Independent Contractor:
What It Means & Who Qualifies

Jump to Section

Need help with a legal contract?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

Independent contractors offer a unique skill set to companies, and in exchange, employers save money on labor costs while creating a competitive advantage. However, the employer-independent contractor relationship must follow specific federal rules and may be subject to further state regulations.

The information below contains everything you should know about hiring or working as an independent contractor:

What is an Independent Contractor?

An independent contractor is self-employed individual. They generally function as an entity contracted to offer specialized services as a nonemployee. An independent contractor agreement sets the terms and conditions of the business relationship between the company client and the contracting service provider.

The rights of an independent contractor are essential for employers to honor and recognize, including:

  • Right to contract
  • Right to advertise
  • Right to challenge employment status
  • Right to control
  • Right to make decisions
  • Right to manage own a business
  • Right to receive payment
  • Right to work at will
  • Right to work location
  • Right to work with others

Violating the above-referenced rights can leave employers on the hook for expensive fines and penalties. Regardless of your position, it is critical to recognize these rights and incorporate them into your independent contractor agreements as a matter of practice and formality.

Here is an article that also defines independent contractors.

What Does It Mean To Hire Someone As an Independent Contractor?

Being hired as an independent contractor is when a company employs someone under contract to perform a specific service. However, employers shouldn’t classify independent contractors as employees since they operate as distinct entities, including sole proprietorships and LLCs . Independent contractors can perform various functions involving specialized tasks beyond the scope of the client’s ordinary course of business.

Both parties generally have an independent contractor agreement to govern their relationship, contrasting with private employment. It’s wise for independent contractors to utilize contracts with clients routinely. They allow you to establish relevant and vital terms and conditions, such as when the work period ends, what happens if one party wishes to terminate, and what happens if one party cannot fulfill their duties.

Meet some lawyers on our platform

Matthew S.

1 project on CC
View Profile

Brad H.

3 projects on CC
View Profile

Bryan B.

32 projects on CC
View Profile

Paul S.

5 projects on CC
View Profile

Independent Contractors vs. Employees

Independent contractors provide businesses with flexibility when it comes to staffing. Depending on the client’s needs or the sales volume, they can engage contractors for a specific period while saving time and money in some situations. On the other hand, employees are more expensive with less termination flexibility.

Below, check out additional differences between independent contractors vs. employees:

Difference 1. Location & Hours

In general, contractors decide when, where, and how they work. The location of their work depends on the schedules and demands of their other clients. You do not have to provide an assigned office or designated workspace for contractors.

The work schedule they follow isn’t necessarily traditional either. The type of work or service provided may require independent contractors to work longer hours, including nights and weekends.

Traditionally, employees work at your business location during certain hours or shifts. If they exceed those usual hours, they will earn overtime pay. They will work from dedicated offices or space provided by you.

Difference 2. Control

Independent contractors perform work independently and free from managerial control. It is common for a company to hire contractors for their expertise based on training and experience alone. As such, there is no obligation to train an independent contractor.

In contrast to independent contractors, you have the right to supervise them more closely and require their adherence to internal company policies. Employees are also more likely to have open-ended job descriptions within a specific role.

Difference 3. Resources & Compensation

Contracts or professional service agreements define how much you pay contractors for their services. Payments don’t happen regularly like a salary but upon completion of milestones or stages. Client’s don’t make tax deductions and pay the independent contractor like they would any other invoice.

Clients seldom reimburse independent contractors for expenses such as work clothes, fuel, lunch, or meals. They typically purchase their supplies independently. Contractors also don’t receive paid employment benefits unless they furnish a separate policy.

Employees don’t pay for things like uniforms, supplies, and tools. Instead, the employer is generally responsible for supplying these items. An employer must pay an employee by the hour or as a salaried person and offer them benefits as required under federal and state labor laws.

Difference 4. Employment Laws

Across the United States, law and regulation regulate the employment of employees, including minimum wage, anti-discrimination, and overtime laws. The employee-employer regulatory system generally does not cover independent contractors.

However, employers cannot treat independent contractors like employees. Misclassification of personnel is a significant issue in the US, and infractions can severely punish employers.

For example, California State requires that employers use an ABC Test to determine if an employee is an independent contractor. The ABC Test asks three essential questions as follows:

  • Is the worker free from control?
  • Does the worker offer services beyond the normal scope of business?
  • Is the worker permitted to offer services to others?

If the employer answers “Yes,” to these questions, they must classify the employee as an independent contractor. If they answer “No,” then they must reclassify the independent contractor as an employee. They may also owe misclassified workers benefits and backpay.

Here is an articles that discusses the diffeneces between an independent contractor vs. employee .

What qualifies as a 1099 Employee?

A 1099 employee is an independent contractor, such as freelancers, contractors, and gig workers. We call them “1099 employees” because companies must issue a 1099-MISC tax form to them annually. A written contract usually defines the specific tasks or projects that these workers are hired to accomplish.

Employers must treat 1099 employees just like independent contractors, including freedom from managerial control, the ability to set work hours, and more. A tax attorney can help you generate the legal documents necessary for managing 1099 employees.

ContractsCounsel Independent Contractor Image

Image via Pexels by Snapwire

Examples of Independent Contractors

According to the IRS, you are not an independent contractor if the employer can control the services you perform. Independent contractors are incredibly prevalent in the construction, marketing, technology, and trade industries.

Here is an example of how an independent contractor relationship works:

  • Katherine offers services as a web designer in her area
  • KLM & Co. needs to hire a web designer for a new company website
  • It doesn’t make sense for KLM to hire a private employee for this project
  • KLM eventually connects with Katherine and review her proposal
  • KLM decides to hire Katherine as an independent contractor for the website
  • Katherine drafts an independent contractor agreement and produces it
  • Both parties finalize the agreement by signing it
  • Katherine performs services from her home as described in the contract
  • KLM works in good faith by allowing Katherine to complete the work
  • Upon final approval, Katherine submits an invoice to KLM
  • KLM receives the invoice and pays it
  • Unless KLM hires Katherine for more work, the project concludes

Workers with special skills are frequently self-employed, seeking independent work instead of private employment. Many doctors, lawyers, dentists, and other professionals who provide services to the public are often self-employed. Freelance writers also work as independent contractors.

Get Help With Employment Issues

Several legal issues are surrounding employer-independent contract relationships. As such, legal advice and guidance can help you navigate the associated complexities. Employment lawyers can answer questions and draft independent contractor agreements that are practical for your situation. Post a project for free to get bids from vetted lawyers to help.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

ContractsCounsel verified
10 years practicing
Free Consultation

G'day, my name is Michele! I work with startups, entrepreneurs and small/medium-sized businesses across the country in a wide array of industries. I help them with all of their ongoing, daily legal needs. This includes entity formation, M&A, contract drafting and review, employment, asset sale & acquisition, and business sales or shareholder exits. I'm half-Australian, half-Italian, and I've lived the last 20+ years of my life in America. I've lived all over the USA, completing high school in the deep south, graduating cum laude from Washington University in St. Louis, and then cum laude from Georgetown University Law Center. After law school I worked for the Los Angeles office of Latham & Watkins, LLP. After four intense and rewarding years there, I left to become General Counsel and VP of an incredible, industry-changing start-up called Urban Mining Company (UMC) that manufactures rare earth permanent magnets. I now work for Phocus Law where I help run our practice focused on entrepreneurs, startups, and SMEs. I love what I do, and I'd love to be of help! My focus is on providing stress-free, enjoyable, and high-quality legal service to all of my clients. Being a good lawyer isn't enough: the client experience should also be great. But work isn't everything, and I love my free time. I've been an avid traveler since my parents put me on a plane to Italy at 9-months old. I'm also a music nut, and am still looking for that perfect client that will engage me to explain why Dark Side Of The Moon is the greatest album of all time. Having grown up in a remote, and gorgeous corner of Australia, I feel a strong connection to nature, and love being in the elements.

ContractsCounsel verified
8 years practicing
Free Consultation

Attorney Greg Corbin is the founder and principal of Signal Law in Denver, Colorado. A top-rated trial and transactional lawyer with more than seven years of total legal experience, Mr. Corbin provides exceptional counsel and support to clients across the greater Denver metro and surrounding areas who have legal needs involving any of the following: business and corporate law; contracts and agreements; incorporations, partnerships and other entity formation and dissolution services; and ongoing business counsel for emerging and expanding commercial enterprises. Utilizing the latest in cost-saving technologies and advanced automation, Mr. Corbin has established his practice as a modern law firm ready for the future, and he strives to provide the highest level of representation to his clients and help them achieve their goals and the favorable outcomes they seek as efficiently and cost-effectively as possible. He has gained a reputation for his innovative solutions as well as his transparent pricing structure and responsiveness when dealing with his clients. In recognition of his outstanding professionalism and service, Mr. Corbin has earned consistent top rankings and endorsements from his peers as being among the top lawyers in his region for business law and transactions. A 2008 graduate of Kansas State University, Mr. Corbin obtained his Juris Doctor from Boston University School of Law in 2013. The Massachusetts Bar Association admitted him to practice that same year, and the Colorado State Bar Association admitted him in 2015. Mr. Corbin is an active member of the Denver Bar Association and the Colorado State Bar Association, among his other professional affiliations, and he supports his local community through his involvement with Project Worthmore and Biking for Baseball, where he serves on the boards of directors.

ContractsCounsel verified
5 years practicing
Free Consultation

The Law Office of David Watson, LLC provides comprehensive and individualized estate-planning services for all stages and phases of life. I listen to your goals and priorities and offer a range of estate-planning services, including trusts, wills, living wills, durable powers of attorney, and other plans to meet your goals. And for convenience and transparency, many estate-planning services are provided at a flat rate.

ContractsCounsel verified
Managing Partner
7 years practicing
Free Consultation

Experienced contracts and business attorney with years of experience advising entrepreneurs and small businesses. Currently act as general counsel to multiple companies with millions in annual revenue. My specialty is creative legal problem solving with solutions tailored to your business.

ContractsCounsel verified
2 years practicing
Free Consultation

My career interests are to practice Transactional Corporate Law, including Business Start Up, and Mergers and Acquisitions, as well as Real Estate Law, Estate Planning Law, and Intellectual Property Law. I am currently licensed in Arizona and Pennsylvania, after having moved to Phoenix in September 2019. I am currently General Counsel for a bioengineering company. I handle everything from their Mergers & Acquisitions, Private Placement Memorandums, and Articles of Amendment to Intellectual Property Assignments, to Employment Law and Beach of Contract settlements. I have 4 years experience handling commercial breach of contract cases working with Burton Neil & Associates, P.C. I have experience with Intellectual Property infringement after having worked for Ryley Carlock & Applewhite. I have also recently gained experience with Estate Planning law, drafting numerous Estate Planning documents for people such as Wills, Powers of Attorney, Healthcare Directives, and Trusts. I am looking to further gain legal experience in these fields of law as well as expand my legal experience assisting business start ups, mergers and acquisitions and also trademark registration and licensing.

ContractsCounsel verified
2 years practicing
Free Consultation

Atilla Z. Baksay is a Colorado-based attorney practicing transactional and corporate law as well as securities regulation. Atilla represents clients in the negotiation and drafting of transactional (e.g. master service, purchase and sale, license, IP, and SaaS agreements) and corporate (e.g. restricted stock transfers, stock options plans, convertible notes/SAFE/SAFT agreements, bylaws/operating agreements, loan agreements, personal guarantees, and security agreements) contracts, in-house documents (e.g. employment policies, separation agreements, employment/independent contractor/consultant agreements, NDAs, brokerage relationship policies, and office policy memoranda), and digital policies (e.g. terms of service, privacy policies, CCPA notices, and GDPR notices). Atilla also reviews, and issues legal opinions concerning, the security status of digital currencies and assets. Following law school, Atilla practiced international trade law at the Executive Office of the President, Office of the United States Trade Representative, where his practice spanned economic sanctions enacted against goods originating in the People’s Republic of China valued at $500 billion. Afterwards, Atilla joined a Colorado law firm practicing civil litigation, where the majority of his practice comprised of construction defect suits. Today, Atilla's practice spans all corporate matters for clients in Colorado and the District of Columbia.

ContractsCounsel verified
18 years practicing
Free Consultation

After graduating from The University of Chicago Law School in 2002, Clara spent eight years in private practice representing clients in complex commercial real estate, merger and acquisition, branding, and other transactional matters. Clara then worked as in-house counsel to a large financial services company, handling intellectual property, vendor contracts, technology, privacy, cybersecurity, licensing, marketing, and otherwise supporting general operations. She opened her own practice in September of 2017 and represents hedge funds, financial services companies, and technology companies in a range of transactional matters.

ContractsCounsel verified
2 years practicing
Free Consultation

I love contracts - and especially technology-related contracts written in PLAIN ENGLISH! I've worked extensively with intellectual property contracts, and specifically with IT contracts (SaaS, Master Subscriptions Agreements, Terms of Service, Privacy Policies, License Agreements, etc.), and I have built my own technology solutions that help to quickly and thoroughly draft, review and customize complex contracts.

ContractsCounsel verified
18 years practicing
Free Consultation

Founder and owner of Grant Phillips Law.. Practicing and licensed in NY, NJ & Fl with focus on small businesses across the country that are stuck in predatory commercial loans. The firm specializes in representing business owners with Merchant Cash Advances or Factoring Arrangments they can no longer afford. The firms clients include restaurants, truckers, contractors, for profit schools, doctors and corner supermarkets to name a few. GRANT PHILLIPS LAW, PLLC. is at the cutting edge of bringing affordable and expert legal representation on behalf of Merchants stuck with predatory loans or other financial instruments that drain the companies revenues. Grant Phillips Law will defend small businesses with Merchant Cash Advances they can no longer afford. Whether you have been sued, a UCC lien filed against your receivables or your bank account is levied or frozen, we have your back. See more at

ContractsCounsel verified
2 years practicing
Free Consultation

I am a software developer turned lawyer with 7+ years of experience drafting, reviewing, and negotiating SaaS agreements, as well as other technology agreements. I am a partner at Freeman Lovell PLLC, where I lead the legal process outsourcing effort for routine commercial contracts. We provide a strong alternative to traditional hiring by providing you with the power of a team for the price of a temporary attorney.

ContractsCounsel verified
24 years practicing
Free Consultation

Experienced legal counsel to entrepreneurs, small businesses, and investors. Advising clients starting, buying, selling, operating, financing, and investing in businesses // U.S. Army Veteran // Dog Lover // Ironman Triathlete, Marathoner, Open Water Swimmer, USAT Triathlon Coach // Oenophile

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call