When faced with legal jargon such as “grandfathered in,” it can be difficult to understand its meaning and implications. But this phrase is actually quite simple, and can be used in a variety of contexts across different business and legal environments.
Simply put, being “grandfathered in” means to exempt someone or something from a new law, policy, or regulation because they or it existed prior to that rule or law coming into effect.
For instance, let’s say a business has been operating for five years and is generating $1 million in annual revenue. A new law is proposed that requires all businesses over $2 million in annual revenue to pay their employees a minimum wage of $15 an hour. The business in question is grandfathered in, meaning that they’re exempt from the law since they were in existence prior to the law being put in place.
Grandfathering in can also be used to describe situations where businesses are allowed a delay before they have to comply with a new law or regulation. For example, if a business is required to file taxes annually but is grandfathered in to file every two years, they may have more time to get their finances in order.
The Benefits of Grandfathering In
Grandfathering in allows businesses time to adjust to changes or to take advantage of incentives available through a new system prior to them coming into effect. It can be especially beneficial when new laws are subject to drastic changes. This gives businesses around the country the chance to streamline operations, update policies, or acquire capital before they’re affected negatively in a drastic way.
Grandfathering in is also beneficial to those being grandfathered in. After all, they’re being given the chance to avoid being penalized for previously-engaged-in activities under the old system.
The Downside of Grandfathering In
Of course, not everything about grandfathering in comes with positives. Grandfathering in can risk creating an environment where “haves” and “have nots” exist. For instance, those businesses that are grandfathered in may be able to go forward without worry of being affected by the new regulation elsewhere, while those not grandfathered in may face drastic situations in which they have to completely rework their operations in order to stay in business.
In Conclusion
Although many people are confused about what grandfathered in means, it’s actually quite simple. Being grandfathered in means that a person or business is exempt from a new policy or law due to having existed before that policy or law went into effect. It can be beneficial by giving businesses time to adjust, but can also be detrimental by creating an environment of “haves” and “have nots.”