Chicago Business Attorney Blog
Most business disputes do not start with bad intentions. They start with contracts that were written for a business environment that no longer exists.
The vendor agreement you drafted three years ago did not account for tariffs reshuffling your supply chain. The independent contractor arrangements your company relies on were built before enforcement agencies started looking much harder at how businesses classify workers. The employment practices you put in place assumed a set of rules that several states, including Illinois, have now rewritten.
In 2026, the distance between what your legal documents say and what the law now requires has grown wider, faster, than most business owners have had time to notice. That gap is where disputes begin, audits are triggered, and litigation gets filed.
This is what is happening right now, and what every business owner needs to understand.
Your Old Contracts Are Not Built for a Tariff Environment
Over the past 18 months, tariff policy has been anything but stable. Import costs spiked. Federal courts stepped in. The Supreme Court ruled in February 2026 that the administration’s use of the International Emergency Economic Powers Act to impose tariffs was unconstitutional, and a new wave of Section 122 tariffs followed. The landscape continues to shift.
For businesses with vendor agreements, supply contracts, or purchase orders that were written before any of this, the legal problem is not the tariffs themselves. The problem is that most of those contracts do not say who bears the cost when prices change.
A contract that locks in pricing without a tariff allocation clause can trap either party in a losing position. The vendor who cannot absorb the increase may claim the contract is unenforceable due to commercial impracticability. The buyer who expected a fixed price may argue the vendor is in breach. Both parties end up in a dispute that a well-drafted force majeure or material adverse change clause could have prevented entirely.
The businesses that are navigating this well have done one thing: they went back through their active vendor and supplier contracts, identified every agreement that lacked clear cost allocation language, and either renegotiated those terms or documented a mutual understanding with their counterparties. That is a legal task, and it is one that is far cheaper to handle proactively than through litigation.
If your contracts have not been reviewed in the past year, they need to be.
The Worker Classification Problem Has Become a Liability Waiting to Happen
Independent contractor relationships have exploded across every industry. Businesses use contractors for technology work, marketing, logistics, customer service, and countless other functions. The economic appeal is clear: no payroll taxes, no benefits obligations, no workers’ compensation premiums.
The legal risk is equally clear, and it is rising.
Misclassifying an employee as an independent contractor exposes a business to back taxes, unpaid overtime, benefit contributions, government penalties, and personal liability exposure for the people running the company. Intent does not matter. Enforcement agencies and courts look at the actual working relationship, not the label on the contract.
The factors that make a misclassification claim successful against a business are appearing more and more in the arrangements businesses think are clearly contractor relationships:
A contractor who works set hours, attends required meetings, works exclusively for one company, and uses company-provided tools is not legally a contractor under most tests. The signed agreement calling them a contractor does not change that analysis. Courts and agencies have said this repeatedly, and businesses continue to be surprised when it happens to them.
Remote work arrangements have made this worse. Businesses assume that because a worker is not physically on-site, the level of control they exercise is limited. That assumption is wrong. Required availability windows, mandatory video calls, performance metrics, and exclusive service arrangements all signal employment, regardless of where the work is performed.
One more trap that many businesses do not see coming: putting a non-compete clause in an independent contractor agreement. A recent federal appellate decision made clear that requiring a contractor to sign a non-compete is itself evidence of an employment relationship. The business ends up with an unenforceable non-compete and misclassification liability at the same time.
Review your contractor arrangements now. If the working relationship has evolved beyond what the contract originally described, that evolution has legal consequences.
AI in Your Business Has Created Legal Obligations You May Not Know About
Most businesses are using AI in some form right now, often without realizing the full scope of what they have agreed to through their software subscriptions. Applicant tracking systems, performance management tools, scheduling platforms, customer service chatbots, and contract drafting tools all frequently incorporate AI features that activate automatically.
State laws are catching up to this reality quickly. Illinois made AI discrimination in hiring a civil rights violation effective January 1, 2026. Colorado’s comprehensive AI law took effect earlier this year. More states are moving in the same direction.
The common thread across all of these laws is disclosure. Businesses that use AI to influence employment decisions must notify the people being evaluated. Businesses using AI-driven customer interactions face disclosure requirements in multiple jurisdictions. And under the Illinois law, failure to provide that notice is itself a violation, independent of whether any discrimination actually occurred.
There is also the contract enforceability question, which is emerging in business litigation in multiple states. Courts are beginning to examine whether contracts drafted with significant AI assistance meet the traditional requirements of mutual assent. The party relying on an AI- generated contract to enforce its terms may face arguments that the agreement lacks the specificity or the meeting of minds that contract law requires. This is early-stage litigation, but it is a developing risk that businesses using AI for contract drafting need to understand.
The practical implication: know what your software is doing. If you use any platform that touches hiring, performance management, customer communication, or contract generation, find out whether AI is involved and what obligations that creates.
The Contracts Governing Your Business Were Built on Assumptions That Have Changed
This is the root problem connecting all of the issues above.
Business owners tend to draft contracts, put them in a drawer, and move on. That is understandable. Running a company does not leave much time for legal housekeeping. But contracts are living documents in the sense that they govern relationships that keep changing even when the paper does not.
A vendor agreement signed in a stable pricing environment does not protect you in a volatile one. An independent contractor arrangement that reflected how someone actually worked three years ago may not reflect how they work today. An employment policy written before state AI laws took effect may already be out of compliance.
The businesses that end up in litigation over these issues are almost never there because they did something intentionally wrong. They are there because the legal framework around their business changed and the documents governing their relationships did not.
The most valuable thing a business owner can do right now is treat legal review as an operational task, not an emergency response. Pull your active vendor contracts. Look at how you have structured your worker relationships. Ask whether your hiring and employment practices account for laws passed in the last 12 to 18 months. Do that review with counsel who understands the current environment.
The cost of that review is measured in hours. The cost of discovering these issues through a dispute, an audit, or a lawsuit is measured in something much larger.
What to Do Right Now
Review active contracts for cost allocation language. Any vendor, supplier, or service agreement that does not address how price increases from regulatory changes, tariffs, or supply disruptions are handled is a contract with an open dispute waiting inside it.
Audit your independent contractor relationships. The written contract is the starting point, not the ending point. If how someone actually works has changed, the legal classification may have changed too. Review the substance of the relationship, not just the paperwork.
Find out what AI your software vendors are running. Many subscription platforms have added AI features to tools businesses have used for years. Know what those features do, what data they process, and what disclosure obligations they may create.
Bring your employment practices current. State employment laws have moved significantly in the past two years. Non-compete enforceability, AI use in hiring, wage and hour requirements, and worker classification rules have all seen meaningful changes.
Practices that were compliant 18 months ago may not be compliant today.
At Bellas and Wachowski, we have been helping businesses identify and close legal gaps before they become disputes for more than 50 years. If your contracts, employment arrangements, or business practices have not been reviewed recently, now is the right time to do it.
Call us at (800) 825-9260 or visit bellas-wachowski.com to schedule a consultation.
George Bellas is a business litigation attorney and Illinois Super Lawyer with over 50 years of experience representing businesses in state and federal courts. He is nationally recognized for his work on technology in litigation.