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Why Independent Contractors Should Beware of Indemnity Clauses

Cronan Law Firm Can Help Protect Your Business Interests

As the gig economy expands, more companies are looking to independent contractors and freelancers to provide services on an as-need basis. While this is great news for independent contractors seeking a variety of flexible projects, making sure to read the contractor agreement carefully is essential. The section on indemnification, while becoming more ubiquitous, could wreck havoc on freelancers who fail to understand the very contract they are signing.

The Indemnity Clause

These clauses, usually buried deep within the contract, essentially tell an independent contractor that they will hold harmless the company in the event it gets sued, and even pay for all costs to defend and make financially whole the company. This means that if, say, a freelance journalist writes an article and it is published by a major organization, and some reader takes offense to the article’s content and sues the organization, then the freelancer is wholly responsible for any and all costs associated with defending the organization. As a freelancer, you are taking on all the costs associated with having an employee (health care, office space, employment taxes, unemployment, worker’s compensation, etc.) So, why would the freelancer be expected to also bear all the legal risk of the work being done?