On many prior occasions we have weighed in on the perils of lay people drafting their own contracts to “save legal fees” or to “avoid dealing with a lawyer”. Many of these crudely drawn DIY (do it yourself) agreements result from cutting and pasting clauses from other unrelated forms or agreements and sticking them together to form one “contract”. More lawyer fees are generated by disputing or litigating the resulting unclear and often conflicting, terms of such agreements. In years past, most such disputes tended to be limited to the parties to such agreements only.
In 21st century America cities, towns, states and the federal government, are looking for more and more ways to raise revenue. Business owners both large and small, are very much in the cross hairs. Whether a given agreement serves to prevent a taxing authority from collecting certain income taxes, workman’s compensation fees or licensing fees is now more than ever, the concern of your elected officials. This is especially true when there is the possibility of levying a penalty or fine against any person or company for failing to comply with ie: insurance regulations, collection of sale taxes, failure to obtain a business license, pay proper local licensing fees, work place safety requirements, unemployment insurance issues and on and on.
When dealing with assistants, associates, part time employees and the like, you now must be acutely aware that a government bureaucrat will use that agreement you wrote against you to exact some monumental fine or tax if at all possible. This is often true even when the other party to your agreement has filed no complaint against you of any kind and indeed while the two of you may be engaged in a most happy “marriage”. Added regulations mean added dollars to government coffers. Every collection justifies the existence of at least one government job.
Jack was audited by the New York State Dept of Labor twenty some odd years ago. Even though his assistants considered themselves independent contractors and they were more than happy to be responsible for their own taxes, the State came in and said “Doesn’t matter, we don’t care”. They were employees, with a few exceptions, even if that person was only working as an assistant for only one day of the year. As a result Jack today utilizes his accountant, a payroll service, and lawyer Ed. For Jack, money spent on prevention is a lot cheaper then trying to defend a position against an aggressive entity with unlimited funds to pursue their collection of your funds. And his experience was decades ago when local and Federal governments weren’t looking so deeply for revenue as they do today.
Have any agreement relating to the terms of retaining the services of any person(s) drawn and or at least approved by a competent lawyer. Most (if not all) of these agreements should get a once over from your accountant even before a lawyer gazes upon it. Here “DIY” will likely cost you far more money in fines, judgments and attorneys’ fees than simply having a professional write up the agreement in the first place.