10 Legal Rights of Independent Contractors

Understanding your legal rights as an independent contractor can help protect your business and foster positive client relationships. In this article, we explore 10 key legal rights and provide additional details to keep you informed.

How are independent contractor rights determined? 

When a company engages someone as an independent contractor, they are responsible for ensuring that person is properly classified. The Internal Revenue Service (IRS), Department of Labor (DOL), and individual states each have different factors that determine whether a worker can be classified as an employee or an independent contractor.  

Unfortunately, these guidelines can often contradict one another. For example, an employer might claim a worker is an independent contractor according to one set of factors, but the government may categorize that same worker as an employee under a different set of factors. 

Millions of workers have been misclassified, according to the IRS. Regardless of whether employers misclassify workers to reduce labor costs or by mistake, it’s essential to be aware of your rights as a 1099 independent contractor.

Although laws can differ state to state, independent contractors and 1099 employees have the following 10 general legal rights:

1. Right to Work How You Want

Your client cannot control how you do your work. It’s up to you to decide how you do your job, unless otherwise specified in your contract. You might work from a coworking space, from a beach in Mexico, or from a home office. Your working hours may vary too—whether during the day, at night, or on weekends. This autonomy in how you manage your work is a core aspect of being an independent contractor and one of the reasons this type of work is so appealing.

2. Right to a Written Contract

A contract is an essential legal component of establishing a consultant-client relationship. You should always make sure a signed contract is in place before starting any work. A contract will define the relationship between you and your client, clearly stating that you are an independent contractor. At minimum, a contract must also include: a description of the project that you will be working on, a specified time period for completion, payment and billing terms, and termination conditions. 

Learn more: Do I Need an Independent Contractor Agreement for Consulting? 

3. Right to Manage Your Business and Employee Benefits

As an independent contractor, you need to be aware that managing your own benefits is part of running your business. Independent contractors are ineligible for company benefits. This means that your client is not responsible for providing typical employee benefits such as insurance, pension plans, paid vacation, sick days, or disability insurance.  

4. Right to Work Where You Want

Being able to work wherever you want is a big plus of being an independent contractor. For many people, this involves operating out of a home office. For others, this means being a digital nomad and working remotely across countries and continents. The exception to this may be if a particular project requires you to be on-site with a client. In that case, you are also generally responsible for providing your own equipment or tools necessary to do your job. 

Try it: Create a Home Office with These 10 Tips 

5. Right to Provide Your Expertise

As an independent contractor, you are an expert in your field. Generally, clients should avoid providing guidance or training. Instead, you should have the autonomy to complete your work in the way that you see fit. You’re ultimately responsible for updating your skills and completing any further education or certifications that your work may require. 

6. Right to Market Your Services

As an independent contractor, you have the right to market your services to other businesses. You can also work with multiple clients at once. Even if you have a long-term contract with a particular client, you can choose to work on additional projects as well. This flexibility allows you to diversify your income sources and expand your professional network, ultimately benefiting your career growth.

Try it: 8 Effective Marketing Strategies for Consultants  

7. Right to Work When You Want

Many people ask, “Can you tell an independent contractor when to work?” The answer is no. As an independent, you are free to work whenever you like, unless specified in your contract. Everyone has their preferred way of working and each project will be different. Make sure to communicate with your client from the start to establish boundaries and expectations regarding your work approach, as well as how they can best reach and communicate with you throughout the project.

8. Right to Work With Other Independent Contractors

You also have the right to engage subcontractors or partner with other independents to complete projects or specific tasks. As a best practice, inform your client during initial discussions if you intend to use additional resources to complete your work, and include this information in your contract.

Learn more: Consultant Partnership: When Partnership Consulting Is Best 

9. Right to Get Paid for Your Work

As an independent contractor, you will likely submit invoices for work completed. Pay and payment terms should be discussed during initial contract negotiations. You may have a standard billing rate for your services, or your rate might change based on the project. Be sure to discuss how and when you would like to invoice your client and outline these details as part of your contract.  

10. Right to Your Own Tax Responsibilities

Clients should not withhold taxes from your payments. As an independent contractor, you are responsible for paying what’s known as self-employment (SE) tax, which includes both the employer and employee halves of Social Security and Medicare (FICA). At the end of the year, your client is required to submit a Form 1099-MISC, which is a report of payments made to you. The IRS Self-Employed Individuals Tax Center is a great resource for more information on how to pay and file taxes. 

Understanding your rights as an independent contractor ensures you can confidently manage your business, secure fair treatment, and stay legally protected. If you do find yourself in a situation where your classification status is in question, you can file an SS-8 form with the IRS to request worker status determination. 

Dig deeper: Worker Classification Tests: DOL, IRS, State Tests for Classifying Workers 

The information provided in the MBO Blog does not constitute legal, tax, or financial advice. It does not take into account your particular circumstances, objectives, legal and financial situation, or needs. Before acting on any information in the MBO Blog, you should consider the appropriateness of the information for your situation in consultation with a professional advisor of your choosing.