Evening or Weekend Injury? Call Now!

Truck Law

Protect Yourself When Using Contractors

Working with the right contractors can be critical to your company’s success. Choosing the wrong one can drain your resources and set your business back as a breach of contract lawyer knows all too well. You must protect yourself when hiring a contractor to limit the risk that the relationship may end badly and the damage that might cause.

Who Is A Contractor?

A contractor is an individual or a business you hire to perform specific tasks, provide services, or complete a project within a defined scope, timeframe, and budget according to our friends at Focus Law LA. Contractors typically work independently and offer their services to multiple clients.

Contractors can operate in various industries and fields, including construction, engineering, marketing, information technology, consulting, and more. They may provide various services, such as construction, software development, graphic design, legal advice, and more.

Contractors differ from employees in that they are normally hired for a project or task or they’ll do something your company normally does not. They are not considered part of your workforce. They should have more control over their work schedule, methods, and tools than your employees do. 

Otherwise, you risk legal action alleging you’re misclassifying these workers as independent contractors. They may claim you treat them as employees, so you owe them the pay and benefits you provide to your workforce. 

How Do I Protect Myself From Problems That A Contractor May Cause?

Be proactive. Take steps to mitigate risks and ensure the project or service gets completed satisfactorily. Steps you can take include:

  • Conduct a thorough background check to verify the contractor’s credentials, experience, and reputation. Obtain references from previous clients and review their portfolios or samples of past work. A check of court records may show they’re involved in lawsuits with angry clients
  • Maintain detailed records, communications, and documentation related to the project, including contracts, invoices, change orders, emails, and meeting minutes. Documenting the project’s progress can help resolve disputes and protect your interests

Ask an attorney to draft a comprehensive contract and ensure both parties fully understand and agree to the terms before commencing work. That contract should have provisions that:

  • Require the contractor to carry insurance that will cover general liability and worker’s compensation insurance to protect yourself against potential liabilities arising from accidents, property damage, or injuries during the project
  • Clearly define ownership rights to any intellectual property created or developed during the project, including copyrights, trademarks, patents, trade secrets, and the transfer or licensing of intellectual property rights as necessary
  • Implement confidentiality and nondisclosure agreements as part of the contract to protect your sensitive business information, proprietary data, and trade secrets shared with the contractor during the project
  • Structure payments to incentivize performance and give you leverage in case of disputes. Consider milestone payments tied to specific project milestones or deliverables rather than a single payment upon completion. You could pay bonuses if work is completed ahead of schedule
  • Have performance guarantees or warranties to ensure the contractor delivers quality work that meets the agreed-upon standards and specifications. Specify remedies or penalties for failure to meet performance standards
  • Establish a dispute resolution mechanism, such as mediation or arbitration, to resolve any disagreements or conflicts during the project. Include procedures to escalate and resolve disputes 

By taking these measures, you may minimize risks and safeguard your interests when working with contractors. Invest time and resources upfront to establish clear expectations, terms, and protections to avoid potential problems and disputes later on. If you are having issues with contractors, reach out to an attorney near you for help.