WHAT IS AN INDEPENDENT CONTRACTOR AGREEMENT?

An independent contractor agreement is a contract between a company and a self-employed individual. The agreement sets the terms of the work to be delivered and the amount and mode of compensation for the work to be completed.

WHAT IS AN INDEPENDENT CONTRACTOR?

In order to understand an independent contractor agreement, it is imperative that the term independent contractor must first be defined.

An independent contractor is an individual who performs work for another person or entity however unlike an employee the company for whom the work is performed does not exercise control over the manner in which the work will be completed.

The company does not control where the work will be done(unless the (IC) has an agreement to this effect, nor does the company control the hours in which the IC will work, the equipment used to complete the work or dictate how the work will be completed.

WHEN DO YOU NEED AN INDEPENDENT CONTRACTOR AGREEMENT?

An Independent Contractor Agreement is needed when a person is hired to perform services for a company but will not receive the benefits that would normally be accorded a company employee.

The agreement is needed to help explain the independent contractor relationship to the company. It will explain that the independent contractor is not entitled to health and life insurance and other regular employee benefits.

The agreement will explain how the contractor will be compensated and what the work assigned will entail.

WHAT TYPES OF WORK MAY REQUIRE INDEPENDENT CONTRACTOR AGREEMENTS?

Traditionally, we think of independent contractors as salesmen, doctors, accountants, lawyers and persons in the building and construction trade; however, with the emergence of innovative technology the professions that now can be considered independent contractors has expanded extensively.  Nurses, teachers, musicians, instructors, designers, marketers, writers, legal professionals and persons in the IT industry can now be considered independent contractor rather than employees.

WHAT IS INCLUDED IN AN INDEPENDENT CONTRACTOR AGREEMENT?

The agreement should include the following:

• Exact names and relevant contact information of the parties as well as the effective dates of the agreement.

• Even it has to be adjusted at some later date it is important to include a termination date or term of duration of the agreement.

• The agreement should clearly state that this an independent contractor agreement and not an employment contract.  The agreement must emphatically stress that nothing within the contract should be construed as an offer of employment as an employee of the company.

• The most detailed section of the agreement should the section that explains and clarifies exactly what services the independent contractor will provide. If the company skips on this part it could end up in a very sticky situation in which services that it had envisioned would be performed were not completed by the (IC). If in doubt or if there is even a small amount of doubt as to services it is better to be over-inclusive rather than under inclusive.

• Another very important clause that must be included in the agreement is that statement that stresses that all work performed by the (IC) is the property of the company owner, not the independent contractor. This is especially critical when the work performed is considered intellectual property. The Independent contractor must waive all rights to the work he has created for the company.

• Other items that can be included and should be included in specific types of contractor agreements include indemnification clauses that state that the company is not responsible for any misadventures or mishaps that may occur while the (IC) is performing his or her work.

• The agreement should also include a confidentiality clause that prohibits the independent contractor from disclosing confidential information to others.

• A strong well written independent contractor agreement can provide a very satisfying business relationship between the IC and a company so it is very important that an adequate amount of time is expended in drafting a very detailed and specific independent contractor agreement.