The Business Owner Dilemma: Spend money to prevent problems or spend money to deal with problems?

The fact is everything costs money but not everything has value. A business owner’s ability to discern when to spend money will make the difference as to whether or not they end up investing back into the strength of their business or simply plugging holes that never close.

Operating out of a place of desperation or damage control WILL cost your business more money over time than securing your foundation now. 
How do you decide what is valuable versus what is just costly? 

Costly: Defending Lawsuits

Lawsuits are costly! (I hope I didn’t shock you.) And when one is brought against you it can cost $50,000 just to settle it (make it go away), even if there is no merit to it. But, because going to trial and defending yourself is also very costly, most business owners decide to settle the case at $50,000 instead of spending over $100,000 at trial and possibly losing. But, if you have a legal strategy in place, you have leverage to push back on Plaintiff’s lawyers to show them that you have a good case and you don’t have to be forced into settlement or trial. This is the difference between a devastating lawsuit and a nuisance.

Costly: EDD, CAL-OSHA, EEOC, IRS, and Department of Labor Fines and Penalties

Fines and penalties from government agencies can range from $1,000 per violation to $25,000. If you have more than one employee and you get dinged with a penalty, chances are you have more than one violation. This means fines can easily snowball into more and more money out of your pocket. Additionally, capturing the attention of a government agency is not on any business owner’s wishlist, I am sure. But once you have their attention, your chances of audit increase exponentially.

Costly: Utilizing a Payroll Company’s HR Support Center

This one may not seem costly at first, because the company reps do a great job selling you the dream of less time spent with employees, automation, and answering all your questions. In reality, if you sign up with one of their PEO options, they charge you a percentage of your annual payroll as their fee. When you grow your business, they penalize you by also growing the fee. This option proves costly from an out of pocket standpoint, but ends up being the most costly of all, because it provides no legal strategy, no auditing, and no compliance checks. It requires YOU to know the questions your need to ask first in order to provide you information. And if you’re like most business owners, complying with Employment laws is not an area they’d like to become experts in, so knowing the questions to ask is unrealistic.

Valuable: Having a Legal Strategy

Having a Legal Strategy means having a clear road map of the areas in which your business must comply, does not currently comply, and how to get there. It means knowing why having job descriptions and employment handbooks will protect your company and allow you to discipline and terminate employees, and then having solid ones in place. It means having a legal compliance expert answering your questions and raising flags for you. And it means sleeping at night knowing that even if you are sued, your legal strategy will protect you.

San Gabriel Valley Law is THE Human Resources Law Firm protecting CA Employers. Protect your business by scheduling your legal strategy session today at 

*As always, information is not legal advice and is not intended to be comprehensive and should not be relied upon. Readers should consult a lawyer for current up to date standards. Intended for CA audiences only. No Attorney Client relationship is formed by the viewing or interaction of this information.