Hiring independent contractors to complete specialized work or provide temporary help is becoming more common every day. It doesn’t matter if a company is small or large, local or international, or anything in between. Using freelancers is standard practice in business today.
In fact, there are over 53 million freelancers in the United States according to a 2014 study by Freelancers Union, and People Per Hour reports that the 10 tasks that are most commonly outsourced to freelancers in 2014 were:
- Web development
- Business support
- Marketing and public relations
- Video, photo and audio services
- Software development
- Search marketing
- Translation services
- Social media support
Protect Your Business with Strong Independent Contractor Agreements
Each freelancer you hire to complete a project or task for you should sign an independent contractor agreement, and this includes your friends and family members!
Always have an experienced business attorney write your independent contractor agreements to ensure you’re fully protected, and make sure they include the following terms at a minimum:
The contract must include a full description of the services that the independent contractor will provide to your business.
2. Payment Terms
Always include a specific description of the payment terms and when payment will be made. This description should address both fixed fees and hourly fees.
3. Equipment, Supplies, and Materials
Provide details about the specific equipment, supplies, and materials that the company will provide to the independent contractor and what the independent contractor will be required to supply. Make sure office space is included!
4. Out-of-Pocket Expenses
Include a description of if, when, and how any out-of-pocket expenses that the independent contractor incurs will be reimbursed.
5. Independent Contractor Relationship
Your contract should provide a statement which clearly explains that the independent contractor agreement creates an independent contractor relationship (not an employer-employee relationship), and the independent contractor will not receive any type of benefits that your employees receive.
6. State and Federal Income Taxes
Always include a statement that the independent contractor is responsible for paying all of his or her own state and federal income taxes.
7. Permits, Licenses, and Liability Insurance
Don’t forget to provide a statement that the independent contractor has the necessary permits, licenses, and liability insurance to actually do the work he or she is being contracted to perform.
8. Termination and Disputes
Describe the terms of the agreement, including how and when the agreement can be terminated by the independent contractor or by you as well as the terms of how disputes will be settled.
9. Intellectual Property
Be sure to include a clause that establishes ownership of intellectual property.
Every contract should have an indemnification clause that clearly states the independent contractor indemnifies you for any violation of an intellectual property infringement committed by the independent contractor.
It’s easy to skip independent contractor agreements when you trust the person you’re going to work with and just want to move forward with the project, but don’t do it! It just takes one thing to go wrong to put your entire business at risk, so protect yourself with solid independent contractor agreements!