The AI media landscape is currently a « Wild West. »
In the rush to scale, many founders are choosing speed over legal integrity.
A common structure has emerged: companies registered as LLCs in jurisdictions like New Mexico or Delaware, hiring international experts as « Independent Contractors. »
A lot of the time, they operated from outside the US…
However, behind the apparent simplicity of these setups lies a massive legal and financial liability: Worker Misclassification.
The Myth of the « Protected » LLC
I have spent 30 years building, scaling, and advising businesses.
I have seen every « growth hack » in the book.
But the current trend of tech companies imposing full-time exclusivity and internal subordination on freelancers, while ignoring contractually mandated notice periods, is not a good strategy.
It is a breach of contract and a regulatory red flag.
Notice Periods are Signed Liabilities, Not Suggestions
Most US contractor agreements include a « Term and Termination » clause.
In the TECH and AI space, a 60-day notice period is standard.
When a company pivots and terminates a contract immediately without honoring this period, they aren’t « saving costs. »
They are creating a debt.
Under New Mexico law, a signed notice period is a binding financial liability.
Ignoring it constitutes a breach of contract that opens the door to litigation, where « bad faith » can lead to significant additional damages.
The IRS Shadow: Misclassification Risk
A « Contractor » who is required to work exclusively, follows strict internal management, and uses company tools is often, by law, an EMPLOYEE.
Forcing exclusivity on international contractors while dodging social contributions and benefits is a high-stakes game.
US authorities (IRS and Department of Labor) are increasingly cracking down on « shell » operations that use US entities to bypass labor standards.
It’s time to stop these behaviours now and to tell the TRUTH to EVERYBODY !
For a founder, the « savings » on a termination fee are negligible compared to the cost of a federal audit or a « Willful Misclassification » penalty. And it cost so much money and problems you cannot even imagine.
IRS is hyper strict on this and they can close the ENTIRE business ! (worst than the french URSSAF)
The Intellectual Property (IP) Deadlock
This is the most critical point for any content-based business.
In most jurisdictions, including New Mexico, Intellectual Property transfer clauses are effectively contingent upon the fulfillment of the contract.
If a company fails to pay the contractually owed notice period or termination fees, the legal chain of title for the IP (videos, scripts, assets, pictures, texts, discussions…) becomes CONTESTED.
Using ANY assets produced under an unfulfilled contract creates a massive copyright risk for the company and its future investors. This creates a major ‘cloud on title’ for the company’s assets, making them toxic for future investors or acquirers.
Integrity is the Only Way to Scale
As the AI industry matures, the « Legal-Last » approach will fail. Whether you are a founder or a high-level expert, the jurisdiction of your contract matters.
Integrity is not a luxury; it is the foundation of a sustainable brand. Those who shortcut the law today will find that their « speed » has only led them into a legal dead end.