Force Majeure clause and employment classifications changes coming for MPs

The legal nuances of meeting planning can be a bit overwhelming even for the seasoned planners. To offer some helpful insight in what areas to be on the lookout for, Smart Meetings sat down with Ty M. Sheaks, attorney, author and faculty legal advisor for International Association of Venue Managers to break down the major legal challenges meeting profs should be aware of in 2023.

Force Majeure Clauses

As we all learned over the last three years, force majeure clauses focus on liability when unforeseen circumstances impact the ability for one or both parties to perform the contracted activities.

Listen On-demand: Top Legal Challenges for 2023

“It is something you couldn’t foresee, something totally out of your wheelhouse i.e. Covid,” said Sheaks, “This makes performance basically impossible.”

What’s the difference between long and short form force majeure clauses? A lot. “The short form is basically saying any Act of God will be counted as a force majeure. There’s no definition for Act of God,” explained Sheaks.

However, the more vague the wording, the harder it will be for those looking to cancel or terminate an event contract.

Sheak continued, “The short form is usually not advisable. Because there’s too much gray area and especially after Covid, courts really cracked down on this. Look, if it wasn’t in there, this doesn’t cover it. You can’t get out of your contract under the force majeure clause.”

“The long form is the exhausted list. A lawyer gets giddy and writes out everything that could go wrong. Acts of terrorism, floods, earthquakes and biblical plagues. This is the one that is preferred.”

Your choice of words could determine liability. Words like prevented, impeded, hindered or delayed, are preferred rather than less specific all-encompassing terminology that may be too general in legal terms.

Read More: Ty Sheaks on Force Majeure Contract Clauses

“Now that we have all experienced the cancellation world of Covid, meeting planners should be sure to reference cancelations with the phrases: disease, viral outbreak, epidemic. Simply stating Covid-19 will not be enough if your event is impacted by something completely different.” Also, be mindful of including refences to ‘governmental actions’, ‘emergency declaration’ or ‘any law of action taken by the government or public authority’ in case the reason for the event cancellation comes a different source.

Rutgers University uses the following example of a force majeure clause in the reference paper “Expecting the Unexpected: Force Majeure Clauses and the Covid-19 Pandemic”.

Force Majeure. Neither party shall be held responsible for any loss, damage or delay suffered by the other party owing to any cause that is beyond the reasonable control of the defaulting party and cannot be attributed to negligence or willful nonperformance of its obligation. Such causes include wars, terrorist acts, embargoes, riots, civil disturbances, fires, storms, floods, hurricanes, earthquakes, strikes and labor disputes and government acts and restrictions.”

Independent Contractors vs Employees

The U.S. Department of Labor is updating regulations about when a worker should be classified as an employee and when they qualify as an independent contractor. “The rules are changing to be slanted to reclassifying people as employees. Why is this important? If they’re employees, then you have to pay more attention to the overtime rules, time rules, pay scales, pay requirements. It gets way more into the weeds,” Sheaks said.

Tracy Judge, founder, and CEO of Soundings, a company that works to connect businesses with qualified staffing, has been preparing for this change as well.

Listen On-demand: Tracy Judge’s Independent Planner Emergency Kit

“There’s a lot of things that go into consideration when you’re classifying a worker. Each state has different laws. It’s getting harder to be a 1099 than it was before. If you’re out on your own and you’re not plugged into someone that can W2 you as an employee, then it’ll be much harder to get work because larger organizations are going to start cracking down on who can be a freelancer and who needs to be an employee,” said Judge. “We look at this from both sides, because talent is our customer, as well as our clients.”

In 2022, Soundings began running workers’ classification compliance checks before staffing any project. If a worker cannot be legally classified as a 1099 independent contractor, Soundings classifies them as a W2 employee. 

Judge sees these new classification rules having an immediate impact on the staffing industry.

“It changes our relationship with talent. For instance, most travel directors/on-site staff who were paid a day rate as a 1099 must now be classified W2 employees to be compliant. We are dealing with changes to how we have to pay talent and, as a result, how we have to charge our customers.”

Judge predicted independent contractors will also get hit hard by these new rules, “Companies are going to be drilling into what is needed to actually be 1099, and a good majority of independent contractors will not have the proper business set-up, licenses, and insurance to comply.”