California Articles of Incorporation with Indemnification
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How to fill out Articles Of Incorporation With Indemnification?
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FAQ
What Is an Indemnification Clause? An indemnification clause is a legally binding agreement between two parties specifying that one party (the indemnifying party) will compensate the other party (the indemnified party) for any losses or damages that may arise from a particular event or circumstance.
While generally, indemnity contracts for negligence are enforceable, the strict rule of construction in California is that indemnity for active negligence requires explicit language in the clause that negligence of the indemnitee is to be included.
The Basic Law: In California, an employer is vicariously liable for the negligent and wrongful acts of his employees that are committed within the scope of employment.
Section 2802 provides that an employer ?shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.?
To be held personally liable, the individual must have either a) been personally involved in the purported violation; or b) participated in activities of the employer related to the alleged violation(s)- e.g., approving payroll practices, implementing timekeeping procedures, etc.
Indemnification in California Under the California Labor Code, this means that employers must pay for an employee's lawsuit expenses where the lawsuit was a result of the employee doing his job or following the orders of his superiors.
CA Corp. Code§ 317(b) states a corporation has the power to indemnify any person who,? ? is or was an agent of the corporation, against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with the proceeding if that person acted in good faith.?
By statute, you cannot have another party indemnify you against damages that result your sole negligent or willful acts. If such a clause is in a contract it is void. Thus under California law, the person seeking indemnity from the other party must have some degree of fault for the harm that results in the liability.