Security Guard Contracts

TASA ID: 2483

Before September 11, 2001, "security" consisted of three parts: it was a business function, an industry, an academic discipline.  The terrorist attacks on that date added a fourth: Homeland Security.  Each segment is different, but the one generating the most interest from a legal viewpoint is security as a business function.  This is where security's goal is to prevent losses to the greatest extent possible and minimize the cost of those that are inevitable. 

Toward that end, many businesses and institutions supplement their core loss prevention efforts, consisting of integrated operating systems and procedures and security policies and procedures, with security hardware and frequently with security personnel, either proprietary or those provided by a contract agency.  Human behavior being what it is, not surprisingly, the way in which security officers conduct themselves is the basis of much of the litigation encountered by their users.

Lawsuits related to an organization's security program are primarily tortuous in nature.  In cases where contract personnel are involved users of their services may encounter problems that, with some thought, might have been avoided or minimized but for the agreement entered into between the user organization and the contract agency.      

There are certain realities that users of contract services can neither afford to ignore nor dismiss as inconsequential:  (1) They cannot simply contract away their responsibility for security by using contract personnel, a practice that has been tried and found wanting.  (2) Parties alleging injuries, physical or otherwise, based on the alleged misconduct of security officers seek redress from the business or institution where it occurred; aggrieved parties rarely distinguish between contract or proprietary security officers.  Therefore, to best protect themselves, users of contract personnel must ensure that the relationship between themselves and the agencies is clearly defined.  This need and a way in which to deal with it is best illustrated by the following experience.

A multinational corporation's security director, relatively new to his job, was served with a summons and complaint filed on behalf of a contract security officer alleging an on-the-job injury some two years previously.  Neither the plaintiff nor his agency were now working for or at any of the defendant's facilities nor had their services been used for well over a year.  The summons and complaint were given to the defendant's general counsel, to whom the security director reported, who instructed the latter to check the contract originally entered into to see if it had a "hold harmless" provision.

The security director, who also happened to be a lawyer, did more than call for a copy of the applicable contract.  He asked for copies of all agreements    entered into corporate-wide at facilities using contract guard services. The results were more than disturbing.  Not only was there a lack of uniformity, but it also was evident that absent a corporate purchasing department policy and procedure, local purchasing managers had been left to their own discretion. 

Roughly half of the facilities submitted agreements consisting of a page or a page and a half document prepared by the contract agency; the rest used purchase orders completely devoid of any terms or conditions, and that merely "bought" a given number of guard hours at an agreed upon hourly rate.  That was what happened in the case of the allegedly injured security officer now seeking redress.  Where contracts existed, not surprisingly, agency lawyers understandably had written them in ways designed to best serve their clients should any questions or disputes arise.    

Reporting his inquiry's results to the general counsel, the security director suggested, based on his findings, that it might be a good idea for the corporate law department to write a "boiler plate" for a contract to be used corporate-wide.  This would better protect the company, ensure uniformity, and limit local purchasing departments to merely filling in the blanks.  

The general counsel agreed and assigned the contract-writing job to the security director.  A standard contract was written, approved, and disseminated by the corporate purchasing department as a corporate policy and procedure to be used for contract guard services worldwide.

The text of the finished product used lay terms rather than traditional legal language, so all parties could easily understand to what they were agreeing without the benefit of counsel.  In the interest of efficiency and ease in execution, and minimizing possible misunderstanding or disagreement at the time of signing, copies of the agreement would be attached to requests for proposals sent to selected agencies. This meant their bid submissions would be realistic rather than vague and left open to question or further negotiation.

To avoid questions of the company's possible liability for withholding taxes, union dues, other charges or similar purposes, the contract made it clear that agency personnel were indeed agency employees and not those of the user.  It specified all insurance requirements, called for the company to have a certificate of insurance in hand before agency personnel began work, and included direct notification from the insurer in case of an agency's failure to pay its premiums or other coverage problems.  Particular attention was paid to liability and indemnification in any matter based on contract employees' conduct.  

Concerned with contract personnel who would be assigned to its facilities, the company spelled out in detail its qualifications, training, uniforms, equipment, assignments and agency supervision; equipment to be provided by the company was set forth.  These provisions did not usurp the agency's authority or prerogatives in terms of staffing; they merely were the criteria to be used by the agency in assigning personnel.  Agencies would also have surety bonds or "honesty" coverage for assigned employees. 

In addition, the agreement stated the ways in which agency personnel should respond to emergencies.  It also prohibited the carrying or presence on site of firearms and the detention, arrest, or appearance of an arrest by agency personnel without the approval of company management.     

Hourly rates for guards or security officers obviously would depend on the selected proposal, but the contract called for a downward adjustment if the same agency provided personnel at more than one of the company's facilities.  Included were provisions for what would constitute a breach of contract in whole or in part on the part of either of the parties and their resolution.

Due to this radical change in procedure, initially some members of the corporate purchasing department, through which the agreement would be made available, asked how to respond if agencies to which requests for proposals were sent balked at some of the provisions.  The company's position was clear: if an agency wanted the company's business, it would accept the company's terms. Although some agencies weren't too happy with the user company, rather than the agency now dictating the terms and conditions, in fact, no implementation problems were encountered.

This article discusses issues of general interest and does not give any specific legal or business advice pertaining to any specific circumstances.  Before acting upon any of its information, you should obtain appropriate advice from a lawyer or other qualified professional.

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