Independent Contractor Agreement

Independent Contractor Agreement

Drafts a results-oriented ICA that survives IRS and state misclassification scrutiny while protecting both parties on IP, confidentiality, and liability.

Prerequisites

Gather before drafting:

1. Parties — legal names, entity type/state of formation, addresses, authorized signatories
2. Scope — deliverables, milestones, acceptance criteria, start/end dates
3. Compensation — fixed fee, hourly, retainer, or milestone-based; reimbursable expenses
4. Governing state — determines applicable classification test (ABC vs. economic-realities)
5. IP sensitivity — pre-existing contractor IP vs. novel work product
6. Insurance — coverage types and minimums for the engagement

Agreement Sections

1. Parties and Recitals

• Legal names, entity type, formation state, address
• Confirm signatory authority (board resolution / operating agreement if entity)
• One-sentence engagement purpose

2. Scope of Services

• Specific deliverables with measurable acceptance criteria
• Milestones and deadlines
• State explicitly: contractor controls manner, means, method, and schedule
• List exclusions to prevent scope creep

3. Compensation and Payment

4. Contractor Classification

Include affirmative statements that contractor:

• Retains full control over manner and means of performance
• Provides own tools, equipment, and workspace (note exceptions)
• May work for other clients concurrently
• Bears risk of profit or loss
• Receives no employee benefits (health, retirement, PTO, workers' comp)
• Is not supervised or subject to set hours

Jurisdiction-specific tests:

5. Term and Termination

On termination: deliver work in progress, return property, submit final invoice. Hiring party pays for accepted work through termination date.

6. Confidentiality

• Scope: trade secrets, business strategies, customer lists, financial data, proprietary processes, anything marked or reasonably understood as confidential
• Duration: 2–5 years general; indefinite for trade secrets
• Carve-outs: publicly available, independently developed, received from third party, legally compelled (with prompt notice)
• Return/destroy all materials on termination

7. Intellectual Property

Use belt-and-suspenders approach:

1. All deliverables are works made for hire under 17 U.S.C. § 101 — verify eligible category
2. Fallback assignment of all right, title, and interest (worldwide, perpetual) for anything not qualifying as WMFH
3. Contractor executes additional documents to perfect ownership
4. Pre-existing contractor IP listed on Exhibit A; non-exclusive license granted for use as embedded in deliverables
5. Moral rights waiver for copyrightable creative works

8. Representations and Warranties

Contractor: authority to contract, no conflicting obligations, possesses required skills/licenses, work meets professional standards, deliverables non-infringing, compliance with applicable laws.

Hiring party: authority to contract, reasonable cooperation, timely information.

9. Indemnification and Liability

• Liability cap: total fees paid (carve-out for confidentiality/IP breaches)
• Exclude consequential, incidental, punitive damages (same carve-outs)

Contractor insurance minimums:

Require certificates of insurance; hiring party named as additional insured on GL.

10. Dispute Resolution

• Escalation: good-faith negotiation → mediation (30 days) → binding arbitration (AAA Commercial Rules)
• Seat: governing state; fees split equally; each party bears own attorneys' fees
• Governing law and exclusive venue for non-arbitrable claims: governing state courts

11. General Provisions

• Entire agreement / merger clause
• Written amendments signed by both parties
• No contractor assignment without consent; hiring party may assign to successors/affiliates
• Severability; no waiver by failure to enforce
• Notices via email + overnight courier
• Force majeure (exclude payment obligations)
• Counterparts; e-signatures valid under ESIGN Act / UETA

Signature Block

Both parties sign with name, title (if entity), and date.

Pitfalls and Checks

• Never use supervision language — avoid "direct," "supervise," "report to," "schedule set by" — these flag misclassification
• California ABC test: Part B (core business work) is near-impossible to satisfy; recommend separate CA counsel review
• Non-competes: void/restricted in CA, MN, ND, OK; limited enforceability elsewhere — assess before including
• Multi-state work: identify all states where services are performed; each may apply its own classification test
• Never guarantee IC status: include disclaimer; recommend client consult tax counsel
• Gig/platform engagements: verify current NLRB independent contractor standard