The Legal Case

Every business, large or small, has to face the Millennium Bug. And that bug can land a business in court for lengthy litigation. In fact, lawsuits have already been filed over Y2K problems; for example, consumers have filed lawsuits because some point-of-sale systems refuse to accept credit card charges from people whose cards expire in the year 00.

At least two centenarians recently received letters welcoming them to kindergarten in the year 2000, but most Y2K problems won't be so amusing. For example, what will happen with insurance dates and tax computations and the restocking of supermarket shelves? Will your insurance company claim that none of your employees has enrolled? Will your tax-computation software fail to recognize the century change and miscalculate the taxes you owe? Will food be removed from supermarket shelves and destroyed because the warehouse stocking program isn't Y2K-compliant and thinks the food is outdated? Will your business be immune to similar problems?

Let's look at a potential scenario. Suppose you contract your payroll to a small benefits provider. If that provider's system isn't Y2K-compliant and comes to a screeching halt at 12 a.m. on January 1, 2000, your employees might not be paid until the provider installs a new accounting system. If your employees aren't paid, neither are their creditors. The potential for your employees and their creditors to take legal action against you is real.

The best way to head off costly litigation is to do your homework now by seeking legal counsel about your responsibility and liability in the event a Y2K problem with your business negatively affects your customers. Similarly, scrutinize the fine print in any contracts you sign. If one of your suppliers claims Y2K compliance and its Y2K problems negatively affect your business, you won't want to have signed away your right to legal recourse.