoenaed personnel file for the employee who left 3 years ago? A lawsuit that didn’t even involve them caused a staffing procedural dilemma.

All the time and money required to remedy situations that could have been easily handled by the proper institution of originally compliant systems.

What this lawyer lacked was that he was being caught and that it wouldn’t be that hard to become obedient. However, it is necessary to acquire knowledge about regulatory traps. Then it’s easier to make proactive adjustments to his procedures.

Awareness is the important first step in being realistic in your confidence that your business is safe.

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