Independent Contractor Agreements: Private Sector’s Restriction of Free Enterprise

In the six years I have been a self employed / freelance creative I have came across independent contractor agreements that contain wording that you just don’t want to sign, it happens to everyone. The freedom limiting agreements are usually buried in the middle of 4-8 pages. In the creative field we often run across wording pertaining to copyright transfers and work for hire in these agreements. Once signed and any work done there after becomes property of the company you were working for. This means you create no intellectual property for yourself and in some cases may be required to obtain written permission from the C?O of the company to use the work for self promotion.

The latest contract I received goes a dozen steps beyond that and is a perfect example of the private sector’s ability / desire to restrict the free enterprise of an individuals. This contract essentially puts you out of business or makes you liable for a lawsuit from the company for any job you may do in the future for any number of other companies. The company sending this contract is a global advertising agency with several offices working on lots of brands and a long list of clients. I can appreciate the fact that they need to hire independent contractors to help from time to time for various reasons and don’t want any stealing of clients, however a global advertising agency shouldn’t fear loosing a client to an self employed individual. However, with that said, a contract such as this would severely limit your business, work and income; or expose you to legal liability for up to seven years from signing.

Independent Contractor Agreement Excerpt

2. Term. The term of this Agreement shall be for a period of two years commencing on the effective date hereof. Notwithstanding the term of this Agreement, the Company may terminate this Agreement at any time, with or without cause.

7. Other Employment of Agent.
a. During the term of this Agreement and for a period of six (6) months after termination of this Agreement, Agent shall not provide services (whether as an employee or an independent contractor) to any of the Company’s competitors; and
b. During the term of this Agreement and for a period of five (5) years after termination of this Agreement, Agent shall not provide services (whether as an employee or an independent contractor) to any of the Company’s clients if those services involve brands of the client that the Company is servicing or has serviced during the term of this Agreement; and

20. Relationship Between the Parties and Taxes. The relationship between Agent and the Company shall be that of an independent contractor and not that of an employee.

What It All Means

Section 2 specifies a duration of two years even though the work was only for a short period of time, two days in this instance. This section also states that the agency can terminate the agreement at anytime removing any hope of work in my field for the next 30 months or less.

Article 7 Section A states that I agree not to work for any of the companies competition for a maximum time period of two years and six months. Due to the nature of their business all of my current clients are their competition and all of my future clients would be their competition. So if I did work for any of my current clients I would be in breach of this contract. This would take my income down to the amount of work they were offering me. I also could not accept a full time job from any ad agency or possibly a design firm for up to thirty months.

Article 7 Section B, what is left after article A would be working directly with companies. However an agency such as this has a vast amount of large clients, many of them conglomerates, Thus severely limiting the number of companies I could directly work for and excluding a large portion of the ones who are requiring the type of higher end work I do. This would be effective for a term of seven years from the date originally signed, and include any and all brands/companies that they worked with during those two years of the contract. Again limiting work as an independent contractor or as a full time employee with them. As a self employed individual I would value the relationship built with the agency over any other individual companies, however is it even possible to keep track of all the brands an agency may have worked with during that two year period to avoid working with them and protect yourself legally.

Article 20: States very clearly that I am an not an employee and thus am not entitled to any guaranteed amount of work, benefits or compensation due to lack of work.

How To Resolve This

It is my experience that most agencies say they are pressured by their lawyers to hand out these contracts with the controversial sections. The lawyers see the contract as in the best interest of the company they represent, kind of a full metal jacket of armor. To a point it is, however with such a contract anyone who has been in the business and has any success would simply just not sign the agreement if the controversial sections are not removed. Resolving these contract issues is simply just a matter of asking for the sections to be crossed out or removed. When you do this make sure you retain a copy of the altered and signed document for your records.

Also remember two things when dealing with any contract issues

The First is to read, read and read again. It is easy to loose focus on the wording and start to glaze over it, make it through the 4+ pages … every word. Second, the person you will be dealing with about the contract probably knows the language and wishes that part wasn’t in there, work with them to get it removed, they are your friend in finding a solution.

  • AaronBurger

    Good read.  As a freelance photographer, I’ve run across issues of copyright and liability, but haven’t seen this work restriction before.  I think you give good advice and I agree with you that most of these issues can be resolved by redrafting or making changes to a contract before signing. Don’t be afraid of losing out on a job!  Speak intelligently and politely about the changes you wish to make.

  • http://www.brnyrk.com/ Brian York

    Thanks Aaron, one defiantly shouldn’t be afraid of loosing a job because you had an issue with the contract. Its rarely the case and the cost of signing could be greater than the job itself in the long run.