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Role and Functions of Law Essay

The role of law functions in everyday business transactions and the surrounding societies. Melvin (2011) stated, “Law is a body of rules of action or conduct prescribed by controlling authority and having legal binding force” (p. 4). Role of law in a business and society are the same however can impact businesses differently. Kelly and Associates Insurance Group are compliant with many state and federal laws.

Functions of Law

Legal terms are often referred to as jargon or legalese. Law creates duties, obligations and rights that reflect accepted views of society. The U.S. Constitution includes the preamble, seven articles, and 27 amendments. The function of law is to establish a structure of federal government to settle disputes by establishing rules. Separating of powers to maintain the order and resolve disputes, and protecting the liberties and the rights of the people. Most of the U.S. laws are set forth by the first three articles in the U.S Constitution containing the legislative branch, the executive branch, and the judicial branch.

Role of Law in Business and Society

The Sarbanes-Oxley Act of 2002 is an example of a recent role of law for public companies performing business. The main purpose of this act is to prevent fraudulent business activity. Internal controls established so one employee, who receives a bill and enters the invoice, should not be the same employee creating the check, signing it and mailing it out. The Sarbanes-Oxley Act passed as a law due to the scandals at Enron and WorldCom. These companies both filed bankruptcy, as they revealed that their financial reports were fraudulent. The function of law in society is to protect the liberty of the people. In chapter 2, case 2.1 Cipollone v. Liggett Group Inc. Cipollone filed suit against Liggett violation of New Jersey consumer protections statutes. Melvin (2011) stated, “Congress’s broadest power is derived from the Commerce Clause whereby Congress is given the power to “regulate Commerce amount the several states” (p. 33).

“Article VI of the U.S. Constitution provides that the laws of United States shall be the supreme Law of Land. Thus […] it has been settled that state law that conflicts with federal law is ‘without effect.’ […]” (Melvin, 2011). In this case, the state law was preempted as it conflicted with the federal law, therefore, dismissed. Cipollone’s mother had used Liggett’s products and passed away. Liggett was protected under federal statutes with the general surgeon’s warnings on their product.

Kelly and Associates Insurance Group Functions in Law

Health Insurance Portability and Accountability Act (HIPPA) regulates health-care providers, plans, and program administrators in gathering, storing, and disclosing medical information about individuals this is a well-known privacy protection act passed by Congress. Kelly and Associates Insurance Group is a third party administrator to many health insurance companies like CareFirst (BlueCross BlueSheild), Untied Healthcare, and Aetna. We are required by HIPPA laws to safeguard materials that have protected health information (PHI) readily available. PHI is a person’s name, geographic information, date elements, phone numbers, social security numbers, license numbers, or any medical information. Kelly and Associates Insurance Group are compliant with the HIPPA laws by having internal auditors.

Random audits take place during the day and after working hours. The audits are a group of people who inspect any papers left out, check accessibility of PHI. In the event, information has been breached an affidavit is completed and report it to our compliance team for their completion of the violation. Each case is reviewed and depending on the severity of the violation Kelly and Associates Insurance Group, could be penalized or sued. Kelly and Associates Insurance Group have a service bureau payroll division that is working on reporting Affordable Care Act (ACA) hours. And generating reports to ensure their clients are compliant with the ACA requirements. Same-sex domestic partnership has been another law passed by federal and only some states recognize same-sex domestic partnership.

The partner’s cost of insurance is considered taxable and should be included as imputed income to the states that do not recognize same-sex marriages. Tax compliance laws occur in the payroll division as each state and federal regulations vary from their deposits and filing per client. The filing frequency is determined by the amount of reported wages through payroll; however it is always determined by the taxing authority. This information must be provided to the payroll division by the client due to the liability the payroll department could face as each taxing agency charges penalties and interest for late filing or incorrect filing frequencies.


Law is practiced many times a day by businesses and society. Without laws, the world would have no guidelines to follow. There would be no right, or wrongdoing, and there would be no justice for the people of United States. We are the people, the land of the free; with laws as guidelines to make U.S. a safer place. Laws are being established to better the business transactions and improve society’s quality of life.

Melvin, S. P. (2011). The Legal Environment of Business. A Manageriel Approach: Theory to Practice. McGraw-Hill Company.

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