Today I want to share with you the importance of protecting yourself when you are working with an independent contractor and how you can terminate working with them. I know everyone wants to think that everything will work out, but protecting yourself is so important. That is why I created the Legalpreneur Membership to give you the tools and the knowledge you need.
In this episode, we’ll cover
- Why you cannot fire and independent contractor
- The difference between hiring an independent contractor and an employee
- Protect yourself with a contract when hiring a contractor
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Episode 196: Why You Cannot Fire an Independent Contractor Transcript
Andrea: [00:00:03] Welcome to the Legalpreneur Podcast. I’m your host, Andrea Sager, founder and CEO of Legalpreneur, Inc. As a serial entrepreneur and someone that works exclusively with small business owners legally protecting their business, I’m dedicated to covering common legal issues faced by business owners, providing you with the business knowledge you need to catapult your businesses growth and showing you just how some of the world’s most elite entrepreneurs have handled these legal and business issues themselves in true attorney fashion. The information in this episode is not legal advice. This is for informational purposes only, and you should always consult with your attorney before implementing any of the information in the show.
Andrea: [00:00:49] To the Legalpreneur podcast. I don’t probably sound like my normal self. I’ve been a little under the weather, but it’s all good. I’m here, I’m alive, I’m kicking, it’s all good. And today what we’re going to cover is why you cannot fire an independent contractor. I recently had a client come ask me like, Hey, I want to fire this person. Turns out they’re a contractor and I want to fire them. Just want to make sure I do it legally, whatever. They just want to make sure they were doing it the right way. Well. You’ll find out in a minute why I had to tell her. You actually cannot fire them. And really important, because as you’re hiring in your business, this is where it gets to be really important to figure out, do I want to hire a contractor or an employee? We’ll get into it. Legalpreneur alive is now Dream Bigger. If you haven’t already heard. Today is our FLASH SALE. If you would like to be a VIP ticket holder. If you have not already joined the text list, make sure you text 832-225-3164. Just send the word event and you’ll be on the list. Today is Monday, July 11. If you’re listening to this after Monday, July 11th. Don’t worry, we still have plenty of ticket specials going on, so still send the word event to 832-225-3164. You will still be on the list to get updates about ticket specials.
Andrea: [00:02:26] We’re about to make another big speaker announcement, so stay tuned for that. Now getting into why you cannot fire a contractor. The reason you cannot fire a contractor is because they can’t be fired. They’re not an employee. Only employees can be fired. The only way you can stop working with a contractor is if you terminate the contract with the contractor. This is why it gets to be number one. Very important to figure out if you want to hire a contractor or an employee. And number two, if it’s a contractor. The contract with that person is so important, especially for termination purposes, because some contracts may say, hey, 12 month agreement no matter what or what, however long the duration is. And some of them may say you can only get out of it if. We mutually agree, or if I’m bankrupt or if I am and I don’t know, there’s. It just depends what your contract says. Like, the contracts can say a million different things, so I can’t go through all of the possibilities. But you have to know, you cannot just fire a contractor. You have to have. Legitimate cause to terminate the agreement, and it has to fall within the parameters of the agreement. If you’ve ever doubted using contracts before like you guys, this is exactly why you need to have written agreements. You have to have these things accounted for in the contracts.
Andrea: [00:04:06] You you always want to make sure both parties are protected. So if you want to get out, you can get out. If they want to get out, they can get out. But still, at the same time, you want to be protected. This is why contracts are so freaking important. And when you think about contracts, most people are just like, Oh, just thinking about the contract with their clients. So a service agreement if your service provider. But your contracts with your contractors are so freaking important, you guys, you have to make sure that you’re able to get out of the arrangement if you want to. Unfortunately, this client of mine, they’re stuck in their arrangement. She’s like, It’s just not going the way I thought it would. And of course, of course, she signed the agreement before working with us, which is fine. It’s not the end of the world. But we could have protected her if she would have had an attorney look at her contracts before sending them out to be signed. Before using them. She didn’t. So now she’s stuck. So basically she came to me and she was like, Hey, I want to fire this contractor. I don’t want to pay them anymore. They’re not getting the job done. Unfortunately, I had to tell her, hey, they are not an employee. You cannot fire them. So you have to we have to look at the contract and the contract.
Andrea: [00:05:23] There’s there is really no out for her. So ultimately what I told her is just go to the contractor and see if there’s something I can work out because maybe it’s not working on their end either. Because if they’re a good business owner, I mean, you can be truthful in your reviews of that contractor and say, hey, it didn’t work out for these reasons or they didn’t perform. And there’s many things she could do. And if the contractor didn’t want her to do that, she would let her out of the contract. So that’s what I told her to do, was to just go to the contractor, have an honest conversation. And either work something out as to. Hey, let’s figure out how we can get out of this contract, or you got to step up your work like this is. It’s just not working out. So all that to say, like, you really have to be careful how you’re hiring, whether they’re an employee or a contractor. And you can make sure if it’s a contractor you are able to get out of the contract, you make sure you’re protected. This is what legal protection is about, you guys making sure you are protected and it’s so hard to foresee. What could go wrong. You don’t know the million things that could go wrong. This client never thought this would happen. We never see things going wrong. We always think about the best case scenario, even if we do think of the worst case scenario.
Andrea: [00:06:56] It’s so hard to predict how to protect ourselves from what actually happens if it’s something negative. So this is why you really just need to make sure you have an attorney in your corner at all times, having somebody look at your contracts, protecting your intellectual property, making sure you have the correct entity in place for your business. There’s so many layers to this, so seriously. It always just leads me back to the Legalrepneur membership because we take care of all that for you. So don’t wait. I know it’s always so many people put off the legal stuff until there’s an issue like, I can’t preach this enough, you guys, if you can. See how much being proactive with the legal stuff can help you and how much it can save you money in the long run. It’ll have all of you in the legal Purdue membership yesterday, but it’s all good. I completely get it. It’s one of those things sometimes people just have to experience before they invest in it. So that’s my spiel today. You cannot fire a contractor. You just have to figure out how to terminate the agreement. All right, I’m out. I’ll see you guys next time. Let me know what questions you have. Shout out on Instagram and make sure you join the text list for Dream Bigger.
Andrea: [00:08:21] Here at Legalpreneur, we’re committed to providing a supportive legal community for all business owners. I know how scary the legal stuff can be. If you found this information helpful, I would be so grateful if you could share it with the fellow business owner. And quite frankly, it doesn’t cost anything to write, review or subscribe to the show. Your support helps me reach more listeners, which allows me to support more business owners in their entrepreneurial journey. Have any questions or comments about the show? Feel free to drop me a line on Instagram, I promise. I read all of the messages and comments and if you want to be a guest on the show or know someone that would make a great guest, simply fill out our application form and a team member will reach out if we think it’s a good fit. I’ll see you in the next episode.