When hiring an independent contractor, having an Independent Contractor Agreement is important. California has very stringent labor laws. First, it is important that you are correctly classifying someone as an Independent Contractor. Incorrectly classifying employees as independent contractors could subject the employer to liability under the Unfair Competition Law.
Who creates the agreement?
If you have consulted with a business attorney and determined that you are correctly classifying an Independent Contractor, it is important to have an Independent Contractor Agreement. Some Independent Contractors have their own agreement that they regularly use. Have the agreement reviewed for potential liabilities in order to make sure that both parties are protected. Most Independent Contractors will be open to revisions.
If there is not an Independent Contractor Agreement, you can have a business attorney draw one up for you. An agreement can limit liability, headaches, and expensive lawsuits.
What should be included in an Independent Contractor Agreement?
Here are some items should be identified in the agreement:
- The parties entering into the agreement should be clearly stated. Pay attention to whether the parties are businesses or individuals.
- Clearly identify the scope of work that the contractor is engaged to do.
- Identify the time, means, and manner of work to be conducted.
- Limit the contractor from activity that could be a conflict of interest to the company.
- State that there is no Employer-Employee Relationship. Additionally, state that the parties are not engaging in a joint-venture or partnership relationship.
- The Contractor is not eligible for employee benefits.
- In order to know how and when contractors will be paid, include terms of the Compensation and Expense Reimbursement.
- State the terms for termination of the agreement. When engaging the contractor for a new project, don’t forget to create a new agreement with new terms.
- State the location or jurisdiction and how the matter will be handled if a legal action does show up.
- Make sure that both parties sign and date the agreement as the appropriate parties.
A written and signed Independent Contractor Agreement can limit your liability and protect your future. Handshake agreements do not hold up well when a problem arrises. The Swenson Law Firm is a Business and Estate Planning Law Firm in Sacramento County. They work to protect you, your business, and your loved ones. Call 916-333-0833 to set up a consultation or to sign up for an upcoming seminar.