Mark Pestronk
Mark Pestronk

Q: To increase our high-end, leisure sales to young, affluent adults, I am thinking of retaining, as independent contractors, one or more social influencers who have large followings on Instagram and can refer followers to our agency. Aside from the usual IC rules, what other kinds of provisions do I need in the IC agreement? If I control what the social influencers say, do I run the risk of having them deemed to be my employees, rather than ICs? Also, would these ICs need to have their own seller of travel registrations?

A: Social influencers need to disclose their relationships with, discounts from or payments by travel suppliers. Otherwise, they violate the Federal Trade Commission's regulations and analogous state consumer-protection laws.

From your agency's point of view, you will want to avoid being a co-conspirator in violation of these laws. So, I recommend that you require the social influencer to observe some do's and don'ts. For example:

• If the social influencer has negotiated to obtain a free stay from a resort hotel, then it must be disclosed in the review. Similarly, if the influencer has a relationship or friendship with a hotel employee, the relationship needs to be disclosed.

Influencers need to make these disclosures even if they think a review is unbiased. Further, the social influencers need to understand that mere mentions of travel suppliers, social media tags, pins and the like are to be deemed endorsements, if they usually write about things that they like.

• The disclosure should be in the same article or review as the endorsement itself. If an Instagram piece consists only of pictures, you need to superimpose the disclosure on the pictures, according to the Federal Trade Commission. The disclosure should not be in the influencer's bio or in a website's terms and conditions.

• The disclosure should be in plain, forthright language, such as "Thanks to the Four Seasons Punta Mita for the free stay." The influencer should avoid vague and cagey verbiage like, "I may receive promotional consideration for some of the views expressed on this website," even though this exact language often appears in reviews these days.

• An outright or implied endorsement needs to be based on firsthand knowledge, so your influencers must have actually visited the places or used the suppliers they are endorsing. 

You can add these rules as a short amendment to your existing IC agreement, or you can have a separate referrer agreement just for social influencers.

If you require the influencers to follow these practices, I don't think that you are risking the reclassification of them as employees by controlling their behavior. In my experience, you can always impose rules designed to ensure that the IC complies with the law.

The seller of travel laws cover offers for the sale of travel. Social influencers are not actually making offers or closing sales, so they don't qualify as sellers of travel under the laws of any of the four states that require registration.

More Legal Briefs on independent contractors:

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