Independent Contractor Agreements

Independent contractor agreements are important for anybody who runs a business, performs services for others, or works with outside service providers.

If you work or perform a service for another person or business, and you are not an employee, then you are an independent contractor. If you do work for or provide a service to any other person or business, ask yourself, “Am I an employee?” If the answer is no, then you are a contractor. (If you aren’t sure of the answer, talk to an attorney.)

Services providers, ie. independent contractors, should have a written agreement to use with clients or customers. A written agreement, even a really simple one, can prevent tension, confusion, and legal disputes, and can support your professional relationships.

Here are a few terms and provisions commonly found in independent contractor agreements:

  • Services. This one should be obvious, but the agreement should describe the services that you are providing. What kind of work will you be doing? What is the client expecting to receive? Are there any requirements or restrictions on how, when, or where you do the work?
  • Compensation. Again, pretty obvious. How much is the client paying you? Is it a flat fee, hourly rate, commission based? When are you getting paid?
  • Expenses. Let’s say you’re going to have to buy some materials or equipment, or you are going to have to drive around and travel a lot for your client. The agreement should address which one of you pays for those costs or if you will be reimbursed for mileage and travel.
  • Ownership. Anything that an independent contractor develops, invents, creates, makes, etc. is, by default, the property of the independent contractor. But that’s just the default rule. The parties can agree that it is a “work for hire” or that ownership will be handled in some other way.
  • Confidentiality. It is often a good idea to have a confidentiality or non-disclosure provision in your agreement to protect the confidential information of both parties.
  • Term & Termination. The independent contractor agreement should describe when the contractor will begin work, when it will be completed, and the circumstances under which the parties can terminate the relationship.
  • Indemnification. An indemnification provision can help to protect either party in a situation where the other party does something wrong.
  • Status as an Independent Contractor. The agreement should make clear that the relationship of the parties is that of an independent contractor. The contractor is not entitled to benefits, workers compensation, and is not subject to tax withholding. This will help to clarify that there is not an employee/employer relationship, a partnership or joint venture, or something else. Proper classification of independent contractors is very important!

Independent contractor agreements come in many shapes and sizes. What works for one person is often not going to work for another. That’s why it is important that your independent contractor agreement is drafted specifically for you, your business, and your specific situation and needs.