Articles Posted in Small Business

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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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Starting on January 1, 2024, most employers in the 5-300x251will be required to provide five days of paid leave for any reason. Thanks to an City Council ordinance passed earlier this month by a 36-12 vote, Chicago employers will have to double that amount, including five sick days and five vacation days, under one of the most sweeping employee leave laws in the U.S.

The ordinance, which new Mayor Brandon Johnson described as “a step towards equity in the workplace,” also mandates that when workers depart their positions, companies with more than 100 employees will have to pay out as many as seven days of unused time, while firms with 51 to 100 employees will need to do so over a two-year phase-in period. Small businesses with less than 50 employees do not need to worry about this provision.

Johnson and progressive allied on the City Council wanted a 15-day allotment originally, but business, retail and trade groups, who are still vehemently against the ordinance, pushed back vociferously. And they’re worried that violations could lead to lawsuits, an issue that the council plans to address through a possible amendment—tabled for now—that would provide businesses with a 30-day time frame to address an alleged violation first.

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Tax Implications When Leaving a Partnership

When a partner leaves a business, the resulting transaction can take the form of a payment to the retiring partner to redeem his or her share of the business, or a sale of that share of the business to the remaining partners. Either way, the person who leaves obtains cash or property while the partners who remain increase their share of the assets on a proportional basis. While the end result appears to be the same, however, the tax implications can be quite disparate.

When the retiring partner receives a redemption payment, Section 736 of the Internal Revenue Code comes into play, determining firstly whether the income will be treated as a capital gain/loss or ordinary income, and secondly whether the remaining partners can deduct a percentage of their redemption payments.

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