March 2018 Volume XII No. 1 Taking Care of Business
        
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In Indiana, when an employee is laid off from the job, through no fault of his own, or even when he is discharged, he has a right to file a claim for unemployment compensation. Unless the discharge was for what is termed “just cause,” examples of which are fighting on the job (and being the aggressor,) using abusive language, making 190 long distance phone calls on the employer’s phone, some to a Texas firm which provided odds on the outcome of sporting events or leaving a threatening message on a supervisor’s phone at work, the claim is not usually even opposed by the employer.

But, even so, some creative employers have figured out a way to avoid payment of these benefits and that is by not having any employees at all. No employees, no unemployment compensation.

How can this be done? By classifying “employees” as self-employed independent contractors.

And Indiana law says sometimes it works if:
The employer doesn’t control the person, the work is outside the usual course of business, if the person is in an independent business or is in sales and paid by commission.

But sometimes it doesn’t work.

Here’s a true story...only the names have been changed.

Mega Corporation is in the business of pairing drivers with manufacturers who need drivers to transport recreational vehicles to its dealerships. Adam Jones is a professional driver.

Mega required that Adam sign a contract which stated that Mega would not “employ” him or anyone to provide these driveaway services. Adam signed the contract and was then paid as a self-employed independent contractor, rather than as an employee. Mega thought this arrangement would also save them the cost of providing the benefits typically paid to employees. After no longer working for the company, Adam applied for unemployment compensation benefits. Mega denied his claim arguing that since Adam had never become an employee he did not qualify for unemployment benefits which can be paid only to employees, not to independent contractors.

Not so fast, said the courts. Regardless of the presence of a written contract, it was still up to Mega to prove that Adam had been performing work outside the usual course of the company’s business. Mega failed to do so. The work Adam was doing was exactly the type of work in which Mega was engaged, so Adam was entitled to full unemployment compensation benefits despite the written contract in which he had agreed that he was not an employee.

The moral of the story: Any written contract, no matter how long, well written, and detailed, is not enforceable if it is contrary to either state or federal law.

If you have questions regarding the contents of this article, or other similar issues, please contact your HWE relationship attorney or visit us at http://www.hwelaw.com.

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As a business owner, are you using insurance and indemnity provisions to your benefit, or are you unknowingly exposed to providing insurance and indemnity to the other side in your business contracts? This is an often overlooked, but significant issue for businesses.

For many businesses, management of contracts is an onerous and time consuming effort. Negotiating terms that place your business in the best possible position requires even greater effort, but in return can provide important protections. Businesses often don’t recognize that they have the right to negotiate favorable terms. Many vendors will provide a customer with a standard form of agreement for execution. If the vendor has substantial bargaining power and leverage, then the vendor’s contract may be the only option. Frequently, however, the bargaining power is not so one-sided, allowing a business to negotiate more favorable terms.

Two important areas for negotiation are (1) insurance; and (2) indemnification. Indiana courts have long recognized the ability of contracting parties to agree who will provide insurance coverage for work performed or material supplied under a contract. Sometimes this takes the form of a “purchase order” or written agreement. Often times, leases include an obligation to provide insurance coverage. The basic contract language is simple – the vendor agrees to provide insurance for the work and make your business an additional insured on the vendor’s insurance policy. This type of provision is routinely included in business contracts. Additional technical insurance provisions should also be included to clarify the parties’ agreement.

In all events, even if you do not negotiate your own business agreements, beware of signing a vendor’s standard form of agreement which may have insurance and indemnification obligations. Upon review of those standard terms, you may determine you are in a position to negotiate more favorable terms. At a minimum, however, you will be aware of your businesses’ obligations to provide insurance and can contact your insurance carrier to obtain the requisite additional insured coverage.

Similarly, read the fine print in purchase orders and terms and conditions of sale. These “standard” documents contain legally enforceable terms and you should be aware of your contractual obligations.

Indemnity agreements are another matter for negotiation. Indemnification provisions permit a business to recover from a vendor the amount of losses it has incurred as a result of the vendor’s work under the contract if you are sued by a third party. Indemnification agreements can take many different forms, and will depend on the type of contract in issue. If the indemnity agreement is to protect against a vendor’s negligence, there are specific requirements. Conversely, if the indemnity is to protect against a vendor’s breach of the agreement or violation of law, there are other requirements. Including an indemnity provision limits your businesses’ potential exposure as a result of the vendor’s performance of work under the agreement.

If you have questions regarding the contents of this article, or other similar issues, please contact your HWE relationship attorney or visit us at http://www.hwelaw.com.

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DISCLAIMER: This publication is not intended to be legal advice but is presented for informational and educational purposes only. The facts and circumstances of a specific legal issue are unique and you should seek legal advice for your specific questions or concerns. No attorney-client relationship is created.