10 Must-Haves in An Independent Contractor Agreement

From 4 Corner Resources, Pete Newsome discusses the key items that should be included in any independent contractor agreement. Pete writes:  

1. Independent contractor relationship

This is the part of the contract that we touched on a moment ago—the one that specifies that the worker is an independent contractor and not an employee of the company. As such, the contractor will not be eligible for benefits like health insurance and is not entitled to any protections granted by law to employees. You should make clear in this section that the worker is responsible for covering their own taxes—the company will not withhold any taxes on their behalf as it would from the paycheck of a full-time employee.

Depending on the type of services the contractor is providing, you might want to use this section to require that they show proof of liability insurance. This insurance would help cover the costs if, say, the contractor was injured on the job or their work resulted in the company getting sued for a copyright violation.

2. The scope of work to be provided

This should be the easiest part of the independent contractor agreement for you to create; it’s the part where you outline the deliverables you’re expecting to receive from the contractor in exchange for payment.

The deliverable will vary depending on the work being done, but it should be specific, for example, the contractor will deliver one 30-second radio commercial promoting Acme Corporation via a downloadable attachment in mp3 format. If the project is a complex one, it can be helpful to break down the final deliverable into smaller milestones that will be handed over along the way.

In some cases, like one where you’re hiring a marketing consultant to weigh in on a new campaign, there might not be a concrete deliverable. Coming up with the deliverable might be part of the work itself. In this case, you should outline what goals the project is meant to accomplish. For example, the contractor will develop a new creative concept and supporting materials that will generate interest among Acme Corporation’s 25- to 40-year old target audience.

3. The timeline for the work to be completed

In addition to laying out the deliverables that are expected, your contractor agreement should specify the timeline for the work to be done: when you expect the final deliverable as well as any key deadlines along the way.

If your project requires signoffs from multiple parties, be sure to take those into consideration when setting the timeline. For example, if the CMO needs to review the campaign before the contract is wrapped up, be sure to build in a window for feedback and edits before you agree to remit payment.

4. Terms for payment

How and when will the contractor be paid? Common terms for payment include net 30, which means the contractor will be paid within 30 days of submitting their invoice, or end-of-month (EOM) invoicing, in which the contractor will submit an invoice and be paid at the end of every month. Some agreements might involve paying a deposit upfront and the balance upon project completion.
Also, specify who will pay for any expenses incurred as a result of the work, like raw materials, equipment, paperwork filing fees, etc.

 

Source: 10 Must-Haves in An Independent Contractor Agreement

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