Independent Contractor Agreement

What is an independent contractor agreement?

Definition

An independent contractor agreement is a written contract that sets forth the terms under which the contractor performs services or works for the client, without creating an employment relationship. Unlike traditional services contracts, this agreement clearly outlines the independent status of a contractor and the absence of any employee-employer relations.

The parties involved in a simple independent contractor agreement template are the client and the contractor. Both parties could be individuals, organizations, or businesses operating across the U.S. The client is a person who is willing to order certain works or services. The contractor is a person who has professional skills and expertise to provide certain services or perform the work in exchange for remuneration. For the provision of certain services, the contractor may require possession of a special license. Thus, we recommend checking state-by-state regulation before entering this agreement.

Status of Independent Contractor

An independent contractor is an individual, self-employed business, or organization that independently delivers work or services in exchange for remuneration from the client. There are no relations of subordination between the client and the contractor, as both parties are equal. The client does not hire an independent contractor, which excludes any employment relations between them.

In fact, it means that the client does not have:

• to provide a contractor with any employment benefits (e.g., paid sick leave, paid annual vacations);
• to pay taxes from the contractor’s income; or
• to review, guide, or manage the internal working process of the contractor.

How to draft a simple independent contractor agreement template?

To create a legally solid independent contractor agreement form, we recommend including all mandatory elements mentioned below:

Details of Services

This section shall include:

• Description of the services or works to be provided (attach additional documents, if necessary);
• Description of final deliverable or expected results;
• Process of the review for final deliverables and introduction of any amendments, if necessary.

Payment Provisions

Every independent contractor agreement form has to include clear terms for the contractor’s compensation. Those terms shall include the following:

• Payment Schedule. A contractor may receive compensation as a one-time payment or in installments (e.g., per completed milestone). Despite the chosen option, the text of a contract has to include clear dates for making the payment.
• Billing and Invoicing. It is common for an independent contractor to receive compensation based on the issued invoice. Therefore, the text of a contract must define the invoicing period, for instance, weekly, monthly, quarterly, etc.
• Late Fees. Parties may wish to include additional penalties for the client who does not make payments on time. Parties may define the amount of late fees could on a case-by-case basis. The late fees could have different forms, for example, a fixed fee or a fixed percentage from a due sum.
• Acceptable Payment Method. The contract must include a list of acceptable payment methods the client can use to make a payment.

Schedule of Work

The importance of timing for every business contract is of the essence. Therefore, a good example of an independent contractor agreement form must define the exact schedule or milestone for the delivery of work. Parties may describe separate milestones or set up one deadline for the whole project. The latter option, however, is more suitable for short-term and not-so-complex projects.

Unlike for other types of service contracts, an independent contractor agreement does not usually include an automatic prolongation clause. However, if the parties are willing to do so, they may prescribe automatic prolongation once the initial term of the contract ends.

Last but not least is the inclusion of the commencement date. This is the date on which a contractor shall start provision of services or performance of agreed works. The commencement date is not similar to the effective date, which is the date of signing this agreement.

Termination Clause

Every simple independent contractor agreement sample shall define the set of rules according to which parties can end this contract. We recommend inclusion of the important clauses below:

• Grounds for immediate termination. The text of a contract shall define the exact list of circumstances in which either party can immediately end the contract. For instance, if the provision of certain services requires a license that the independent contractor cannot prolong, this agreement ends immediately.
• Normal Termination. An independent contractor agreement is a type of business relation that either party should be able to end without cause at any time. Therefore, it is vital to stipulate in the text of the agreement a notice period within which a notice of termination shall be sent. The notice period could be between 10 and 30 days.
• Automatic Termination. By default, the text of every simple independent contractor agreement lays out that the contract ends upon full completion of services and execution of their obligations by both parties.

How to customize an independent contractor template at FasterDraft?

To get a fully customized legal document template, follow a few easy steps below:

1. Click the “Create Document” button.
2. Answer simple questions in the form.
3. Select a template’s format—simple independent contractor agreement PDF or Word.
4. Make a payment.
5. E-sign, download, and use this contract template for your business.