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The Key Components to a Solid Associate Contract
Congrats on your decision to scale your business and hire associates! Before you get started, be sure to take the proper legal steps. It's essential that you know exactly what clauses you need for your associate contracts as well as how to properly disclose in your business’s client contracts what services the associate will be performing.
ESSENTIAL CLAUSES FOR THE ASSOCIATE CONTRACT BETWEEN YOUR BUSINESS AND THE ASSOCIATE
Work Relationship Clause
A work relationship clause designates the associate as an independent contractor or an employee. This is a huge legal issue because contractors and employees are very different in terms of taxes, what they can do, employment laws, liability, and insurance. If you hire a contractor but treat them as an employee in all legal senses, you will be audited by the IRS and/or your state government. Then, if you’re found to have misqualified them as a contractor when they should have been an employee, you could face penalties, fines, back taxes, and potentially a lawsuit from your worker.
Let’s go over the difference between the two. An employee is someone that follows your sole direction, has set hours of work, and is required to do very specific tasks assigned to them by you. If this is the case, you are responsible for providing proper tax documentation and paying certain taxes, workers' compensation and unemployment insurance as required by your state, paying for costs incurred, and all other employee-based regulations.
A contractor is a person that works events under your brand name but typically has their own business on the side and only takes on a set number of contracted events for you. You do not need workers' compensation or unemployment insurance for them, don’t need to put them on payroll, and don’t need to pay your share of taxes for their work. Put simply, a contractor is someone that works for you occasionally on their own terms, whereas an employee works for you regularly on your terms. And, because you may utilize an associate more than once or even many, many times each year, it's important to be able to still show that they are a contractor instead of an employee. Also, there are many legal guidelines that vary from state to state regarding this matter so make sure to review those laws when hiring an associate.
In sum, you CAN hire associates as contractors so long as they have their own business and licensure, are covered by their own insurance, work for you only a few times a year, and have the ability to say ‘no’ and control when they take on work.
Equipment and Insurance Clauses
When you hire an associate as a contractor, there are also two main things they should provide; 1) their own equipment, and 2) their own business insurance. Personal equipment is necessary for contractors primarily to show they are not your employee but also to ensure your equipment is not damaged. If your equipment is being used by someone else and is broken, your insurance will not cover the costs (as they are not listed under your plan and/or are excluded from coverage under your insurance’s exclusions). This goes hand-in-hand with the contractor having their own insurance. If someone is hurt while your contractor is on the job, equipment is broken, someone does something negligent, and so on, the contractor needs to have their own business insurance to cover that. But, if you are hiring an associate as an employee you will cover their insurance and either give them a stipend for equipment or pay for their equipment.
No matter if they are a contractor or employee, it is important that your contract has insurance and equipment policies clearly laid out!
Associate Compensation Clause
For employees, you will pay them hourly or salary via payroll, in addition to all expenses they incur while working for you will need to either be covered by your company or reimbursed. For contractors, an associate must invoice you separately for each event they work for you. We also suggest having them have a set fee on the invoice for their work instead of being paid hourly, so they don’t look too much like an employee. Thus, if you agreed to $100 an hour for their work, and they worked an 8-hour wedding for you, they should invoice you a total of $800 for the event without breaking it down into hours. You will then pay them the $800 without any deductions and they will be responsible for their own taxes when they report that 1099-NEC income on their tax return.
Remember, everything you do, especially financially, needs to clearly show that a contractor is not an employee. All of the compensation details for your associate need to be laid out in the compensation clause near the top of the contract—especially if they are a contractor. How you pay them, when they get paid, and how much they get paid need to be clearly agreed upon at the beginning of working together.
ESSENTIAL ASSOCIATE CLAUSES FOR YOUR BUSINESS’S CLIENT CONTRACT
When establishing an associate program, you don’t want to neglect the client portion of the arrangement. Clients need to understand that while associates are able to act on your behalf, your business is still the entity contracting for the event and held responsible under the contract. Here are the two main clauses you need to include in your client contract:
Lead Associate Clause
This clause is more of a disclaimer and explains that while you are responsible for providing services to your client in accordance with the contract, an associate of yours will be present at their event and carry out those services. This ensures continuity of the project so the client knows who will be present in-person but that the company will fulfill the remainder of the contract.
Substitution of Associate Clause
In the event that something unexpected happens and the associate designated cannot fulfill the services promised to your client, this clause allows you to alert the client that either you will find another associate to step in or that you will do so personally as the lead photographer. This clause not only functions as a form of protection for your associates in case of sickness, injury, or personal emergency but is also as a way to communicate transparency and respect towards your clients. Including this provision in contracts is essential and will help avoid disputes or confusion down the road. It also ensures that a client cannot cancel your contract if that particular associate isn’t able to perform.
The Legal Paige has everything you need to make sure your client contracts have the right clauses to let them know about your associates.
First, have your associates sign a contract with your company. Check out our most-purchases associate contracts:
- Associate Photographer Contract for Independent Contractors
- Associate Wedding Planner Contract for Independent Contractors
- Associate Hairstylist and Makeup Artist for Independent Contractors
- Associate Videographer Contract for Independent Contractors
- Associate DJ Contract for Independent Contractors
- Associate Photo Editor Contract for Independent Contractors
- Associate Hairstylist Contract for Independent Contractors
Then, be sure your client contract includes the appropriate clauses related to the associate working for you. Check out these clauses here:
Photography Contracts → Associate Photographer Clause Bundle
Hairstylist & Makeup Artist Contracts → Associate Hairstylist & Makeup Artist Clause Bundle
Photo Editor Contracts → Associate Photo Editor Clause
Wedding Planner Contracts → Associate Wedding Planner Clause Bundle
Associate DJ Contracts → Associate DJ Clause Bundle
THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. EVERY SITUATION IS DIFFERENT & IS FACT-SPECIFIC. A proper legal analysis is necessary based on your location and contract. Consult an attorney in your home state for advice regarding your contract or specific legal situation.