15 Must-Haves in an Independent Contractor Agreement

If you are an entrepreneur who hires freelancers or independent contractors to help with your business, you need to have a written agreement in place.

This document is known as an Independent Contractor Agreement, and it outlines the expectations and responsibilities of both the contractor and the business owner. While not every detail needs to be included in this agreement, certain must-haves should be included. That’s why I decided to take a look at the 15 Must-Haves in an Independent Contractor Agreement.

Keep in mind that this list is not exhaustive – you may want to add other items based on your specific needs. And if you have any questions about what should be included in your Independent Contractor Agreement, be sure to speak with an attorney!

What Is An Independent Contractor Agreement?

An Independent Contractor Agreement is a legally binding contract between a business owner and an independent contractor. This document outlines the expectations and responsibilities of both parties and sets forth the terms of the working relationship.

Read more: Contract-to-Hire Pros and Cons You Need to Know

Why Do You Need An Independent Contractor Agreement?

There are several reasons why you need an Independent Contractor Agreement in place. First, it protects your business by clearly defining the scope of work and expectations of the contractor.

Second, it can help prevent misunderstandings or disagreements down the road by setting forth the terms of the agreement up front. Finally, having an Independent Contractor Agreement in place can help you avoid any legal issues if there are ever any problems with the work performed by the contractor.

What Is The Difference Between An Independent Contractor And An Employee?

An independent contractor is an individual who contracts with a company to provide services on a freelance basis. An employee, on the other hand, is someone who works for a company full-time and is entitled to employee benefits such as health insurance and vacation days.

Independent contractors are not considered employees under the law, which means they are not entitled to the same protections and benefits as employees. For example, independent contractors are not entitled to minimum wage or overtime pay, and they are not covered by unemployment insurance if they lose their job.

Understanding the difference…

It is important to make sure that you understand the difference between an independent contractor and an employee before entering into any agreement. Otherwise, you may find yourself in a situation where you are not entitled to the protections and benefits you thought you were.

The Layout Of An Independent Contractor Agreement

Here are some important sections you should have in your independent contractor agreement.

Definitions

The first section of any contract should be devoted to defining key terms. This is especially important in an Independent Contractor Agreement, as there are a few key terms that need to be defined:

• Contractor: this is the independent contractor who will be performing the work outlined in this agreement.
• Client: this is the business owner or client who is hiring the contractor.
• Work Product: this is the final product or deliverable that will be provided by the contractor.

Scope of Work

The next section of the agreement should outline the scope of work. This includes a detailed description of the work to be performed, as well as any deadlines or milestones that need to be met. It is important to be as specific as possible in this section so that there is no confusion about what is expected of the contractor.

Compensation

The third section of the agreement should discuss compensation. This includes how much the contractor will be paid, as well as when and how they will be paid. Be sure to include any details about expenses, bonuses, or other forms of compensation in this section.

Independent Contractor Status

The fourth section of the agreement should address the independent contractor status of the contractor. This means that the contractor will not be considered an employee of the client. He will not be entitled to any employee benefits. This section should also include a disclaimer that the contractor is responsible for their own taxes and insurance.

Signatures

The final section of the agreement should be devoted to the signatures of both the contractor and the client. Once both parties have signed the agreement, it is legally binding!

15 Must-Haves In An Independent Contractor Agreement

1 – A Clear Definition of The Work to Be Performed

This is perhaps the most important element of the agreement. It will outline the expectations and responsibilities of both parties. Without a clear definition of the work to be performed, there is a risk of misunderstandings or disagreements down the road.

2 – A Detailed Scope of Work

As I mentioned, the scope of work should be clearly defined in the agreement. This includes a detailed description of the work to be performed, listing specific duties and outcomes expected.

3 – Compensation details

The agreement should also include a section on compensation. Be sure to include any details about expenses, bonuses, or other forms of compensation in this section. Be clear with how much they will get paid per hour.

4 – An Acknowledgement of The Independent Contractor Status

It is important to include a section that acknowledges the independent contractor status of the contractor. This means that the contractor will not be considered an employee of the client and, therefore will not be allegeable for any employee benefits.

5 – Signatures from both parties

Once the contract has been signed by both parties, it is binding and enforceable!

6 – Deadlines

A timeline of when the project will be completed should be included to ensure that both parties are on the same page.

7 – Confidentiality

If the work being performed is confidential in nature, this should be stated in the agreement to protect both parties.

8 – Intellectual Property

If the contractor will be creating any intellectual property as part of their work, it is important to include a section that outlines who will own this property.

9 – Grounds for Termination

It is also important to include a section that outlines the grounds for termination. This can help avoid any misunderstandings or disputes if either party needs to terminate the agreement early.

10 – Choice of jurisdiction

If a dispute arises, it is important to include a section that outlines which jurisdiction’s laws will govern the agreement.

11 – Severability

If any part of the agreement is found to be invalid or unenforceable, the remainder of the agreement should still be valid and enforceable.

12 – Assignment

The agreement should include a section that prohibits either party from assigning or transferring their rights or obligations without the prior written consent of the other party.

13 – Waiver

If either party fails to enforce their rights under the agreement, this should not be construed as a waiver of those rights.

14 – Entire Agreement

It needs to include a section that states that the agreement is the entire agreement between the parties and that any prior agreements or understandings are void.

15 – Amendments

It should also include a section that states that any amendments to the agreement must be in writing and signed by both parties.

Do You Need An Attorney To Have An Independent Contractor Agreement?

You are not required to have an attorney to create an independent contractor agreement. Although, it is always a good idea to consult with one before entering into any legal contract. An attorney can help ensure that the agreement is fair and legally binding. He can also answer any questions you may have about the process.

Additional Info On Contract Writing

I’ve found these helpful handbooks as well as the forms to help on the subject. So, check out the Consultant & Independent Contractor Agreements, the Legal Forms for Starting & Running a Small Business: 65 Essential Agreements, Contracts, Leases & Letters, or Contract Writing for Dummies Plus Sample Agreements & Contracts Examples: LAW: Write Draft & Negotiate Business Contracts to get you started.

Next, for the necessary forms, I recommend the Independent Contractor’s Noncompetition Agreement: Business – Independent Contractors, Legal Forms Book, the Independent Contractor Employment Agreement (To the Corporation): Legally Binding – Independent Contractors Legal Forms Book, and the Independent Contractor Agreement, Simple – Legally Binding: Employment Legal Forms Book all available online in 2023.

Furthermore, if you’re still not confident, why not try using the Independent Contractor’s Agreement – Legally Binding: Independent Contractors Legal Forms Book, the Independent Agreement (Publisher-Consultant): Business – Independent Contractors, Legal Forms Book, the Independent Contractor’s Noncompetition Agreement – Legally Binding: Independent Contractors Legal Forms Book.

Must-Haves In An Independent Contractor Agreement – Final Thoughts

So, there you have it – the 15 most important elements to include in an independent contractor agreement.

While this list is not exhaustive, it covers the most important points that should be included in any agreement. Remember, if you are ever unsure about anything, it is always best to consult with an attorney before entering into any legal contract.

Good luck writing your Independent Contractor Agreement!