Free Independent Contractor Agreement Template

The IRS has specific rules that specify whether someone is an employee or an independent contractor. The biggest difference is in how the worker is taxed. Business owners need to make sure their interests are considered so having an agreement with an independent contractor is important.

Contracts are enforceable when it is a mutual agreement between two parties with clear details of what is agreed upon. The agreement is typically initiated by one party and accepted and signed by the other. It is important that the wording in the contract or agreement is clear so there is no confusion. The more detail, the less confusion there will be if one party challenges the agreement.

What an independent contractor agreement should cover:

• The effective date of the agreement.
• Terms of agreement. This includes when the agreement is effective and when the agreement ends.
• What services will be rendered by the contractor. Specifically what will be done for agreed amount of pay.
• How the services will be performed should be spelled out. If the contractor uses other workers to help with the project, it should be the contractor’s responsibility to pay the expense of additional workers.
• What is the agreed compensation for the services and when is the compensation due for payment.
• Contractor should be required to provide worker’s compensation insurance for any workers that fall under the agreement and the hiring organization should not be held responsible for any claims that result from injuries to the contractor’s employees.
• All equipment, tools and supplies needed to perform the work should be provided by the contractor.
• The agreement should describe the minimum amount of insurance the contractor will carry to cover any negligent acts on the part of the contractor or the contractor’s employees.
• A termination clause should be included in the agreement stating the number of days required for giving notice of termination of the agreement.
• The agreement should be upheld in the court of the state that the contractor resides.
• If the contractor does work of a creative nature, it should be specified who owns the copyright of the work. Typically the person paying for the work owns the copyright but this should be specified in the agreement.
• The agreement should be signed by both parties by the person with the authority to sign on behalf of the organization.

Finally, one of the advantages of outsourcing work is reducing cost and risk to the organization. These factors should always be considered when hiring contract workers and negotiating the agreement should be part of the process.

As with all legal documents, having an attorney review before finalizing or signing is advisable.

photo by:  RichardAsia

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