Articles Posted in Small Business

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Time to Review Severance Agreement

Employers who have not already done so should comprehensively review their past and present severance agreements to ensure that any non-disparagement and confidentiality clauses contained therein do not run afoul of the National Labor Relations Board’s ruling in a February 2023 case called McLaren Macomb, in which the NLRB significantly—and retroactively—restricted employers’ rights to include such clauses.

Referring to a provision of the National Labor Relations Act (NLRA) that protects employees’ rights to “engage in protected, concerted activities to address or improve working conditions,” the board wrote that: “a severance agreement is unlawful if its terms have a reasonable tendency to interfere with, or coerce employees in the exercise of their Section 7 rights.”

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Chicago Paid Leave Ordinance

Employers physically located within the City of Chicago need to be ready as of July 1 to implement the new Chicago Paid Leave and Paid Sick and Safe Leave Ordinance, which stipulates that covered employees can earn up to 40 hours of paid sick leave and 40 hours of other paid leave usable for any reasons per 12-month accrual period.

Covered employees are those who work at least 80 hours within a 120 day period. Immigration status is irrelevant. The benefit year can be defined the same for all employees or entirely individually, and can be tied to the calendar year, fiscal year, tax year, contract year or anniversary date of employment.

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AI & Content Creation

Businesses using generative AI programs like ChatGPT to create any content—whether for blogs, websites or other marketing materials, and whether text, visuals, sound or video—need to ensure that they’re not inadvertently using copyrighted materials in the process.

Clearly, the times they are a changing….and businesses need to adapt to the changes.  Employers should promulgate messages to their employees and contractors updating their policy manuals to ensure that communications professionals and others crafting content are aware of the risks of using AI-generated materials, which go beyond the possibility that they are “hallucinated” rather than factual—although that’s worth considering, too.

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Lawmakers Amend BIPA

When a class action lawsuit against the fast food chain White Castle teed up what could have been a $17 billion dollar verdict the Illinois Supreme Court decided to “respectfully suggest” that the state legislature revisit and clarify certain provisions of the Biometric Information Privacy Act (BIPA) of 2008.

That act, as originally written, held that employers who did not obtain employees’ permission when using their fingerprints or other biometric information like face scans in the course of their jobs—or who overlooked the same step if collecting similar information from customers—would be on the hook for $1,000 per “negligent” violation or $5,000 per “reckless” or “intentional” violation.  For example, if a fingerprint ID system was used to sign in/out at work, each sign-in and each sign-in was a separate violation which could cost the employer $1,000 each time an employee signed in or signed out.

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Non-Competes Now a Nonstarter

This is really big news!

Businesses that have entered into non-compete agreements with current or recently departed employees will need to come up with other ways of achieving the investment-protecting goals those non-competes were designed to accomplish. That’s because the Federal Trade Commission has issued a final rule, which will take after 120 days after publication in the Federal Register, that invalidates current non-competes for most workers and bans new ones for all employees.

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Is AI Washing Dirty?

Many people have become familiar with the term “greenwashing,” referring to attempts by a company to cast its products as more environmentally friendly than they are through public relations and marketing “spin” efforts.

Now comes the concept of “AI-washing,” in which companies exaggerate the degree to which or ways in which their products and services are powered by artificial intelligence, in order to gain a real or perceived competitive advantage. In addition to potentially misleading consumers and harming investors, this can break U.S. securities law, according to Gary Gensler, chair of the Securities and Exchange Commission.

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How Can Generative AI Assist Your Business?

What is generative artificial intelligence, embedded in applications such as ChatGPT?  How could it help your business?   What pitfalls should you avoid.  What policies should you craft around it?

This is no longer science fiction.  AI has become a reality and every business will be impacted by its use and application and your business must get on board with dealing with it and using it.

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Antitrust Lawsuit
National Association of Realtors

Decades-old norms regarding Realtor commissions and other policies surrounding home buying and selling have been swept away by the March 15 court settlement between the National Association of Realtors and groups of homeowners who filed suit against the realtors’ group arguing that home buyers should pay their agents’ commissions directly and  – most significantly – be able to negotiate that fee.

As a result of the settlement – which is still subject to the approval of the judge overseeing the case – the standard 6% commission on a home sale, heretofore split between the buyers’ and sellers’ agent, will be replaced with a system whereby prospective buyers can shop around for a lower rate and brokers can advertise those rates, even charging flat fees if they wish.

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Corporate Transparency Act

While Congress might have had worthwhile purposes in passing the Corporate Transparency Act, a section of the 2021 National Defense Authorization Act, it’s nonetheless unconstitutional, according to a federal judge’s summary judgment ruling in an Alabama case brought by the National Small Business Association (NSBA).

The Act requires most entities incorporated under state law to provide the U.S. Treasury Department’s criminal enforcement arm with significant personal information about their stakeholders, in an attempt to prevent money laundering, tax evasion and other financial crimes that often make use of shell corporations.

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Employee or Freelancer?

Is a person who works for your business financially dependent on you, or can they potentially independently profit based on their skill set? Will they be part of your company indefinitely? Do they perform a central, daily, integral role? Do you dictate when, where and how they work? Do you limit their ability to work for others? Can the person apply what they do to other endeavors, widening their market reach and leading to other revenue streams?

Small businesses and other employers will need ask themselves this set of questions and consider the “totality of the circumstances” in determining whether to classify people who work for them as employees or independent contractors, in a rule change published by the U.S. Department of Labor’s Wage and Hour Division on January 10, set to take effect March 11.

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