The Explainer: Living the dream … with proper protection
If you’re picking a venue, opt for an American court if you can.
Last week I was really excited to learn that I will be spending at least the next year living and racing in Italy. For me, it’s a dream come true, since not only will I be competing in Europe — which has always been a fantasy for me — I will actually be getting paid to do so.
Since getting the offer, however, I have started to think about the potential problems I might encounter along the way.
For one thing, I would really appreciate it if you could review my contract before I sign it. I was a biology major in college and, frankly, all of that legal mumbo-jumbo makes my eyes glaze over. What’s worse, the original is in Italian, although there is an attached version in English. The weird thing is that the attachment looks like a version of your old machine-translation poem, “We were fought by men, very fast.” Can you have a look at it and suggest what I can do?
What if the team flakes out, the job doesn’t work out or they just don’t live up to the contract? Do I have legal options? I sure don’t want to be stranded over there.
Also, do I need a special work permit or visa to work as a bike racer in a foreign country?
What about taxes? Do I have to pay U.S. taxes on income earned overseas?
Because this is not a done deal, I would prefer not to use my real name, so I will just sign off as …
Unfortunately, no, I should probably not review your contract and offer specific legal advice regarding the deal. If you have specific concerns, you are going to have to check in with an attorney. I can’t really help you, beyond just offering general observations.
For one thing, when it comes to legal questions, The Explainer is really just intended to serve as a jumping-off point, rather than as legal advice specifically relating to your question. I can’t really be your attorney in this matter (unless, of course, you happen to live here in Wyoming and want to visit my office and sign a representation agreement).
As my old friend, Bob Mionske, regularly notes in his column: “Understand that reading the information contained here does not mean you have established an attorney-client relationship with attorney Bob Mionske.”
(Note to self: I really do need to steal that line from Bob’s column and add it here, too.)
That said, I would really enjoy looking at the machine translation of said contract, which could provide us all another chance to produce a terrific new poem.
The choice of law provision
I am a little concerned about the fact that the contract is drafted in Italian and then reproduced with an apparently machine-generated translation. Obviously, if you try to enforce it, the terms and conditions outlined in the original Italian contract would be what the court has to consider.
I can only imagine that a machine translation of specific sections would trigger a host of problems, particularly if the original contains what lawyers refer to as legal “terms of art,” specific terms that are so established in a legal system that everyone knows what they mean. Assuming that Italy, too, has its own terms of art, it may cause a great deal of confusion when those are reproduced in machine translation.
One thing you might want to look for in the proposed contract is whether it contains a “choice of law” provision, which will note where and how any potential dispute is to be resolved. If it doesn’t — or if the dispute is to be resolved in Italian courts — I would suggest asking for the inclusion of language that allows you to apply U.S. law for interpretation of the provisions of the contract and an American venue for resolving those disputes.
Standard boilerplate language would read something like this: “This contract shall be governed by the laws of the State of (Anita’s state). Any disputes arising under or related to this agreement shall be submitted exclusively to the State or Federal courts in the (county in which Anita resides), State of (Anita’s state), and both parties agree to submit to the exclusive jurisdiction of such courts.”
For one thing, the inclusion of such a provision will save you the hassle and expense of trying to resolve a legal dispute in Italy. Assuming the arrangement falls apart — and it’s been known to happen — and you come back home, the last thing you want to do is get tied up in Italian courts, trying to resolve a dispute, when you can deal with it here at home.
Assuming that you can reach an agreement on that front, you — or a lawyer you hire — should draft an English version of the contract and make that the copy everyone signs. I can only imagine a local judge in your state might have a bear of a time issuing a decision based on a contract drafted in Italian.
Now, I am not sure how much money is involved, but unfortunately I can guess that a racing contract with a women’s team is probably not going to involve six or more figures. Even if you do win a contract dispute, particularly with a foreign entity with no U.S.-based assets to seize, you will face a problem enforcing any judgment against your now-former team.
While you might be in possession of a judgment from a U.S. court, you may have to try to enforce that judgment in Italy. That’s never easy. Enforcement could involve more expense and hassle and may require you to enlist the services of an attorney in Italy.
Obviously, if the amount in dispute is not huge, then it may not be worth the trouble. You’re much better off just getting paid and having a good year over there than you are getting involved in litigation with the folks who are now offering you a deal to ride.
Nonetheless, you do need that contract and it needs to be specific. As long as we’re translating the thing, go ahead and rewrite it … or have your lawyer rewrite it.
Do make an effort to include in the redrafted contract all of the promises and representations the team is making now, whether they are already included in the Italian version of the contract, mentioned in an email or told to you over the phone or in person. Include things like salary, housing, equipment, transportation and health care.
Carefully read the doping provisions, too. These days, most rider contracts include a provision that allows you to be fired if you violate UCI doping rules or the WADA Code. Fair enough. If you’re a doper, you should be canned. Of course, you’re probably not the sort to engage in that behavior, but you do need to be prepared for the possibility of a bad test, a screwup somewhere or just bad luck. Check the contract to see what level of help you might get from your team. Odds are pretty good that it won’t be much, so be ready for that. By being ready, I mean have a list of attorneys, well versed in the intricacies of the WADA Code, who can help you through the mess. There are a few of us out there.
It may also be worth including language that covers your ass if you find the team to be engaged in a systematic doping program. I would talk to my lawyer about making the entire amount of your annual salary due upon presentation of evidence that you’ve been approached by team management to engage in doping practices. I largely suggest that to see how they react to the inclusion of such language. If they freak out, try to find out why. It may save you hassles.
Finally, if it were me, I would request an open-ended return flight ticket already paid for, in your name and in your possession. That might be your best—and only—real protection against a bad situation and a contract breach, since at least you won’t find yourself stranded without an income or a roof over your head.
Ultimately, you really need to gauge your comfort level with the people with whom you are making this deal. Sure, a contract is necessary, since it serves to spell out the rights and obligations of both parties, but you really never want to see this stuff end up in court. That’s a sign of failure at some point in the relationship, isn’t it?
The visa question
Regarding your visa question, I have to assume that since the aforementioned contract was originally presented to you in Italian, that you will, indeed, be racing for an Italian team. Since it’s an Italian employer, you will need to get a work permit to race over there for a salary, particularly if you plan to stay in excess of 90 days.
Yes, I know that there have been a lot of riders who go over on a tourist or business visa and happily compete with few problems, but why risk it? It shouldn’t be too difficult and if your team has any experience working with riders based outside of the European Union, your contact person should be able to get the ball rolling on that front.
If you are the first non-Euro’ to race on the team and they are not willing to make those arrangements on your behalf, contact the nearest Italian consulate to see what requirements you need to satisfy.
One important thing to remember is you need to double-check the current status of your passport. Even if you plan on traveling on a tourist visa — which is automatically granted to U.S. citizens visiting the EU — you can’t even get on the plane if your passport is slated to expire within the 90-day visa window. Check it and renew it now if necessary.
Taxes on overseas income
The tax question comes up a lot. Yes, according to the IRS, you are responsible for reporting income earned overseas and you are responsible for paying taxes on it.
That said, there are a number of things to keep in mind when you do. First off, you need to decide where you really want to claim as your “tax home.” In other words, will you remain a resident of the U.S. or will you be permanently based in Italy?
You also need to keep close track of taxes you end up paying to the Italian government — which is far more attentive to taxation these days. If Italy ends up being your place of residence, then you might be eligible to exclude up around $92,000 of your foreign income from U.S. taxation.
Nonetheless, you will still need to report that on a U.S. tax return. There are a number of rules that the IRS has regarding foreign-earned income, residency requirements, exclusions, credits, yada, yada, yada … in other words, you should probably meet with a tax professional both before you leave for Italy and when you file your 2012 taxes.
The meeting prior to your departure is really helpful when it comes to the record-keeping you should plan for in the coming year. That will make the filing of your 2012 return much easier. Indeed, if you have a knack for that kind of thing and your income picture isn’t particularly complicated you may be able to file your tax return on your own and forgo that second meeting with the tax pro. I would, however, strongly encourage you to check in with one before you leave, just to make sure that you have at least a basic understanding of the rules that do and do not apply to your case.
Finally, I want to wish you the best, “Anita.” I can only imagine how exciting the prospect of living and racing overseas has to be for you. Best of luck and let us know how the season works out. I, for one, hope most of that contract, lawsuit and enforcement advice proves to be totally unnecessary.
The Explainer is now a regular feature on Red Kite Prayer. If you have a question related to the sport of cycling, doping or the legal issues faced by cyclists of all stripes, feel free to send it directly to The Explainer at Charles@Pelkey.com. PLEASE NOTE: Understand that reading the information contained here does not mean you have established an attorney-client relationship with attorney Bob Mionske … err … I mean Charles Pelkey. Readers of this column should not act upon any information contained therein without first seeking the advice of qualified legal counsel licensed to practice in your jurisdiction.