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Self-certification for veteran-owned and service-disabled veteran-owned small businesses is being eliminated, and a number of other changes went into effect on January 1 as a result of an updated Final Rule from the Small Business Administration (SBA) about these types of awards, details of which will be posted in a new section of the SBA’s regulations.

Until now, only contractors seeking status as either a Veteran-Owned Small Business (VOSB) or Service-Disabled Veteran-Owned Small Businesses (SDVOSB)—defined as 51% or more owned and controlled by a veteran or service-disabled veteran, respectively—competing through the VA’s Veterans First Contracting Program have been required to petition the VA’s Center for Verification and Evaluation to attain qualified status.  Going forward, however, self-certification will only be an option for those seeking subcontracts and for goaling purposes.

The updated Final Rule also expands certification eligibility for these classes of small businesses, eliminating the requirement that firms be labeled as “small” in their primary North American Industry Classification System (NAICS) code. After January 1, contractors considered small under any NAICS code listed in its System for Award Management (SAM) profile—not just the primary code—will be considered qualified.

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Can You Keep a Secret?

At the federal level, the Defend Trade Secrets Act of 2016 created a pathway for civil action due to misappropriation of trade secrets; federal courts also can rule on criminal trade secret actions based on the Economic Espionage Act of 1996.

The UTSA defines a trade secret as information with actual or potential independent economic value, based on the facts that potential competitors don’t know about it and don’t have the proper means to obtain it; and that “reasonable” efforts are being made to keep that information secret. The information in question can take the form of a formula, pattern, compilation, program, device, method, technique or process.

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Bellas & Wachowski - Chicago Business Lawyers

2023 Business Outlook

2022 started out with the hope of a recovery from the pandemic but ended with a recession.  With the advent of 2023 we are left to ponder on what is ahead for businesses in 2023.

It’s the Recession, Stupid:   The war in Ukraine has affected the world economy which was struggling with recovery after the pandemic.  Interest rates have increased which has adversely affected the real estate market and businesses which are facing higher operating costs and higher costs for loans.  We may see more businesses shut down because of the increased costs or an inability to pay off their loans.   It is doubtful that we will seen interest rates rise to the levels we saw in the late 1970’s and early 1980’s.   I recall thinking I was fortunate to get a mortgage rate of 13.5% on my first home purchase in 1979!   Businesses will need to carefully monitor their cash flow and receivables.

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Are NDAs for Sexual Harassment dead?

Employers will no longer be able to require workers to sign upfront non-disclosure agreements (NDAs) pertaining to sexual harassment incidents they have experienced or witnessed under new federal legislation that passed overwhelmingly through Congress and signed into law by President Biden on December 7.

One operative word here is “upfront.”   The Speak Out Act does not prohibit businesses from negotiating for NDAs that cover sexual harassment as part of a court settlement.  It simply means that aggrieved employees will need to speak out before filing any potential lawsuit that could lead to an NDA prohibiting them from doing so.  The new legislation also does not apply retroactively, so employers that previously had NDAs in place will not suddenly be faced with a flood of public allegations from prior to the legislation’s signing; the prohibition on upfront NDAs applies only going forward.

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Buyer of Nontraditional Legal Services, Beware

All kinds of business forms are offered online, and many of them for free.  Stand-alone paralegal services are offering various sorts of assistance to small businesses for significantly less than lawyers generally charge.  Accounting and bookkeeping services that organize businesses are increasingly positioning themselves as trusted enterprise advisers in ways that potentially can spill over into law-related issues.  And the cost of litigation continues to grow.

It’s thus understandable at some level that small business owners, who operate on modest margins in many cases, would ponder how much they need to continue to rely on their traditional partners in the legal world for the same level of services they typically have in the past and look to the web find alternatives to the services of a lawyer.

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Family Owned Business
Succession or Dissolution?

They make great stories when they’re successful, but maintaining continuity of family-owned businesses from generation to generation presents many challenges.  A family-owned business can be an excellent means of transferring and preserving generational wealth when run smoothly. Learning to work together as a family can benefit everyone and the business.

But many families just don’t get along, and those internal familial problems have a way of working themselves into the operation of the business.  When that happens, family members inevitably look to their attorneys for guidance, and at that point litigation may be the only option.

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How Do Family Businesses Survive Transition?

The Cornell University Smith Family Business Initiative says that more than three-quarters (77%) of small businesses rest on significant family involvement. Family Enterprise USA has counted 5.5 million family businesses in the U.S., finding that they contribute 57% of the U.S. GDP, employ 63% of workers and create 78% of all new jobs. And not all are small businesses: Businessweek.com has reported that 35% of Fortune 500 companies are family-controlled.

But the statistics on how often family businesses don’t sustain themselves over time—whether due to squabbling or for other reasons—paint a stark picture. According to Business Week, 40% of family-owned businesses reach the second generation, 13% get to a third and just 3% are passed down to a fourth generation or beyond.  And familybusinesscenter.com calculates the average life span as 24 years.

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Illinois Amends One Day in Seven Rest Act

The new year will bring with it activation dates for new or amended state legislation that passed earlier this year, some of which will have an impact on small business owners and their employees.

One significant change that employers should know about centers on the One Day Rest in Seven Act, or ODRISA. Heretofore, that law has mandated a minimum of 24 hours of rest per calendar week, but as of January 1, this will change to 24 hours of rest per seven-consecutive-day period. So if an employee works for six consecutive days, the law now covers with them on day seven, even if those six days don’t align with a Sunday through Saturday work week.

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What Would It Mean for Your Business?

Illinois voters will have the opportunity on Election Day, November 8, to vote “yea” or “nay” on an amendment to the state constitution that would protect workers’ rights to collectively bargain, while prohibiting state legislators from making Illinois a “right to work” state, in which workers in unionized workplaces can decide individually whether to join the union.  The Amendment should have no practical effect on small businesses since small businesses are generally not unionized.

Known popularly as the “Workers’ Rights Amendment”—although its official name is the more prosaic Illinois Amendment 1—the measure would amend the Bill of Rights Article of the Illinois Constitution to give employee the ability to bargain collectively, through representatives they select to negotiate wages, hours, working conditions, and worker safety.  The amendment, which received partisan support in both houses of the state legislature when it was approved for the ballot in May, also negates any local laws that prohibit this.

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Can I-Robot Hold a Patent?

An obscure but telling sign of when the robots will have taken over will be in evidence when they’re allowed to be named as inventors on patent applications.  But that day—when “I, Robot”-like artificial intelligence is thusly recognized as rivaling that of humans—hasn’t come about yet, at least not here in these United States.  So Sonny – the good robot in the movie I, Robot” – cannot hold a patent, at least not yet!

That came as a disappointment to Stephen Thaler, creator of the DABUS (Device for the Autonomous Bootstrapping of Unified Sentience) AI system, who had filed two patent applications with the U.S. Patent and Trademark Office listing only DABUS as the inventor. 

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