Independent Contractor Agreement
An Independent Contractor Agreement is also known as:
- Freelance Contract
- Consultant Agreement
- General Contractor Agreement
- Subcontractor Agreement
- Consulting Services Agreement
What is an Independent Contractor?
Also known as a consultant or freelancer, an independent contractor is a business or individual that typically works for his or herself and provides a product or service for a customer in exchange for monetary compensation.
What is an Independent Contractor Agreement?
An Independent Contractor Agreement is a written contract that spells out the terms of the working arrangement between a contractor and customer, including the services provided; terms and length of the project or service; payment details; and confidentiality, non-solicitation and dispute resolution clauses.
Who can use an Independent Contractor Agreement?
- Contractors, freelancers or consultants who wish to have a written agreement with their client.
- Customers, clients or businesses who hire contractors and wish to outline the service arrangement through a written contract.
What is the difference between an Independent Contractor and an Employee?
While there are many ways to distinguish an employee from a contractor, here are some of the most common ways an employer can differentiate between the two types of workers.
- May have more than one customer
- Invoices his or her customers
- Has a personal investment in contracting business and may incur profit and loss as a result
- Contractor's customer has little overview of the work or services being provided
- Signed an Independent Contractor Agreement
- Works on a contractual basis
- May hire employees to help complete services
- No employment benefits
- The employer controls how the employee's work is carried out, and when and where the employee works
- Employer controls the employee's wages
- May receive employment benefits, such as medical, pension, vacation or sick pay
- Signed an Employment Contract
- May undergo employment reviews
- Receives in-house training
- Employer created his or her job description
Why is it important to classify workers as either Independent Contractors or Employees?
Classifying a worker correctly allows an employer to file its taxes accordingly and ensures the employer is complying with employment laws.
Employers must pay a portion of payroll taxes on their employees, whereas independent contractors conduct their own personal tax filings.
How do I address confidentiality in an Independent Contractor Agreement?
Confidentiality is a concern for customers who may be entrusting private or sensitive material when hiring an independent contractor to carry out a service for their company.
In a contractor agreement, you can include terms to prevent a freelancer from divulging information about your business. There are also terms about non-solicitation and non-competition in the event there are conflict of interests in the industry or a risk of competition.