Everything You Need to Know About Release of Liability & Indemnification Agreements for Employees

Ever wondered how you can protect your business from potential legal claims brought by employees? If so, you've likely come across terms like 'release of liability' and 'indemnification' agreement. Although these legal terminologies can seem overwhelming, as a responsible business owner, it's crucial to wrap your head around them. Don't worry -- we're here to make it easy for you!

What is an Employee Release of Liability and Indemnification Agreement?

An employee release of liability, combined with an indemnification agreement, is essentially a legal shield for your business. It's an agreement signed by your employees acknowledging they undertook specific risks associated with the tasks they perform at work. In case of any mishaps, the agreement protects the employer from any potential lawsuits.

Let's break it down further.

Key Components of Employee Release of Liability & Indemnification Agreements

Release of Liability Clauses

The 'release of liability' section covers scenarios where an employee might suffer harm due to the inherent risks involved in their job role -- think construction workers or professional stuntmen. The clause asserts the employee has knowledge of these risks and willingly agrees to bear them.

Indemnification Clauses

Often paired with release clauses, indemnification is an agreement that if any losses occur due to the specific actions of the employee, they will compensate the employer for the damages they face. For instance, if an employee's negligence triggers a customer lawsuit, the indemnification agreement can protect the business from bearing the financial brunt.

Pro-tip: You should always have an attorney review your indemnification agreement to ensure it's valid and enforceable.

Non-Disparagement Clauses

These clauses can be found in both pre-employment contracts and NDAs (as we'll discuss below). Essentially, they're agreements that prevent the employee from negatively speaking about their former or current employer -- which can protect both parties. For example, if you discover a former employee is badmouthing your company on social media after leaving, you can sue them for defamation.

Pro-tip: If you're looking to put a non-disparagement clause in your contract, make sure it's as specific and clear as possible. That way, there won't be any confusion about what is considered "negative" speech.

Scope of Release and Indemnity

This part generally describes the activities covered under the agreement. It could range from general employment tasks to specific activities like company-hosted events or business-related travel. The scope of release will also include a description of what is not considered covered by the agreement. This can include anything from personal actions to activities that occur outside of work hours.

Pro-tip: If you're looking to get a release from an individual, it's best to have them sign a general release rather than a specific one. That way, if they end up doing something that isn't covered by the agreement, they won't be able to argue against it.

Assumption of Risk

This clause is typically included to prevent an employee from claiming they were unaware of the potential risks involved in their job roles. This clause can be included in a release agreement, but it's important to note that it doesn't make the employer completely immune from liability. For example, if an employee is injured on the job and claims they were unaware of the risks involved in their role as an electrician, then this clause may not be effective.

Pro-tip: Include a list of common risks associated with the job and have the employee agree to them. For example, if you're hiring someone to work in construction, they should know that there's a chance of injury and be aware of any safety precautions they need to take.

Applicable Laws and Jurisdiction

This section specifies the state laws that will govern the agreement and the jurisdiction where any disputes arising under the agreement will be settled. If you're doing business in multiple states, this is a vital clause that you should include. It's also important to specify which state's laws will apply to the agreement if you're doing business only in one state.

Pro-tip: If your company does business in multiple states, then make sure to include an "as it may be amended from time to time" statement after each law and jurisdiction reference so that future changes can be made without having to rewrite the entire agreement.

Pro-tip: Know the laws and regulations that will apply to your situation before drafting an agreement. For example, if you're hiring someone to work in construction, they should know that there's a chance of injury and be aware of any safety precautions they need to take.

How to Write an Effective Release of Liability & Indemnification Agreement

Writing an effective release of liability and indemnification agreement may seem like a daunting task, but it's simpler than it appears. Just follow these straightforward steps:

Step 1: Introduction

Start your agreement by clearly identifying the involved parties – the employee and the employer (your business). Make sure to include names, addresses, and contact information. Also, mention the agreement's purpose – to release liability and indemnify the employer.

This Release of Liability and Indemnification Agreement ("Agreement") is made and entered into by and between [Employee's Full Name] ("Employee") and [Business Name] ("Employer"), located at [Business Address]. The purpose of this Agreement is to have the Employee release liability and indemnify the Employer for certain activities related to their employment.

Step 2: Describe the Activities and Risks

Enumerate the job-specific activities the employee will perform and the potential risks involved. Be precise and comprehensive. This section is crucial, as it helps the employee understand what they're consenting to.

The Employee shall assume and acknowledge the risks associated with their employment, including but not limited to [list specific tasks and associated risks or potential dangers]. The Employee understands that these activities may involve potentially hazardous situations and willingly accepts all associated risks.

Step 3: Include a Release of Liability Clause

Write a clear and unambiguous release of liability clause. This section will explicitly state that the employee waives their right to sue the employer for injuries or damages incurred due to their job duties.

Employee, on behalf of themselves, their heirs, executors, administrators, and assigns, hereby releases, waives, discharges, and covenants not to sue the Employer, its officers, agents, or employees, from any and all liability, claims, or damages for personal injuries or property damage resulting from the Employee's employment by Employer and participation in the activities described herein.

Step 4: Add an Indemnification Clause

In this section, the employee commits to compensating the employer for any damages if they cause harm to others or the company due to their negligent actions.

Employee agrees to indemnify, defend, and hold harmless the Employer, its officers, agents, or employees from and against any and all claims, demands, actions, losses, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from or related to the Employee's negligent or willful actions during their employment.

Step 5: Specify Governing Law and Jurisdiction

Establish the state laws governing the agreement and the jurisdiction for dispute resolution.

This Agreement shall be governed by and construed in accordance with the laws of the State of [Your State]. Any disputes arising from this Agreement shall be resolved exclusively in the courts located within [Your County and State].

Step 6: Execute the Agreement

Finish your agreement by including a signature line for both the employee and the employer (or authorized representative). Be sure to date the signatures to make the agreement legally binding.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date indicated below.[Employee's Full Name]                           [Authorized Representative's Full Name]_____________________________      _____________________________    Employee Signature                                              Employer Signature_____________________________(Date)

After drafting your release of liability and indemnification agreement, it's wise to consult a legal professional to verify its compliance with your jurisdiction's laws. Once your attorney gives you the green light, you can go ahead and present the agreement to your employees for their review and signature.

Common Mistakes to Avoid

Ambiguity in Language

Legal language is often challenging to understand. While writing the agreement, make sure it's easy for employees with non-legal backgrounds to comprehend.

Failing to Customize Agreements

Templated agreements often fail to cover all potential risks. Personalize your agreements to fit your employees' roles.

For example, if you're hiring a marketing agency to handle social media for your company, make sure your agreement includes terms that cover how their employees will interact with followers on your behalf.

Failure to Include All Parties

If you're working with an outside vendor or contractor who's not an employee of yours, make sure they sign a separate contract before beginning work.

This will help you avoid some of the legal issues associated with vicarious liability.

Failure to Create Separate Agreements for Each Project

A template agreement is fine for many types of work, but it's not always appropriate. If you're working on an ongoing project with another company where changes are likely, consider creating a separate contract for each one. This will help ensure that all parties are aware of their responsibilities and requirements every step of the way.

Why Using a Professional Contract Template Is Crucial for Your Business

Entrepreneurs can undoubtedly draft agreements themselves. However, using a professional template ensures that:

• You are following state and national laws;

• You save valuable time and resources;

• You minimize potential disputes and resulting litigation.

There you have it! All the essentials about 'Release of Liability & Indemnification Agreements for Employees'. Now, it's essential to inform your employees about the agreement adequately and seek their consent in a non-coersive environment. Want to ensure your business is on the right legal track? Consider using our professional contract template to mitigate risks.