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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
Pura Rodriguez, JD, MBA is the President and Managing Partner of A Physician’s Firm, based in Miami. She represents healthcare providers from different specialties in a broad range of issues, including contract review, business planning and transactions, mergers and acquisitions, vendor and contract disputes, risk management, fraud and abuse compliance (Anti-Kickback Statute and Stark), HIPAA compliance, medical staff credentialing, employment law, and federal and state regulations. She also assists providers in planning their estates, protecting their assets, and work visa requirements.
Jaclyn is an experienced intellectual property and transactional attorney residing and working in NYC, and serving clients throughout the United States and internationally. She brings a targeted breadth of knowledge in intellectual property law, having years of experience working within the media, theater, PR and communications industries, and having represented clients in the music, entertainment, fashion, event production, digital media, tech, food/beverage, consumer goods, and beauty industries. She is an expert in trademark, copyright, and complex media and entertainment law matters. Jaclyn also taught as an Adjunct Professor at Cardozo School of Law, having developed and instructed the school’s first Trademark Practicum course for international students. In her spare time, Jaclyn’s passion for theater and love for NYC keeps her exploring the boundless creativity in the world’s greatest city!
A bilingual attorney graduated from J.D. with a C.P.A. license, an M.B.A. degree, and nearly ten years of experience in the cross-border tax field.
Experienced and business-oriented attorney with a great depth of contract experience including vendor contracts, service contracts, employment, licenses, operating agreements and other corporate compliance documents.
With over 21 years of practice, Chet uses his vast experiences to assist his clients in the most efficient manner possible. Chet is a magna cum laude graduate of University of Miami School of Law with an extensive background in Business Law, Commercial Real Estate, Corporate Law, Leasing Law and Telecommunications Law. Chet's prior experience includes 5 years at two of the top law firms in Georgia and 16 years of operating his own private practice.
Steve Clark has been practicing law in DFW since 1980. He is licensed in both Texas and Louisiana state and federal courts. He concentrates his practice on business clients and their needs. He has been a SuperLawyer in Texas since 2011, and is Lead Counsel rated in Business Law. He is also a Bet the Company litigator in Texas.
I am a top-performing bi-lingual legal services professional with a proven record of success. Reputation of assessing and evaluating client’s needs and providing individualized solutions in line with those needs while efficiently handling multiple tasks simultaneously. Able to create a collaborative work environment ensuring business objectives are consistently met. Seeking an attorney role within a legal setting to apply skills in critical thinking, executive communications, and client advocacy.