Independent Contractor Agreement

What is This Agreement?

An Independent Contractor Agreement establishes a formal relationship between a business and a contractor. It clarifies that the contractor is not an employee, defines the scope of work, payment terms, intellectual property rights, and helps protect both parties from misclassification issues.

When to Use

• ✓Hiring contractors or consultants
• ✓Outsourcing specific projects
• ✓Engaging freelancers for ongoing work
• ✓Protecting against IRS misclassification
• ✓Defining intellectual property ownership

Who Uses This?

• ✓Companies hiring contractors instead of employees
• ✓Staffing agencies
• ✓Technology companies with remote workers
• ✓Businesses with international contractors
• ✓Any entity that needs to establish independent contractor relationship for tax purposes

Browse all contract templates on our Contracts for Doing Business in the US guide.

What Happens If Misused or Missing?

• ✗Misclassification risk: IRS penalties, back taxes, benefits liability
• ✗Without agreement: worker may be reclassified as employee (IRS 20-factor test)
• ✗Missing control provisions: suggests employment relationship
• ✗No IP assignment: contractor may retain ownership of work product
• ✗Penalties can include back payroll taxes plus interest and penalties