Who's in the hot seat? Probably YOU.

Last week, I said I'd write about why working in VA teams and subcontracting are generally bad ideas.

Let’s first try to agree on why someone would either sub contract or work in a multi-VA team. People say that working in these models allows them leverage—to do more work, and/or to better serve clients. And all of that is true…and you know that I absolutely can get behind VAs leveraging themselves and better serving clients!

What I can’t get behind is their doing it in teams, or via subcontracting, because most of them will be putting themselves in the middle of a liability nightmare they’re likely not even aware of.

The issue at hand is indemnification—who gets the legal finger pointed at her when something goes wrong.

If you’ve procured the client for either of the situations mentioned above, chances are it’s you, whether or not you created whatever problem has caused a legal finger to be pointed. The reason for that is that the client has the agreement with YOU.

As an example: You have an agreement to do work for a client. Some part of it is something you don’t know how to do, or don’t want to do. So you sub out/team out that stuff. The sub/team member screws things up royally, causing a problem for the client. The client loses money, or looks bad to peers, or has some other problem, and royally pissed off, sues…YOU.

Now, you can then sue the sub or team member, but what’s the point of all that? Even if you made a few bucks on the deal, I promise it’s not going to feel like enough if you end up in the hot seat.

It’s true that you could have an attorney draw up a hefty legal agreement meant to protect you from such an eventuality. But I feel quite certain most VAs don’t spend the money to have this done, and most clients wouldn’t sign it if they were presented with it. And in truth, even an agreement like that wouldn't stop someone from suing you (because as a practical matter, anyone can sue anyone for just about anything), although it might get you out of the hot seat once you get to court.

Bit O’Moxie: These models are fraught with very real legal danger. Unnecessary legal danger, in fact, when the key to getting to exactly the same place (leveraging yourself and/or getting stuff done you can’t/don’t do) is so easily at hand (read more here, and here), and doesn’t carry the same peril. I suggest you stay away from these models, and, instead, build the resources that you can share with clients, allowing them to choose their own vendors, pay them directly, and have you manage the process. It's simply cleaner, all the way around.

If you know something about this that I (and the various attorneys and E&O insurance agents I’ve discussed this with over the years) am missing, please share what you know. I really am entirely behind anything VAs can do to strengthen their practices, but I just don’t see this as something that strengthens, when there’s so much potential to destroy what you've built.

Comments

[Danielle Keister]

The other problem with these "team VA" (as well as virtual staffing agency) concepts is that they are illegal.

There are only two classifications in this world: You are either an employee or you own a business, regardless of whether that business is one of self-employment. There is no third status, especially not one that gives anyone license to illegally employ workers as independent contractors.

There is no gray area here. If you are in the business of farming out workers to your clients, those people are legally supposed to be classified as employees. And anyone whose work is so integral (and not incidental) to the profits and losses of the businesses is a worker of that company, not an independent contractor.

Plus, if you end up in a bad relationship with one of those workers, all it takes for them is to file an IRS Form SS9 to get you as the employer who has misclassified these workers into legal and financial hot water.

These team VA businesses are not necessarily more productive or lucrative. They come with a larger overhead and more administrative and management burdens. And the people doing the work aren't going to work for free. Plus, consider that if you subcontract the work out in a truly legal way, you lose the kind of control over the timing and quality of the work that these team VA businesses are often hyping.

I'm not saying it's a bad idea. But do it legally. Subcontract work when you must without touting these people as part of your "team." Hire your own VA to help you manage your business, leaving you to focus on working with your clients. And hire actual employees if necessary.

I get a lot of hate mail about this topic because the VACOC doesn't allow team VA businesses (firstly, because they aren't true Virtual Assistant businesses), but I don't understand how anyone can expect an ethical industry organization to get behind a business idea that promotes fundamental dishonesty and illegality.