An independent contractor agreement defines the details between a contractor and the company.
When you choose to hire an independent contractor instead of an employee, or if you intend to work as an independent contractor, you will need to write an independent contractor agreement that contains the details of your agreement. The first problem you need to solve is making the contract fit the legal definition of an independent contractor. Once your contract matches these specifications, you’ll add the scope of work, contract length, deliverables, a payment agreement, and legal compensation options. Some independent contractor agreements provide terms for canceling or renewing the contract.
As with all legal documents, contractor contracts should be carefully reviewed to ensure all expected clauses are included and to identify any issues.
An independent contractor contract must specify what is being purchased from the contractor or vendor. There is no employer-employee relationship in this type of contract, so instead of a job description with duties, an independent contractor contract contains a scope of work. This section details the duration of the contract, with start and end dates, and the deliverables, or products the contractor agrees to create, or services the contractor will perform.
An electrician may work as an independent contractor.
Clarify that the contractor’s work product will meet the specifications, indicating that the contract is “work-for-hire.” Once the company and the contractor have agreed to these terms, the product or service may be rejected if it does not meet the specifications. Without this statement, an attempt to control the final product received from the contractor can place the company in a gray area that separates contractors from employees.
The place of performance is an important element of an independent contractor contract. Establishes legal jurisdiction and helps satisfy legal requirements that separate employees from independent contractors. Make it clear that the contractor is providing their own equipment and tools and that the work performed will not take place on company premises. Without this clause, an employer-employee relationship can be said to exist.
Payment terms are essential in the contract. Specify whether the contractor receives incremental payments or a lump sum and approximate payment dates. If applicable, the agreement must state that the contractor is responsible for all taxes due.
The final part of an independent contractor agreement is a section that details the rights and responsibilities of each party to the agreement. Be sure to include these statements in case of disagreement. This helps protect against contractor actions that negatively affect the business and vice versa.