Mistakes to Avoid When Hiring Subcontractors
Hello from beautiful Croatia! Made my move at the end of May and am loving it so far. Check out my Instagram stories for more on my travels. Also celebrated 2 years in business at the end of May. So grateful to all of you for being here and joining me in this business that has enabled me to support business owners in more than 20 countries, while given me immense freedom to live life on my own terms.
Sappiness done. 😉 Without sounding judgmental, I’ve seen a lot of mistakes around subcontractors on multiple fronts, so wanted to share what to do and what not to do. As always, I’m showcasing these only to highlight things you might not otherwise know are wrong. Multiple business owners have made all of these mistakes so trust me, definitely not calling anyone out!
What Not to Do:
❌ Using subcontractor’s contract (versus your own independent contractor agreement):
Your sub’s contract isn’t drafted to protect you, your business, or your clients your subcontractor will do work for. And you can’t sign their contract and have them sign your contract (no dueling contracts). All of your subcontractors need to be signing an independent contractor agreement (and NDA) drafted specifically for your business.
Grab our Independent Contractor Agreement with built-in Non-Disclosure Agreement here.
❌ Using a free contract (or piecing together your own contract):
The free contracts I’ve seen being used for subs are varying degrees of terrible. Sorry, but it’s true. When you hire subcontractors and don’t use the right lawyer-drafted contracts, their mistakes are your mistakes and can cost you (and your clients) big time. It’s not a question of if something goes wrong, it’s when. Avoid at all costs.
Also, I’ve seen well-intentioned business owners trying to create their own subcontractor agreements. Those I’ve seen have huge gaps that can leave the business owner very vulnerable on multiple fronts. When I mean vulnerable, I mean: making the business owner liable to everyone, even third parties, for ALL of the subcontractor’s mistakes. Unenforceable provisions. No clauses protecting the business owner from a sub poaching their clients. Or poaching their unique content or processes. And much more. Can’t emphasize enough how important it is to have the right protections for you and for your clients.
Over the last few weeks, I’ve corrected contracts for multiple clients they had drafted by other lawyers. If those contracts had gaps, can you imagine what you might be missing trying to draft your own? 😬
❌ No Non-Disclosure Agreement:
NDAs for subs are non-negotiable. Not only are subs exposed to your business’s confidential info (client lists, business methods, ideas, etc.), they’re exposed to your clients.’ Your subs will likely have access to your clients’ accounts and passwords. Your subs may even be acting as your clients on social media platforms and elsewhere. In addition to protecting your clients’ confidential info, as well as outlining what your subs can and more importantly, can’t say about your business and your clients, NDAs protect you against subs trying to poach your clients or profit from your ideas.
❌ No SOP’s:
Are there certain tasks your subs perform regularly? Duties and responsibilities? Even if these routinely change, your contract needs to state this and put subs on notice that you have SOPs, and a condition of their employment with you is abiding by the SOPs.
❌ No Reporting Requirements:
Similar to SOPs, if your subs are hourly and need to report their time to you in order to get paid, your contract needs to outline the process, including any deadlines and penalties for late entry.
❌ No Disclosure in Client Contracts:
Especially in the case of social media managers/agencies where subcontractors are literally taking on the client’s identity, you need to disclose to clients that subs will be working on their accounts and that you will have subs sign an NDA. (side note: if you’re using my CSA or SMM contract templates, this is already in the contract)
What to Do Instead:
✅ Lawyer-drafted independent contractor agreement with an NDA for all of your subs.
Already have contracts in place with your subs but no NDA? It’s not too late. Have them sign an NDA ASAP to protect yourself and your clients. (Remember if you’ve purchased contracts from me, you get a loyalty discount code. If you didn’t receive it in your email with your contracts, please let us know so we can get it to you ASAP)
✅ Get crystal clear on your SOP’s and any reporting requirements for your sub.
If it’s not in a contract, it’s difficult to enforce. It also makes terminating a sub much easier as their duties and responsibilities are in black and white.
✅ Update your client contracts to ensure that you disclose your potential use of clients.
This can be as simple as “We may use subcontractors in our business to complete our Services. In the event that we engage any subcontractors, all subcontractors will execute a non-disclosure agreement to protect your confidentiality.” Or however. That’s just off the top of my head. The point is, the client should be aware. The last thing you want is a situation where you’re using subcontractors, something goes wrong, and the client finds out that you delegated work to someone without letting them know and there aren’t remedies because you didn’t have a lawyer-drafted contract or an NDA protecting the client.
✅ If you’re running an agency, I’d recommend having a lawyer like me draft a custom document to reflect all the nuances of your agency’s operations and mandates, especially if you have multiple subs with differing job descriptions. You can contact me to discuss via the Contact link at the bottom of this webpage.
Questions? Please let me know. Have a great weekend!