Employee or Independent Contractor?

Can You Legally Spy on Your Independent Contractors?

Photo by Agence Olloweb on Unsplash

From Creators, Cliff Ennico provides great advice saying you can’t spy on your independent contractors in large part because you can’t direct or control your independent contractors. Cliff also provides great recommendations on alternatives. Cliff writes:

“I read with interest a column you did a while back on whether or not you can legally spy on what your employees are doing on the Internet. I have a ‘virtual company’ with one or two full-time employees, but work with several independent contractors who work out of their homes. Occasionally, we have meetings at the office, and the contractors bring their laptops to work on while they’re here. Do I have the same rights to spy on their online activities as I do with my employees?”

In a word, no.

You do have a legitimate concern about your independent contractors engaging in online conduct that would embarrass you or your company, or subject you to legal liability. But I think that concern is outweighed by the fact that you cannot legally direct and control an independent contractor’s activities the way you can your employees’. Spying on your independent contractor’s online activity dramatically increases the risk that the IRS or some other government agency will reclassify your independent contractors as “employees,” with disastrous consequences for you and your business.

It gets worse. When someone is your independent contractor, you must give him the opportunity to work for other companies. As you (hopefully) have done, those other companies have made these contractors sign confidentiality or nondisclosure agreements promising to keep all of their clients’ information confidential so company A doesn’t find out what company B is up to, company B doesn’t find out what company C is up to and so forth.

By spying on your independent contractors’ laptops, you may find yourself viewing confidential data of other companies, causing your contractors to breach their duty of confidentiality to their other clients. There’s also a strong possibility that if another company finds out you had access to its confidential information, it would sue you for inducing the contractor to breach his nondisclosure agreement.

The best protection against illegal online activity by an independent contractor is to put some strong language in your contractor agreement prohibiting it, specifically the following:

— Your agreement should require contractors to abide by “all reasonable rules and regulations” of your company when they are working on your premises, including your internet use and email policy. Make sure each contractor gets a copy and signs a receipt acknowledging that he or she understands it.

— The contractor should indemnify you for any conduct that gets you into legal trouble (this means the contractor will pick up all costs of defending a lawsuit and pay any judgment or settlement against you).

— Get this indemnity from the contractor herself, not her corporation or limited liability company (LLC). You want her to know that if she even thinks of doing something online to injure your company, her house will be at risk.

— Finally, require all of your contractors to obtain errors and omissions insurance for their indemnity obligations, and name your business an additional insured on all E&O policies they carry.

Read the full story at Can You Legally Spy on Your Independent Contractors?, by Cliff Ennico | Creators Syndicate

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