STEPHEN P. POSTALAKIS B L A U G R U N D , H E R B E R T , K E S S L E R , M I L L E R ,

M Y E R S & P O S T A L A K I S , I N C O R P O R A T E D 3 0 0 W E S T W I L S O N B R I D G E R O A D , S U I T E 1 0 0

W O R T H I N G T O N , O H I O 4 3 0 8 5 ( 6 1 4 ) 9 2 3 - 3 1 1 2

S P P @ B H M L A W . C O M

O H I O A S S O C I A T I O N O F C O U N T Y B O A R D S S E R V I N G P E O P L E W I T H

D E V E L O P M E N T A L D I S A B I L I T I E S 2 0 1 2 A N N U A L C O N V E N T I O N

H I L T O N A T E A S T O N

OVERVIEW OF CONTRACT PROVISIONS FOR INDEPENDENT

CONTRACTORS

Who are you?

  Many Boards operate using essentially “trade names”, names that have become affiliated with the program, such as “Fairhaven”.

  These names are NOT properly used in contracts. Rather, if the Board is the Contracting agency, use the Board’s statutory name. Typically, this is the “[County] Board of Developmental Disabilities”

Who are you?

  If the contracting entity is a Not-For-Profit entity, use the formal name of the entity as shown on the entity’s organizational documents.

  If you are unsure of the name, you can visit the Ohio Secretary of State’s web site and perform a search. You may find that the organization has changed names several times.

Who is the Contractor?

  It is equally important to use the actual legal name of the contractor. If the contractor is a business, you can search the Secretary of State’s web site. Look for the organizational documents.

  You should also look to see if the organization is in “good standing” with the State. Sometimes, corporations and LLC’s are “tax cancelled” or otherwise listed as not in good standing.

Who is the Contractor?

  If the contractor is an entity, it is a good idea to require the contractor to provide a current “Certificate of Good Standing” from the Secretary of State.

  In all cases of doubt or confusion, get clarification and advice BEFORE entering into the contract.

  If the contractor is an individual, use the person’s full name.

Typical opening paragraph

  This contract is entered into this ___ day of _____, 2012, by and between the [County] Board of Developmental Disabilities (hereinafter referred to as “Board”) and Rolling Thunder Mobility Consultants, Inc., an Ohio corporation (hereinafter referred to as “Contractor”).

What is the purpose?

  Often it is good practice to begin the substantive provisions with a simple statement of the intent of the agreement:

  The Board desires to engage Contractor to provide mobility assistance for individuals served by the Board. The Contractor agrees to provide those services as set forth herein.

Define the deliverables

  A separate provision should define, with as much specificity as reasonably possible, the “deliverables”, i.e., what the Board (or not-for-profit) expects to receive from the contractor.

  If time of delivery is essential, it is appropriate to define that time in the deliverables provision, particularly if one or more deliverables is a recurring item, such as monthly reports and the like.

Define the duration

  All contracts should have a temporal beginning and end. This is the case even if it is anticipated that the relationship will be indefinite, in which case, the end time is often one year hence, with an automatic renewal provision unless terminated by either party.

Funding sources as contract terms

  If the contract is going to be funded by a particular source (like a grant perhaps), it is recommended that the contract be contingent upon that funding source. For example:

  “Contractor understands and agrees that this contract is contingent upon receipt by the Board of [name the funding source], and that the reduction or elimination of [the source] will result in the immediate termination of this Agreement without the need of further notice.”

Specific Compliance Issues

  Background checks. Will the contractor or its employees be working in areas where individuals are present?

  Business Associate Agreements. Will the contractor have access to “Protected Health Information” (PHI)? Access to ISP’s, personnel files, attendance at doctor visits all could trigger a HIPAA compliance requirement.

Specific Compliance Issues

  Licensing/certification. Will the contractor be filling a role that requires state licensing or certification?

  CPR/First Aid. Will the contractor be working in a position where first aid or CPR is required or desirable?

  Record-keeping. Will the contractor be providing services that require specific record-keeping regimes?

Safeguarding the Independent Contractor Relationship

 True independent contractor arrangements (as contrasted with employment relationships) should contain, within the contract, elements that help ensure true independence.

  Some things to avoid:  Reimbursement of normal business expenses,

such as travel, meals, parking.  Specific direction concerning how or when the

services are performed, except to the extent necessary.

Safeguarding the Independent Contractor Relationship

 Reporting relationships to Board employees.  Provision by the Board of tools, materials or

other implements or devices (like vehicles).  Office space (except to the extent necessary for

particular services).  Expression of contract payment as an hourly

rate.  Provisions making the contractor subject to

Board employment policies or procedures.

Some things TO include

  Some provisions should be included that help define the independent nature of the relationship. For example:  Insurance. The contract should require the

contractor to provide its own insurance for things like general liability, workers compensation, vehicle insurance. If insurance is important, require the contractor to furnish certificates of coverage and update them as necessary.

Some things TO include

 Provisions requiring the contractor to hold the Board (its employees and Board Members) harmless from any and all claims and liabilities asserted by the contractor’s employees, the contractor’s sub-contractors, the contractor’s vendors and others.

 Provisions prohibiting the contractor from incurring any debt or obligation on behalf of the Board.

Some things TO include

 Finally, a specific provision stating that the relationship is one of independent contract, NOT employment.

 If the independent contractor has employees that will be providing services under the contract, avoid attempts to supervise those employees directly, but reserve the right to exclude any of the contractor’s employees for any reason whatsoever.

Termination/Breach Issues

  Defining what constitutes a breach of the contract by the contractor can be tricky business, and can implicate concerns about the nature of the independent contractor relationship. For example, poor performance sounds a little like an employment relationship.

  Whenever possible, the Board should require a termination provision that permits termination by the Board at any time for any reason or no reason at all. This obviates the need to define what constitutes grounds for termination of the contract.

Termination/Breach Issues

  If the contract must be for a specific time, or project, and early termination by the Board must be curtailed in the contract, the contract must define what will give the Board the right to terminate early.  Avoid subjective reasons as much as possible.  Failure to deliver any deliverable on time is a

good one to include.  Failure of the contractor to fulfill any compliance

requirement is another.

Termination/Breach Issues

 The Board should, where appropriate, reserve the right to audit or inspect the books and records of the contractor that concern the subject of the contract. Failure to allow such audit or inspection can be cause for termination.

 UI/MUI investigations, particularly where substantiated against the contractor or its employees, is a good reason for termination.

 As referenced above, impairment of the funding source can be a reason for termination.

Termination/Breach Issues

 Loss of licensure, bankruptcy, insolvency, service of a garnishment order upon the Board, the institution of criminal charges against the contractor, damage or destruction of Board property, unlawful discrimination by the contractor, causing the Board or its employees to be sued, these are all examples of things that can be specified as grounds for termination of the contract.

Dispute Resolution

  In every contractual relationship, the possibility of disputes between the parties exists. The contract should specify how those disputes will be handled.

 Arbitration or Court? The parties can agree to any dispute resolution process they want, but the contract must clearly spell out any non-judicial methodology (such as arbitration).

Arbitration Considerations

  American Arbitration Association. The AAA is oft-used in contracts. The AAA has set rules and procedures for different types of disputes. It maintains a roster of arbitrators and administers arbitration cases.   It is expensive. AAA charges fees that can run into the

thousands of dollars.   The parties can specify an arbitrator, or use the typical

process of requesting a list, and proceeding to alternately strike the list. The contract should say whether the parties, or a party may request a new list if the first is unacceptable.

Arbitration Considerations

 The parties may specify in the contract that only Ohio arbitrators may be used. Otherwise, your arbitrator may be from out-of-state, which limits familiarity and increases expense.

Court

 The Board may be better off suing and getting sued in court than proceeding to arbitration. Some things to consider:  Do you like your Common Pleas Court? In many

counties, the Common Pleas Judges have some understanding of the DD Board and what it is. Would this be a friendly forum for you? If so, you can specify that any disputes be heard in your Court of Common Pleas.

Court

 Are there privacy concerns? If the contractor dealt with confidential information about specific consumers, arbitration can be a more private forum. However, most courts will understand the need for some information to be “sealed” in the record.

 Is there a jurisdictional issue? This is different than selecting a venue. If the contractor is not local, it might be best to include in the contract a provision whereby both parties submit to the jurisdiction of the selected court.

Court

 Choice of laws. In most cases, this will not be an issue, but just the same, contracts often provide that the law governing the contract is the law of the State of Ohio.

 Damage limitation. Contracts can, in many instances, spell out what the damages can be for a breach of contract (or for that matter, for any claim arising out of a contractual relationship, whether the Plaintiff calls it breach of contract or something else, like a tort).

Court

 Whatever the parties agree upon will ordinarily be accepted by the Court (or arbitrator) as the measure of damages. For example, a fixed sum, or an average of past payments for a specified period of time.

 “Liquidated damages” are a different matter. Parties can specify a more-or-less arbitrary sum as “liquidated damages” where damages are impossible or difficult to ascertain.

Damages

 Other items to consider in this vein:  Attorney fees.  Costs.  Exclusion or limitation of punitive or

compensatory damages.  Board is generally immune from

paying punitive damages under Ohio law.

Miscellaneous Provisions

  Ownership of records. Does the Board want to, or must it, own any records created by the contractor?

  Notices. Define how the parties are to communicate.

  Zipper Clause. Designed to define the parameters of the contract and eliminate arguments that terms exist that are not explicitly set forth in the contract (and its attachments).

Miscellaneous Provisions

  Non-discrimination clause. Required by R.C. §153.59  The Contractor hereby agrees that, in accordance with

R.C. §153.59 and in connection with this Agreement, it shall not discriminate against any citizen of the state, by reason of race, creed, sex, disability or military status as defined in R.C. §4112.01, or color in the employment of a person who is qualified and available to perform the work to which the employment relates and that the Contractor shall not discriminate against or intimidate any employee hired for the performance of work under this Agreement on account of race, creed, sex, disability or military status as defined in R.C. §4112.01, or color.

Miscellaneous Provisions

 Prosecutor review.  Compliance with the law/savings clause.

These are designed to excise from the contract any provision adjudged by a court of competent jurisdiction to be unlawful, but preserving the balance of the contract.

 Procedure for amendment. Should require the same formality as the original contract, and require signature by the executive officers of both organizations.

Miscellaneous Provisions

 Notice that PERS contributions will not be withheld.  Required by R.C. §145.038. Must also advise that

the contractor can seek a determination from OPERS.

 Certificate of availability of funds.  Required to have it as part of contracting process

so it might be a good idea to include contracts as a reminder and protection for Board and Contractor

THANKS FOR ATTENDING!

QUESTIONS?