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What to Consider When Drafting an Independent Contractor Agreement

If you own a business, you might occasionally need short-term or specialized workers. When this happens, you are likely to rely on independent contractors. 

Independent contractors offer business owners many important benefits. However, this type of business arrangement may also involve many liabilities and legal risks. 

It is important to seek reliable legal advice before drafting independent contractor agreements. This will help to ensure that you do not violate any relevant labor regulations at the local, state, or federal level. 

A skilled employment law attorney can help you craft an independent agreement. This will prevent disputes, secure your assets, and protect your rights. 

The Difference Between Employees and Independent Contractors

Most workers are categorized either as “employees” or “independent contractors.” These two classifications feature important legal and regulatory differences.

In most cases, employees are guaranteed more rights under the law. Independent contractors have fewer options and rights in the U.S. labor laws.

Some of the rights that might be guaranteed to full employees include:

  • A minimum hourly wage
  • Overtime payments
  • Unemployment insurance
  • Healthcare plans and coverage
  • And more

Because of these important workers’ rights, business owners should never misclassify their workers. Some businesses try to classify employees as independent contractors to skirt the relevant regulations.

When a dispute arises, ultimately, the courts will decide how a specific worker should be classified. The judge will make this determination based on several factors. However, one of the primary determinants is the financial control that the employer asserts.

Should I Draft an Independent Contractor Agreement?

Business owners can use independent contractor agreements to avoid claims of misclassification. Drafting a clear agreement ensures that the terms for both parties are enforceable and thereby protecting both the owner and independent contractor.  

In the case of a dispute, an independent agreement will serve as important evidence. Government agencies and the courts will review the agreement to determine that you intended to hire an independent contractor. 

These agreements should include details about the nature of the work being provided. It should also detail each party’s roles and obligations. 

Businesses can also minimize their liability in other ways. For instance, an employer who hires an independent contractor should not:

  • Provide the contractor with an employee email account
  • Allow the contractor to attend employee meetings
  • Prevent the independent contractor from subcontracting
  • Require regular status reports from the independent contractor

If you hope to hire a worker for a specialized or short-term project, you may want to choose an independent contractor. Speaking with an attorney who has experience in business law will ensure that your interests are protected

Elements of Independent Contractor Agreements

Although you might know you need an independent agreement, you may be unsure about what these documents should contain. There are several key elements that each independent contractor agreement should have. These elements include:

  • A clear statement of relationship for independent contracting
  • Description of the project, provided services, and deliverables
  • Terms of billing and compensation
  • Each party’s responsibilities for the project
  • Guarantee that the contractor will pay relevant taxes
  • Acknowledgment of lack of employee benefits
  • Project deadlines and general work timeline
  • Conditions for termination of the agreement
  • Confidentiality and nondisclosure terms
  • Protocol for necessary dispute resolution

New York City regulations require these contracts to include further terms and information, such as:

  • Names and addresses for all signing parties
  • A clear list of services the contractor will provide
  • The specific value of the provided services
  • Methods and rates of financial compensation
  • Date by which the contractor must be paid

These are only a few of the legal conditions that should be specified in an independent contractor agreement. Consulting with an experienced business attorney is advisable. A professional will help you to draft an agreement that protects your rights.

Reach Out to Woods Lonergan

If you need to draft a reliable and enforceable independent agreement in New York City, reach out to the skilled team at Woods Lonergan. We will gladly provide an initial no-obligation consultation to discuss your circumstances.