An independent contractor agreement template is a helpful document that simplifies your hiring process of an independent contractor. Before seeking service of an individual or an agency, this document is used to clearly define the scope of work and mention all the relevant terms and conditions.
Basically, an independent contractor is a person or a business that is usually self-employed. They give a service or product in exchange for compensation in the form of monetary payment. So, an independent contractor template is a working agreement between yourself and the contractor.
Table of Contents
- What to include in an independent contractor agreement?
- How do you write an independent contractor agreement?
What to include in an independent contractor agreement?
An independent contractor agreement usually includes the following elements;
- Hiring company; the entity in requirement of a contractor
- Contractor, the individual hired for a task or project
- Services, these are certain details of tasks to perform or products to deliver
- Compensation; it is the amount and frequency the contractor will get paid
- Effective date; it is the date when the job and agreement start
- On the basis of terms in agreement, termination may happen
- Fringe benefits; it indicates that the contractor can’t take part in any of your company’s employee advantages
- The contractor assistants whom they hire on their own
Above all, the agreement should also include the following;
Both parties aren’t able to transfer the responsibility to the job to complete or the payment to another party until previous written permission exists.
If another company or individual takes over the contractor or your company, the agreement remains in effect.
The prior agreements you may have are no longer valid. You have to make any future modifications in a written amendment.
Until you have pre-approved certain costs and the contractor submits invoices, each party bears responsibility for their out-of-pocket expenses.
If you encounter any issue, the laws of your state apply.
The contractor should bear responsibility if any issue arises. It should defend your company from liability.
Your company’s insurance policy isn’t responsible to cover the contractor. The contractor should bear their own insurance.
You have to write and deliver all communications perfectly.
To make the agreement legally binding, both parties should have the authority and power to enter in it.
The other part of your agreement remains legal in case one part becomes invalid.
Releasing a right or claim should be written.
The contractor promises they have all of the permits, registrations, and licenses required to complete the task or project.
How do you write an independent contractor agreement?
At the start of the work agreement, you should make clarifications in your contractor agreement. The best way to accomplish this is by putting everything in writing. Here are the tips that will help you in writing a simple contractor agreement; You should also check Subcontractor Agreement Templates.
Nature of the work and general agreement
This is the first section of the agreement that states in detail the responsibilities of both parties.
Independent contractor status
This is one of the most essential parts of the agreement. It clearly defines the worker as an independent contractor not an employee. This section mentions the contractor’s rights to perform jobs for others. He has to perform these tasks until the services will compete or conflict with their work in your company directly.
The agreement clearly indicates either the contractor must do the work or they may hire other people to help them out.
This section of the contract is typically clarified payments to the independent contractor. Also, such payments won’t have withholding for payroll taxes or income tax. You shouldn’t withhold federal tax from payments to the contractor until required by backup withholding requirements. You shouldn’t have to set these payments on behalf of the contractor.
Who pays the expenses?
In the agreement, specify who will pay for specific expenses. The contractor is typically responsible for all of the expenses in most cases. These may contain vehicle maintenance, mileage, and other travel or business expenses as well as the payments to their subcontractors or employees.
Eligibility for benefits
The contract should include a statement that states the contractor understands that they aren’t entitled to or eligible for;
- retirement or pension benefits
- holiday pay
- vacation pay
- health insurance
- sick pay
- other fringe benefits given by employers
Specify in the agreement that the company won’t give auto liability insurance, liability insurance or other general insurances for the contractor. This indicates that the contractor won’t get coverage from the liability insurance policy of your company. In case any loss or injury happens that the contractor causes, including this clause gives your company protection.
Termination of the contract
The agreement is among your company and an independent contractor so it should clearly state that party may terminate the contract without or with notice. This depends on how your project pushes through or how your relationship evolves.
In conclusion, an independent contractor agreement template is an agreement between yourself and the contractor for a specific project or service. It includes a company or a person hiring another to achieve on a specific task.