Page 1 of 4 1 2 3 ... LastLast
Results 1 to 10 of 36
  1. #1
    Join Date
    Nov 2013
    Posts
    6,196

    Default Can an Indemnification Clause Be Enforced when the Company Misclassified a Contractor

    My question involves independent contractors in the state of: NJ

    My contract says that:
    I will defend, indemnify and hold Company X harmless from and against any claim made upon Company X by any governmental agency or any of the persons employed or retained by me to preform services for Company X (a) to pay withholding taxes, provide any benefits or similar items; (b) resulting from me or any of such persons assigned by me to provide services being alleged or determined not to be an independent contractor as to Company X...
    The question is that when it is determined that Company X misclassified me as an Independent Contractor when I, according to NJ case law and Federal law, that I am an employee, can the indemnification clause to pay the assessments by the IRS and the State (unemployment insurance and workman's comp) be enforced through the contract ? Or are they barred from doing so?

  2. #2
    Join Date
    Sep 2010
    Posts
    18,915

    Default Re: Can an Indemnification Clause Be Enforced when the Company Misclassified a Contra

    Boy, what a doozy of an employer you have. I'm going to illegally treat you as a contractor and if I get caught, it's all on you. No, such would not be enforceable. "Withholding" is your problem anyhow regardless of whether you are an employee. You still have to pay your taxes (just shifts the computation from that of a self-employed person to an employee). Any "benefits" that the feds/states mandate paying (be it the employers share of the FICA tax and the state UI/LTD/Family Leave taxes) are on him. He can't shift them to an employee no matter what he writes in contracts.

  3. #3
    Join Date
    Nov 2013
    Posts
    6,196

    Default Re: Can an Indemnification Clause Be Enforced when the Company Misclassified a Contra

    I pay all the taxes that are due to the Feds and the State so I'm not concerned about being exposed. My question is what is the effect of the contract that I signed and if Company X could sue me for the assessment against them should this proceed to that point.

  4. #4
    Join Date
    Oct 2006
    Posts
    15,210

    Default Re: Can an Indemnification Clause Be Enforced when the Company Misclassified a Contra

    Quote Quoting budwad
    View Post
    I pay all the taxes that are due to the Feds and the State so I'm not concerned about being exposed. My question is what is the effect of the contract that I signed and if Company X could sue me for the assessment against them should this proceed to that point.
    I suspect that you could get him in even more trouble with the DOL or the IRS if he attempted to enforce that part of the contract.

  5. #5
    Join Date
    Oct 2016
    Posts
    2,787

    Default Re: Can an Indemnification Clause Be Enforced when the Company Misclassified a Contra

    The clause would not be enforceable. If they were to sue you should counterclaim for any employer side taxes that you have paid or will have to pay.

  6. #6
    Join Date
    Nov 2013
    Posts
    6,196

    Default Re: Can an Indemnification Clause Be Enforced when the Company Misclassified a Contra

    So now my question is that with a presumption that employers know the employment laws of their state, that a contract anticipates that an independent contractor may be found to be a misclassified employee and that the contract anticipates that, that the contract could be enforced to identify the company for assessments against the company by federal and state authorities.

    Is that not a prima fascia case as to knowledge of the misclassification of the employee? Is that not the doctrine of unclean hands?

  7. #7
    Join Date
    Mar 2013
    Posts
    16,789

    Default Re: Can an Indemnification Clause Be Enforced when the Company Misclassified a Contra

    You've already been told that the provision is unenforceable.

    I have no idea what you are asking in that last post.

    Dumb it down for me.

    What is your goal?

  8. #8
    Join Date
    Oct 2006
    Posts
    15,210

    Default Re: Can an Indemnification Clause Be Enforced when the Company Misclassified a Contra

    Quote Quoting adjusterjack
    View Post
    You've already been told that the provision is unenforceable.

    I have no idea what you are asking in that last post.

    Dumb it down for me.

    What is your goal?
    I think that what he is asking is that if that clause being in the contract more or less proves that the "employer" knows he/she was misclassifying employees. I would say yes.

    I know of an insurance agency who really got clever but never put it in writing. The owner got in trouble with the IRS for misclassifying employees, but instead of stopping, the owner required that all "employees" set themselves up as S-corps and set themselves up as employees of their S-corps or he wouldn't hire them at all.

    I couldn't believe that the "employees" even fell for it.

  9. #9
    Join Date
    Nov 2013
    Posts
    6,196

    Default Re: Can an Indemnification Clause Be Enforced when the Company Misclassified a Contra

    Quote Quoting adjusterjack
    View Post
    You've already been told that the provision is unenforceable.

    I have no idea what you are asking in that last post.

    Dumb it down for me.

    What is your goal?
    Yes Jack, I have been told that the clause would be unenforceable. That is also what I think. What I was/am looking for is the legal doctrine or legal theory why it would be unenforceable. The only doctrine I come up with is that of unclean hands. But contract law is not my forte.

    So my question in the last post is (dumbed down) if the contract anticipates that the contractor may be a misclassified employee, is that not a prima fascia case as to knowledge of the possible misclassification? And since the employer is presumed to know the employment laws of their state, would they not know if the contractor is an employee based on the law (and what the contractor is tasked to do, who controls what they do, and where they do it) when the contract is signed?

    My goal is to understand the law for now.

  10. #10
    Join Date
    Oct 2016
    Posts
    2,787

    Default Re: Can an Indemnification Clause Be Enforced when the Company Misclassified a Contra

    The contract would be unenforceable because it is counter to both state and federal law. Little different than an employee's inability to sign away the legal right to be paid minimum wage.

    1. Sponsored Links
       

Page 1 of 4 1 2 3 ... LastLast

Similar Threads

  1. Contract Law: Duties of Indemnification under a Contract Clause
    By Vernors in forum Business Law
    Replies: 6
    Last Post: 11-13-2017, 02:05 PM
  2. Jurisdiction and Venue: Where Can a Lawsuit be Filed to Enforce an Indemnification Clause
    By urrterrible in forum Civil Procedure
    Replies: 4
    Last Post: 07-24-2015, 10:53 AM
  3. Contract Law: Indemnification Clause in a Contract Between a Manufacturer and Distributor
    By ariansman in forum Business Law
    Replies: 2
    Last Post: 09-05-2014, 07:44 AM
  4. Contract Law: How Does an Indemnification Clause Work
    By qwertyoc in forum Business Law
    Replies: 5
    Last Post: 01-14-2014, 10:23 PM
  5. Contract Law: What Does an Indemnification Clause Do
    By Rego in forum Business Law
    Replies: 8
    Last Post: 06-01-2013, 10:42 AM
 
 
Sponsored Links

Legal Help, Information and Resources