On December 17 2024, the Small Business Administration (SBA) published a final rule that will make changes to its regulations for the Historically Underutilized Business Zone (HUBZone) Program, clarifying certain policies. PilieroMazza recently covered the proposed changes (linked here), which impact not just the HUBZone Program. This final rule goes into effect on January 16, 2025, “will apply to existing contracts,” and makes several amendments impacting all GovCon small businesses.
HUBZone Program
Changes to the Definition of “Principal Office”
- One of the proposed changes was to require 51% residency if 100% of a firm’s employees telework; however, the final rule does not adopt the proposed language. Accordingly, HUBZone firms must have their principal office (i.e., the location where more employees work compared to any other location) in a HUBZone and at least 35% HUBZone resident employees.
Defining an “Employee”
- SBA proposed to change the number of hours per month an individual needs to work to be considered an employee from 40 hours to 80 hours. SBA is keeping the 40-hour requirement but is requiring that, generally speaking, employees work a minimum of 10 hours per week.
- A certified HUBZone small business concern may have up to four legacy HUBZone employees at a given time but must have at least one other HUBZone employee.