Growing your team can be one of the most exciting AND challenging things that you will do as a business owner. It is something that I am still working on and have been for years. When you have a team that is running smoothly it can be absolutely amazing…it can also be prettttty tough if you are struggling to fill these roles. I’ve been fortunate enough to have had some awesome team members along the way but it hasn’t been easy and I’m constantly working on building my own chops as a leader. Beyond finding a great fit for your team, there are some important legal considerations.
Here are the TOP 3 Legal Concerns You Want to Be Thinking About:
#1 - Contract Terms
Newsflash → It's important to have a well-written contract that outlines the terms and conditions of the relationship between you and the independent contractor. I know, if you’ve been following Destination Legal for any amount of time you know that having a solid contract in place is key to ANY relationship. But this is especially key with team members. This can help to protect both parties in case of any disputes, as well as ensure that the contractor understands their responsibilities and obligations.
Some things that need to be included…
✅ What are the deliverables of the position (be as specific as possible!)
✅ When and how are they getting paid
✅ IP (more on that below in #2)
✅ Expectations - use the contract as a way to outline your expectations of working hours, response time, etc. They are contractors so you don’t have too much control over this (meaning, you can’t demand they are at their desk from 9am-5pm EST every day) but you can outline your expectations
If you are hiring a service provider, they may provide you with their contract to sign, which is fine, just make sure to read it and that you are comfortable with and understand the terms. If you need an Independent Contractor / Service Provider Contract for hiring - head over HERE and grab yours now.
# 2 - Intellectual Property
Depending on the nature of the work being done by the independent contractor, there may be concerns around ownership and protection of intellectual property. This type of clause is most important for those that are creating content for you, so for your copywriters, social media managers, VAs, etc. and definitely needs to be included in your contract.
It's important to have clear agreements in place regarding ownership and use of any intellectual property created by the contractor, and to ensure that the contractor understands and agrees to these terms.
Typically if you are hiring out for a service you want to make sure that your contract includes language that the independent contractor is passing the copyright TO YOU. This means that you will own any of the content they create. If you don’t include this, things could go wrong later on. For example, let’s say your VA writes half of your blog posts for you and down the road you decide to publish all of them into a book. It becomes a best seller and all of a sudden your VA comes back claiming ownership and wants ½ your royalties.
Always make sure that you own the content being created for you!
#3 - Misclassification of Workers
One of the most common legal concerns when hiring independent contractors is the possibility of misclassifying them as independent contractors when they should be classified as employees.
This isn’t a huge concern if you are only hiring very part-time contractors (less than 20 hours per week) but becomes more of an issue if you have someone that is hovering around 30 hours or more per week. The distinction between an employee and an independent contractor is an important one because it affects the rights and responsibilities of both the worker and the hiring business.
Misclassifying workers can lead to legal and financial consequences, such as back taxes, fines, and potential lawsuits.
Generally, the main difference between an employee and an independent contractor is the level of control that the hiring business has over the worker. Employees typically have more control and direction from the business, while independent contractors have more freedom and control over how they complete their work. For example, if you’re an employee working 40 hours a week, you can dictate that they have to be at their computer during XYZ hours. But if a contractor is working 10 hours, you can’t necessarily say it has to be during XYZ hours (although you can come to mutual agreement with them).
Another thing to keep in mind is that non-competes are a no-no with contractors and would never be upheld if challenged.
To avoid misclassifying workers, businesses should carefully evaluate the nature of the working relationship and the level of control that they have over the worker. In the online space some businesses are walking a fine line here and classify team members as 1099 contractors when they fit more into the employee definition (and do this to avoid paying taxes and such). As noted above, this could result in fines or other legal issues.
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Hope that helps shed some light on hiring team members and some of the legal issues involved. Growing team is huge and important and necessary to keep scaling so just make sure to have a solid contract in place and keep the above issues in mind!