Indemnification Clause

<p>Hi,</p>

<p>I'm considering working for a studio as a freelancer. Could you please let me know if the wording of the Indemnification clause is something I should be concerned with?<br>

<br /> I've read that one should be careful signing contracts with a clause such as this, in that if you are wrongfully accused or accused of something you did that was not to your knowledge, you shouldn't be held financially responsible?</p>

<p><strong>20.</strong> <strong>Indemnification</strong> Independent Contractor shall defend, indemnify, hold harmless, and insure Company from any and all damages expenses or liability resulting from or arising out of, any negligence or misconduct on Independent Contractor's part, or from any breach or default of this Agreement which is caused or occasioned by the acts of Independent Contractor.</p>

<p>It all makes my head spin - anyone have advice/input? Am I worrying for nothing?</p>

<p>Thanks, as always!</p>

<p>Basically (and quite reasonably) the studio wants YOU to bear all responsibility arising from anything YOU do thats stupid/illegal/dangerous/negligent. Or if you decide to skip off with all the work you took on their behalf they'll have some redress because you're agreeing to be liable for "default of this Agreement" (which woould obviously be to shoot work for them and give it to them).</p>

<p>You do have Contractors Insurance? If not, you should. That's YOUR safety net.</p>

<p> </p>

<p>There is good cause for your head to be spinning.</p>

<p>You would be agreeing to pay a lawyer to defend the company in the event that there is a claim made against the company arising from your alleged conduct or lack of conduct and then be responsible to make them whole for any damages or losses that are imposed on them if the harm was caused by you and, perhaps, if it was only partially caused by you. Not only does this count for misdeeds but also for things that simply came about because you weren't in compliance with the rest of the contract.</p>

<p> </p>

<p>Nothing good can come of this clause. At the least, strike the word defend from the clause. You can't afford the attorney fees even if the litigation proved frivolous (and much of it is). The reality is the clause does little to protect your employer (as I'm assuming you cannot afford to provide the studio with an attorney), but it does set you up for a world of hurt if anything ever goes wrong.</p>

<p>Say the studio gets an unreasonable and litigous client who decides to sue the studio and claims both it and <em>you </em>caused his or her business to fail. The studio then wants you to defend it againt this nightmare. What actually happens in that case?</p>

<p>You cannot afford to pay a law firm to defend them. Very few people can afford the fees involved in contested litigation. So when you both really should be sticking together (I'm assuming neither of you actually did anything wrong), you find your relationship with the studio disrupted over a terrible contractual clause.</p>

<p>You might explain to them the reality. You can't afford to provide a defense. So the smart business decision is for the studio to obtain insurance that will cover them <em>and </em>you in the case of a claim. This way, you both actually get a defense and you won't be at each other's throats over a clause that never should have been in your contract.</p>

<p>To be safe, you really need to consult with an attorney who understands your forum's laws. But I don't sign contracts with "defense and indemnity" clauses and I don't ask people to sign them.</p>

<p>In the end, an appropriate insurance policy is cheaper than a meaningless form clause that a lawyer stuck in there, because he or she could.</p>

<p>Kristina,<br>

Is this for weddings? If so, the IRS has stated repeatedly that you are an employee and NOT a sub-contractor. Check it out.....-Aimee</p>

<p>It's not for wedding photography. </p>

<p>If I were to suggest a rewording of the clause - anyone have any suggestions?</p>

<p> </p>

<p>It seems to me that they probably can't pay you enough to take on this responsibility. Of course, I'm no attorney and you should really contact one. There may also be some free legal services available in your area. Perhaps contact the local bar association for some advice.<br>

Now is the time to consult with someone, NOT after an issue arises. Always good to do your homework. Go slowly and carefully.....-Aimee</p>

<p><em>the IRS has stated repeatedly that you are an employee and NOT a sub-contractor. Check it out.....-</em></p>

<p>Aimee, I asked you a while ago where one can find such a blanket statement by the IRS on this issue. My research came up with a statement on this issue that is not nearly as encompassing as this one and, in fact, it followed the usual legal analysis of how much control was excercised by the hiring party, not an all omnipotent rule that defies that analysis. Where are these repeated IRS statements so that we can actually accept your invitation to "check them out"?</p>

<p>Just to update everyone, I spoke with a lawyer who recommended the following changes - </p>

<p>

<strong>Indemnification</strong> Independent Contractor shall defend, indemnify, hold harmless, and insure Company from any and all damages, <em>reasonable</em> expenses or liability resulting from or arising out of any <em>illegal actions</em> on Independent Contractor's part, or from any breach or default of this Agreement which is <em>directly </em>caused or occasioned by the acts of Independent Contractor.

In addition, making the statement mutual for both the employer and the employee.

Thanks for all the input!

</p>

<p>I can't tell you exactly where to access to this information, but there was a specific test case in the NYC area forcing a number of studios to close their doors as they could never recoup the back taxes they owed. A late friend of mine was an IRS agent and he alerted me to this, so I immediately made all of my weekend shooters employees.<br>

If you check the IRS website for Independent Contractors vs. Employees, you will find the 3 criteria. Basically because someone is required to work at a specific location during a specific time to photograph a wedding, they are considered an employee of the studio they are working for. On the other hand, if someone is given a box full of products to take back to their studio, photograph them and return them, this falls into the category of an independent contractor.<br>

There is a form that you can complete and submit, but they tell you on the website to expect to wait at least 6 months for an answer.<br>

This is really the same as hiring a digital artist to work in your studio 40 hours/week vs. giving them the files to work at a location of their choice and paying them by the file.<br>

I hope this helps, because the taxes, penalties and interest for paying what's determined to be an employee as a subcontractor. Remember, as an employer, you're required to match an empolyee's SS and Medicare, so this adds up quickly. You can imagine the large sums of money involved with large studios employing many weekend shooters....-Aimee </p>

<p>Kristina,<br>

It seems to me that your attorney has left a number of grey areas here. Should something arise from this, you'll certainly need to retain him/her.....-Aimee</p>

<p><em>there was a specific test case in the NYC area forcing a number of studios to close their doors as they could never recoup the back taxes they owed.</em><br>

<em></em><br>

All this tells anyone is that particular studios may have had particular practices that amounted to their shooters being employees. It doesn't tell us that anyone hired by a studio or photographer to shoots a wedding MUST be employee. Indeed, the discussion about the IRS site just verifies that. It seems very unlikely there were these repeated statements by the IRS that we were invited to check out. Also, I think you will find your geographical discussion is a factor and not the be all and end all in the analysis.</p>

<p>It is important to catagorize hired people correctly for tax purposes, employment insurance purposes, workers compensation purposes, other insurance purposes and copyright purposes.</p>

<p><em>I spoke with a lawyer who recommended the following changes</em><br>

<em></em><br>

The differences seem to be...</p>

<p>having to hire a lawyer to defend them... no change</p>

<p>cost of hiring a lawyer is now... "reasonable" Considering that its typical to charge $200.00 an hour or more this is easily construed as reasonable.</p>

<p>Cost of compensating for other losses is now... Not outrageously beyond what their losses actually are. In other words, no difference since a final court judgement is going to be deemed what's reasonable anyway. </p>

<p>Change in actions by contractor... Illegal. Does not say criminally legal or tortiously illegal or even contractual vioations. Is illegal conduct have to be related to the harm or merely incidental activitiy going on at the same time? Illegal has various meanings.</p>

<p>Breach or defaults differnce... None. If you can't fulfill your obligtions for some reason, you are still on the hook the same as before.</p>

<p>Change in "caused by"... a long chain of events after your conduct probably won't fly.</p>

<p>Making the provisions mutual... doesn't negate your exposure unless you win and then maybe.</p>

<p>This is not legal advice but quite frankly you should ask this attorney whether you should really agree to this new version at all and/or seek a second opinion.</p>