Draw the Law: Government and Business, Part I: The Overview

Happy New Year! Pardon the delay, but I have had a lot of work and been trying to deliver new interesting content and helpful services for local small businesses and startups here in Hawaii. So I hope you all are off to a roaring start with your business plan, startup, second round of financing, or expanding your business to new markets.  However, if you were like me you were concerned with the “fiscal cliff” debate that raged with the US Congress at the beginning of the year.  Now in the upcoming weeks, here in Hawaii, as in Washington DC, lobbyists and stakeholders are preparing for a new legislative session to influence lawmakers.  Many of these lobbyists represent consumer advocacy, environmental protection, trade, and business groups.

So this brings me to a new series for Draw the Law, government and business.  I have a background in government, law, business and politics and I find that many small business owners do not appreciate the interaction of government. I realize that many business owners have not had civics in a while, nor did their class cover the nuances of government, regulation, and lawmaking, but that is why I think these posts should bring some clarity. So let's get to it.

The Federal System

So let’s start with a refresher, our government is a federal system. This means there is a national government, located in Washington DC, and fifty state governments, one of which is the State of Hawaii, with its state capitol being located in Honolulu.  What this means is usually you have to worry about two sets of laws.  For example, your income taxes, you have federal income tax, and a state income tax.  Another area is labor law; federal law prohibits gender discrimination, as does Hawaii state law.  However, each of the states, in some areas, are allowed exceed federal law, such as how Hawaii law prohibits discrimination against domestic violence victims or gender expression.  Finally, there are some areas that federal law only exists, such as the registration of copyright or patents.

Imagine that there are 2 sets of systems, that there is a federal government in black, and 50 state governments in red. When you start a business you start it in a state and are subject to state taxes, as well as federal taxes.

The Three Branches

So we have two levels of government, but within these layers there are three parts of each government.  There is the Executive branch, which has the United States President if it is the federal government and the Governor of Hawaii if it is the state.  The Executive branch is responsible for carrying out laws. For example, the US Department of Agriculture Food Safety and Inspection Service is the public health agency responsible for ensuring the safety of meat, poultry, and egg products is safe. At the state level the Department of Commerce of Consumer of Affairs of Hawaii is under the governor and is responsible for registering your corporation or limited liability company with the state.

The Judiciary is made up of the courts, which have judges that rule on cases. We have federal courts and state courts, and there are specific rules and procedures that allow a court to have jurisdiction over your case (i.e. they have power to hear your problem).  So for a business, if their product or service injures a customer and the customer goes out, finds an attorney, and then sues the business they will get this resolved in a court.  Another example is if you were an independent contractor and did work for a client for $3,000.00, but never received payment, you could consider suing the client in Small Claims Court.

Finally, there is the Legislative branch, which in my personal opinion most people find confusing, unless they are a politico.  This is the case because of the politics played among all the personalities of senators and representatives. For the United States Congress there is the House of Representatives and the Senate, similarly Hawaii has a bicameral (2 chambers) legislature.  The sole goal of the legislative branch is to make laws.  Therefore, many businesses, by trade or industry, bandwagon together to lobby for the creation of laws that are favorable, such as the US Chamber of Commerce, the National Restaurant Association, as do other groups, such as unions, like the ILWU or HGEA, as they interact at the two levels of government.

The executive branch (blue) is responsible for enforcement, such as through the department of taxation (taxes). The legislature (red) creates laws and lawmakers are subject to lobbyists, voters, and stakeholders influencing them. Finally, the judiciary (green) decides on cases through laws made by the legislature, such as class actin law suits.

Upcoming Weeks

In future weeks, I will go over how public policy affects management of businesses, lobbying, where nonprofits fit in, and how legislation is driven by stakeholders, as well as other topics that business owners interested in government may be interested in.

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*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.