Writing Independent Contractor Agreements: 8 Things to Include

An independent contractor agreement is a major part of working with contingent talent. Independent contractor agreements protect both your business and the contractor from a legal standpoint. They also serve as a valuable tool to clarify project details, address any questions or discrepancies, and set the foundation for a strong working relationship.

Independent contractor agreements can go by various names, such as independent contractor contracts, self-contractor contracts, self-contractor agreements, outside contractor agreements, and more. No matter what they’re called, the key is ensuring these independent contractor agreements include all the essential information to create a successful partnership.

Below are eight important points to consider including in an independent contractor agreement.

1. Define a Scope of Work

Including a scope of work in an independent contractor agreement is a good way to start a conversation about how the project will be managed.

A scope of work explains how a project will be completed by listing specific tasks, activities, and deliverables. It should include the project’s purpose, the work that will be done, and what will not be covered under the contract. Since projects often need changes, adding a process for handling change orders can help avoid delays if something comes up later.

2. Set a Timeline for the Project

Setting a timeline for the project is another key part of a self-contractor contract. Include a start date for the work and outline how long the project is expected to last. Specify whether the project has a fixed timeframe or is intended to be a longer-term engagement. If there are specific milestones or deliverables the independent contractor is responsible for, make sure to discuss and include them in this section.

Explore: 3 Reasons to Use a Written Contract for Independent Contractors

3. Specify Payment Terms

The independent contractor you hire will likely have a set bill rate or project price. In the contract, clearly outline the agreed-upon rate, along with billing terms and details about how invoices should be submitted.

This section of your self-contractor agreement should also cover any expected billable expenses for the project and specify how you want the independent contractor to manage and report these costs.

4. State Desired Results and Agree on Performance Measurement

Every project you start will have a goal or a set of desired outcomes. Discuss these goals with your independent contractor and decide how you will define success for the project. Using clear, measurable metrics makes it easier to track progress and evaluate results. Setting these metrics ahead of time creates a solid foundation for future conversations about whether the goals are being achieved.

Up Next: 8 Ways to Effectively Engage Independent Contractors

5. Detail Insurance Requirements

It’s common to require independent contractors to carry at least $1 million in general liability insurance and an additional $1 million in errors and omissions coverage. If you haven’t already confirmed that the contractor meets your company’s insurance requirements, the independent contractor agreement is a good place to address this.

6. Include a Statement of Independent Contractor Relationship

An independent contractor contract is a useful tool for clearly establishing independent contractor status. Companies that work with independent contractors are likely aware of the risks of worker misclassification. To help address this, include a statement in the contract that both parties agree to an independent contractor relationship.

Learn More: 5 Ways to Lower Worker Misclassification Audit Risk

7. Discuss Intellectual Property Rights and Confidentiality

Some projects require confidentiality or protection of intellectual property. An independent contractor contract is the right place to address these concerns. If needed, discuss these issues with the independent contractor and agree on any necessary restrictions to include in the contract. In some cases, a contractor non-compete agreement may be appropriate.

8. Review Dispute Resolution Mechanisms

Contract termination conditions might seem like a worst-case scenario but including them in an independent contractor agreement can be helpful. These conditions explain the rights of both parties to end the agreement if certain issues arise, like a breach of contract or nonpayment. You can usually find a contractor contract template or contractor contract sample online to help guide the language included.

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.