Here’s a tip: Not all indemnification clauses are enforceable

Indemnification is when a party assumes responsibility for paying the losses or obligations incurred by another party that were created by or agreed to by the indemnifying party. New York’s Appellate Division, First Department, recently found a temporary staffing agency wasn’t required to honor its agreement to indemnify a catering company for wages owed to wait staff who worked for the catering company. Read on to understand the limits of indemnification.

Background

A group of wait staff sued Great Performances/Artists as Waitresses, Inc., for withholding tips, alleging a violation of New York Labor Law (NYLL) § 196-d. They alleged Great Performances charged diners a mandatory surcharge (which appeared to cover tips and gratuities for the wait staff) but failed to remit those receipts to the wait staff.

Great Performance sued Kensington Events, Inc., the temporary staffing agency that provided the wait staff, citing an indemnification clause that read:

To the fullest extent of the law, you will indemnify, defend and hold harmless [Great Performances] . . . against all claims, losses, damages, liabilities and related expenses (including reasonable attorney’s fees) brought by any employee or independent contractor hired by you for any claims for wages and violation of the wage and hour federal and state laws.