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What Is an Independent Contractor Agreement?
An independent contractor agreement is a contract between a freelancer and a company or client outlining the specifics of their work together. This legal contract usually includes information regarding the scope of the work, payment, and deadlines. The agreement might also provide guidance regarding any confidentiality requirements, insurance, and indemnification.
Independent contractor agreements go by many names, including:
- Independent Contractor Contracts
- Subcontractor Agreement
- Freelance Contractor Agreement
- Contract Labor Form
- Consulting Agreement
- Freelance Contract
- General Contractor Agreement
- Consulting Services Agreement
What Are the Elements of an Independent Contractor Agreement?
Most independent contractor agreements include the following information at a minimum:
Some contracts require additional clauses and information. You can customize an independent contractor agreement to meet the specific needs of your project.
What Is the Purpose of an Independent Contractor Agreement?
Independent contractor agreements serve to protect all parties involved in the transaction. The contract sets clear expectations for the work and end product and provides legal protections for the independent contractor and company or client.
With the contract in place, independent contractors can usually work in the manner they prefer while the company or client does not have any responsibility for their tax obligations.
Independent contractor agreements are only for external freelancers. Company employees do not operate in the same way as independent contractors and thus do not require these agreements.
Confidentiality is a major concern for some companies. Hiring an outside worker can cause some apprehension for keeping company practices internal. Independent contractor agreements often include a clause regarding confidential information, expectations, and consequences in order to protect the company.
When Should You Use an Independent Contractor Agreement?
It's prudent to use an independent contractor agreement if you are one of the following:
- An independent contractor
- A client hiring an independent contractor
- A company hiring an independent contractor
Independent contractors might draw up a contract and present it to their client before beginning the project. Alternatively, the client might produce the contract for the independent contractor to sign, or they might work together to create a contract together.
When a company hires an independent contractor, it's most common for the business to provide the contract for the freelancer rather than the reverse.
Independent contractor agreements are mutually beneficial and protect all parties, so it's in the best interest of everyone involved to draft and sign one.
Benefits of Using an Independent Contractor Agreement
Independent contractor agreements offer a host of benefits for all parties involved in the project. For companies that hire independent contractors, these agreements:
- Protect the company's business interests
- Offer liability protections
- Secure the company's assets
- Ensure the freelancer maintains confidentiality
For freelancers, these agreements:
- Ensure they get paid the pre-determined rate for their work
- Offer professionalism when working with clients by presenting a formal contract rather than a verbal agreement
- Provide clear guidelines and expectations for their work
For clients who hire freelancers to complete projects, these agreements:
- Provide legal protection in the case of an unfinished or unsatisfactory job
- Ensure the project is finished in a set amount of time
- Secure the opportunity to terminate the project if it's not working well
What Is the Difference Between an Independent Contractor and an Employee?
If you're considering hiring someone to perform a job, make sure you know whether you're hiring them as an independent contractor or as an employee. These roles have important distinctions that could impact you and the freelancer or employee negatively if mislabeled.
Independent contractors usually demonstrate these characteristics:
- Are self-employed
- Use their own equipment or tools to perform their work
- Complete 1099 tax forms
- Invoice their clients
- Do not require much, if any, client oversight from day to day
- Work on fixed-term or temporary projects
- Do not receive any employment benefits from their client or hiring company
Employees of a company, by contrast, usually show these characteristics:
- Were hired by a single company to work exclusively for them
- Complete W-2 tax forms
- Have workflow controlled by their employer
- Have wages set by their employer
- Receive employee benefits like health insurance, paid time off, or other perks
- Have an employment contract with the company
- Participate in employee reviews
- Receive in-house training from their company
How To Write an Independent Contractor Agreement
While independent contractor agreements are often straightforward, they are binding legal documents, so it's important that you ensure the information included is accurate. If you want to create an independent contractor agreement, you have a couple of options. First, you can use a template to guide you through the process of creating your own unique contract. If you don't have many special considerations, this is probably the easiest way to create an independent contractor agreement.
However, if your contract has unique complexities due to the nature of your work, you should consult a contract attorney to help you create an individualized independent contractor agreement to ensure all parties involved in the project are appropriately protected.
After you create your independent contractor agreement, you might consider adding a few other related documents to your file to ensure every aspect of your job is well-described and protected.
- W-9 Form: A W-9 form is a tax form that independent contractors and their hiring company or clients must complete. It's different from a W-2 form, which is required for employees.
- Non-Compete Agreement: This agreement ensures that an independent contractor won't work for a competitor for a set period of time, usually during the course of the project.
- Non-Solicitation Agreement: This agreement ensures that the independent contractor won't take the hiring company's clients with them after they finish the job.
Independent contractor agreements are useful legal tools to help protect every disparate party working on a unified project. Make sure your independent contractor agreement includes every important aspect of the job to ensure timely and accurate completion as well as protection for you, your company, and your clients. Seek guidance from a qualified contract lawyer if you need help creating a unique independent contractor agreement.
Meet some of our Independent Contractor Agreement Lawyers
Firm rated best ADR firm for Wisconsin and won an award for cultural innovation in dispute resolution from acquisition international magazine in 2016 and it was rated "Best of Brookfield" by Best Businesses in 2015. Attorney Maxwell C. Livingston was rated 10 best in Labor & Employment Law by American Institute of Legal Counsel and 40 Under 40 by American Society of Legal Advocates for 2016; he also won 10 Best by American Institute of Family Law Attorneys. He is licensed in Wisconsin in all state and federal courts, and in the 7th Circuit Court of Appeals, wherein he won a landmark decision in McCray v. Wielke.
Richard is a wizard at taking on bureaucracies and simply getting the job done. His clients value his straight-forward counsel and his ability to leverage a top-notch legal staff for efficient and effective results. Richard is a professional engineer, professor of law, and has been named among the top 2.5% of attorneys in Texas by the Super Lawyers®. When he is not driving results for his clients, Richard can be found with his small herd on his Texas homestead.
Experienced attorney and tax analyst with a history of working in the government and private industry. Skilled in Public Speaking, Contract Law, Corporate Governance, and Contract Negotiation. Strong professional graduate from Penn State Law.
I am an attorney admitted in NY, with over 6 years of experience drafting, reviewing and negotiating a wide array of contracts and agreements. I have experience in Sports and Entertainment, Real Estate, Healthcare, Estate Planning and with Startup Companies. I am confident I can assist you with all of your legal needs.
Rishma D. Eckert, Esq. is a business law attorney who primarily represents domestic and international companies and entrepreneurs. A native of both Belize and Guyana, she remains engaged with the Caribbean community in South Florida: as a Board Member and General Counsel for the Belize American Chamber of Commerce of Florida, and Member of the Guyanese American Chamber of Commerce. She holds a Bachelor of Laws degree (LL.B.) from the University of Guyana in South America, a Master’s degree in International and Comparative Law (LL.M.) from Stetson University College of Law in Gulfport, Florida, and earned a Juris Doctor degree (J.D.) from St. Thomas University School of Law in Miami, Florida. Licensed to practice in the State of Florida and the Federal Court in the Southern District of Florida, Mrs. Eckert focuses her passion and practice on domestic and international corporate structuring and incorporation, corporate governance, contract negotiation and drafting, and trademark and copyright registrations.
Mark A. Addington focuses his practice primarily on employment litigation, including contractual disputes, restrictive covenants (such as non-competition, non-solicitation, or confidential information restrictions), defense of wage and hour, harassment, retaliatory discharge, disability, age, religion, race, and sex discrimination.
Founder and Managing partner of Emerald Law, PLLC, a business law firm specializing in contract drafting and corporate transactions. Kiel worked as in house counsel for a variety of companies before launching his own firm, and most recently served as the Chief Legal Officer for an international private equity firm.