If you’ve determined you have an independent contractor rather than an employee, the next step is to write the appropriate documents so the contractor can get to work. Let’s discuss why drafting an independent contractor agreement is important, how to write one, and more so you can write your own.
Why you should write an independent contractor agreement
If you’ve brought on an independent contractor, you’ve likely discussed your needs and what you expect them to accomplish. And even if you communicate project goals and expectations as clear as possible, a handshake isn’t enough to seal the deal. It’s all too common to proceed with an independent contractor, get a few weeks (and thousands of dollars) into the project and realize your contractor is failing to accomplish what you thought they would.
Not only is this extremely frustrating, costly, and a waste of time, it can also lead to serious legal ramifications. That’s why you need to write up an agreement. If you want to protect yourself and guarantee results, there’s no substitute for a formal contractor agreement.
How to Write the Independent Contractor Agreement
Begin the contract with a start date and name both parties entering into the agreement. For example:
This independent contractor agreement is made and entered into as of [DATE OF AGREEMENT] between [YOUR COMPANY NAME], and [THE NAME OF THE CONTRACTOR OR THE CONTRACTOR’S BUSINESS].
Section one: Term and Termination
So you’ve established the start date. Next, you want to dictate how long the agreement is for. You can establish a timeline or state until the work is completed, as well as what can terminate the relationship.
Section one can be broken down into subsection 1.1 and subsection 1.2. Subsection 1.1 can cover the term conditions of the contract and subsection 1.2 can discuss how to handle a violation of the agreement, such as a written and documented notice from one party to the other alerting them they’ve violated the agreement.
Section two: Contractor services
While all sections of a legally binding contractor are important, spend a few extra minutes on section two of your independent contractor agreement. Section two is where you want to carefully and painstakingly describe the scope of work you expect the contractor to accomplish. By breaking down the project into very specific details you eliminate the possibilities for ambiguity and confusion. Additionally, spell out how you will review their work and handle quality concerns.
Section two is where you state the compensation rate for the work being performed, how and when workers will be paid, how expenses for the project will be handled, deadlines for the project, and other important project specifications. Finally, state it is not your responsibility or your company’s to handle local, state, or federal taxes. These deductions are the sole responsibility of the contractor.
So do yourself and your company a favor by taking the time to write out these details.
Section three: But are you a contractor for real, for real?
All jokes aside, section three is where you must explicitly state that the contractor is a contractor and not an employee. It’s vital to do so in case one of the contractors attempts to claim he’s owed benefits like a full-time employee.
Section four: Ownership of work completed
Section four exists to dictate that any and all work your independent contractor creates is owned by your company under the relationship outlined in this contract. The contractor gives up all rights to it, but, you can grant permission to the contractor to include the work on their website or professional portfolio for marketing purposes.
Additional Sections to Think About
The four sections outlined above provide a great base to start drafting your independent contractor agreement, but there are plenty of other sections to possibly include to cover legal stipulations. America continues to litigate the ever-living-hell out of itself, and so it’s best to cover as many bases as you can. Some additional items typically include:
Confidentiality: Do you want the work to be kept confidential? If it’s important to keep the work secret, state exactly what can and cannot be shared.
Representations: Representations means both you and the independent contractor are both of able mind to enter into the agreement and by doing so, neither of our rights are infringed upon.
Indemnification: Your company will not be held liable for anything bad that may happen when the contractor is performing their work.
Additional provisions: Common additional provisions include how the agreement can be amended, if the contractor should have their own liability insurance, if the agreement supersedes any previous agreements, and more.
Signed, sealed, delivered
By now you should have an idea of where to begin to start drafting an independent contractor agreement. And once you and your contractor have signed and dated the agreement, you can rest easy knowing your company is protected and excellent work is coming your way.
*Dominion Systems is not a law firm and does not offer legal advice or counsel. The written statements above are a mere guide and are not offered as a legally binding document.