Q: We operate our own tours of foreign countries from time to time, and we retain knowledgeable amateurs such as college professors to act as tour guides. We have never had a written contract between our agency and the guide, but we feel that we should have one to protect ourselves from liability. What should be in such a contract? Do we have to pay the guide, or can we provide just a free trip? Are tour guides that we use on an occasional basis considered our independent contractors or employees? Does it matter that we retain them for only one or two trips per year? Do the guides need licenses?
A: For your agency, the key points in a tour guide contract are to specify exactly what the guide must do to earn his or her compensation, free trip or expense reimbursement. You should also provide that you may deduct from the compensation any losses caused by the guide's conduct, such as omitting an advertised tour stop.
You may also want to prohibit the guide from soliciting your clients for future tours without using your agency. You may event want the guide to agree that he or she will not operate tours in competition with yours for a specified number of years.
From the guide's point of view, the key is to specify whether, how and when the guide will be paid or have his trip expenses reimbursed. One key issue is whether the guide gets any compensation if the tour is canceled shortly before the start date.
For both parties, another key issue is liability insurance. If you want to insure against the guide's negligence or misconduct, and if the guide wants to be so insured, the parties will need a written contract setting forth each party's duties.
Whether you must pay the guide at all depends on whether the guide is your employee or an independent contractor. If the guide is your employee, you must pay at least the minimum wage for the city, state or country where he or she will be working.
The wage would have to cover at least all the hours acting as a guide, but whether it would need to cover additional time, such as travel or meal time, depends on the laws of the place where the tour takes place.
As you know, in addition to IRS criteria, each state has its own criteria for determining whether a worker is an employee or an independent contractor. As different as the various U.S. laws are, the laws of foreign countries are even more varied.
Since it is not economical to research, understand and comply with the employment law of every state and country, you probably have little to lose by making the guide a contractor. Since you operate so few tours and use each guide just once or twice a year, the chances of a problem are very small, especially if the guide has other full-time employment, such as a professorship.
If the guide is indeed a valid contractor, then it is fine to pay him or her nothing and provide only a free trip accompanying the paying group.
However, if you want to eliminate all risk of reclassification, consider contracting with a destination management company (DMC) that can employ a local guide in compliance with local law. You could even see if the DMC will employ your professor on a temporary basis.
Whether a guide needs a license depends on the law of the place where the tour takes place. Most of the time, local law requires such a license.