8 Items to Include in an Independent Contractor Agreement

An independent contractor agreement is essential when working with contractors. While it may be tempting for both your company and contractors to jump right into the work, skipping this step can cause issues down the road. Here, we’ll discuss why having a contract for your independent contractors is important and what key elements to include in that contract.

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Establish legal protection 

A written contract provides legal protection for your company and for the independent contractors you work with. It helps safeguard against the financial burden of a lawsuit, should something happen. While verbal agreements may be convenient, they don’t do a great job of providing proof or evidence of what was agreed upon. 

Define worker status 

An independent contractor agreement is also an opportunity to define worker classification status. This is a helpful piece of evidence if you ever need to prove worker status for legal purposes or inquiries. In your contract, include a section stating that you and the contractor agree to an independent contractor relationship. This helps to establish a business-to-business relationship. 

Discuss project scope  

Include a detailed scope of work that describes the work to be completed, a timeline, and other important details. This will serve as a good reference point to return to and help prevent missed deadlines and incomplete work. Consider outlining a plan for how to address scope creep as well in the event that additional requests come up during the project. 

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What to Include in an Independent Contractor Agreement

Here are eight things to consider including in your next independent contractor agreement. These items will help ensure that the project scope is clearly defined and your company is protected.

1. Services to be completed

Provide a comprehensive outline of the work you need completed. Don’t take for granted that all details are clear. By defining your expectations, you can hold your contractor accountable.

2. Responsibilities of both parties

Clearly defining your roles as consultant and contractor is important, as is discussing the responsibilities each person holds during the project. Make sure to outline what you expect from the contractor and clarify who is responsible for what on your team. 

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3. Clear language

As much as you can, avoid highly technical industry terms or jargon. If you need to include legal terms, make sure both you and the contractor are fully aware of the meaning behind them. 

4. Change order process

Additions or changes to a project are quite common and can quickly lead to scope creep. To keep everything on track, it’s helpful to define a change order process in your independent contractor agreement. This ensures that any adjustments can be managed more smoothly and efficiently.

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5. Termination conditions

In a worst-case scenario, termination conditions will give you or the contractor the right to cancel an agreement. While relatively uncommon, this could happen if there is a breach of contractor nonpayment. 

6. Timeline for work

Whenever possible, include concrete deadlines and deliverables for work. This will be helpful for the contractor to understand exactly what is expected of them and when. It also benefits you by providing a clear timeline for what you can expect to receive. If specific dates can’t be defined, an approximate timeline will still be useful.

7. Performance measurement

What means success for you on the project? Set actionable metrics that you and the contractor can measure. This will allow you to have productive conversations about how you are meeting your goals. 

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8. Payment terms 

Include agreed-upon bill rate and terms. Be sure to also discuss and include how the contractor will bill you and what your net terms are (the amount of time you must send payment after receiving an invoice). 

When it comes down to it, an independent contractor agreement or contract is simply a professional way to conduct business. Contracts not only provide legal protection but also help establish a strong, trusting relationship between your company and the contractors you work with. They clearly define the scope of work, goals, and expectations, setting a solid foundation for success.