Security Company Contracts: Everything You Need to Know
Security company contracts refer to contracts between security companies and hiring parties for the rendering of security services. 3 min read updated on January 01, 2024
Security company contracts refer to contracts between security companies and hiring parties for the rendering of security services. Such a contract contains many important details pertaining to the hiring of a security company – from the security company's qualifications to remuneration. It provides a clear description of the parties' legal obligations so as to minimize disputes in the future.
Security Guard Contract Checklist for a Client
Reviewing a security guard contract can be tedious, especially when you need to go through the fine print with the security guard agency. It is particularly problematic if you are hiring the agency only for supplemental work and not as a major component of your program. Regardless of your purpose of hiring a security agency, there are a number of things you need to do before signing the contract, including:
Check the Security Agency's License
Before anything else, you must request the security agency to provide a copy of its license and validate the license by contacting the appropriate state agency. You can also obtain a report from Dun & Bradstreet to check the agency's solvency or use your company's methods for vetting new vendors.
Ask for a Liability Insurance Certificate
It is essential that you clearly communicate all your liability insurance requirements to the security agency you wish to hire, including general liability, workers' compensation and employer's liability, and excess liability. You can work with your risk management team to determine these requirements.
Establish a Defense and Indemnification Clause
A defense and indemnification clause, or “hold harmless” language, provides protection against lawsuits that result from the negligence of the security guard agency. It ensures that the security company will be responsible for the legal defense cost incurred in defending against a claim that arises from a security guard's negligence and the compensation awarded to the injured party.
Make Sure the Security Guards Meet Your Standards
The security guards who are assigned to guard your property should have adequate qualifications. They must provide a valid individual security guard license if such licensing is mandatory in your state.
State Frequency of Ongoing License and Background Checks
If you are entering into a long-term contract with a security agency, you should set the timing for ongoing background, license, and other checks. For example, the checks can be performed quarterly, biannually, or annually.
Beware of Subcontractors
There are security agencies that claim to be nationwide but actually hire subcontractors to undertake projects across the country. If you allow the security guard agency to hire a subcontractor, you must define your terms clearly. The terms that are required of the main agency should also apply to the subcontractor.
Specify Wages and Benefits
It is important that you specify the hourly wages that you wish to pay the security guards. Also, you should know whether the security agency provides its security officers with benefits. Companies that do so usually have better security guards and a better retention rate.
Include a Cancellation Clause
Typically, a security company contract has a 30-day cancellation clause. Make sure your contract has a clause that applies to both the agency and you, so that the agency will not just walk away and leave you unprotected.
Security Contract Checklist for a Security Company
If you are a security agency entering into a contract, it is recommended that you use a written contract. Such a contract will clearly state the important aspects of the agreement, including the agreed duties, control and supervision of the security officers, number and nature of security officers, and all contractual obligations. If you find onerous terms in the contract, it is advisable that you consult a legal expert before signing the contract.
Some clients may use a standard-form contract. If you are required to sign such a contract, you should look out for these phrases:
- Indemnification, indemnity, or hold harmless
- Waiver of subrogation
- Additional insured
- Owners Contractors Protective (OCP)
- Terms of agreement
In most cases, a security company contract contains a statement indicating that your agency is an independent contractor and not an agent for the client. Theoretically, this language protects the client from liability for your agency's acts and omissions. In addition, it protects the client and you from joint employment claims, which can lead to both of you being held accountable for employee-related claims, such as benefits, pension, and union issues.
If you need help with security company contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.