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The Six Essential Terms To Have With an Independent Contractor Agreement

Lawyers, doctors, real estate brokers and other professionals can work either as employees or as independent contractors. Whether someone is an independent contractor or an employee, your business is subject to various types of liabilities, thus, making an independent contractor agreement a crucial step to protect yourself and your business from liabilities against any third parties. Below is a list of exhaustive terms that all independent contractor agreements should include.

Define the Relationship of the Parties:

An independent contractor agreement should define the relationship of the contractor to the business hiring him/her; this definition establishes that the parties are not entering into an employer-employee relationship. The IRS defines an independent contractor as:

If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed.

The hiring business can direct or control the result of the work the contractor performs, but cannot demand how the work shall be completed. The agreement should have the full names, including company or trade names, the address of each of the parties evidently stated within. In writing, make it clear that the contractors are not your employees, but rather an independent agent.

The Duration of Duties:

Along with a description of the services the independent contractor agrees to provide for the hiring party, the next component to address in the agreement is the time required to fulfill the duties. The agreement might indicate incremental dates for the completion of segments of a large project. It might also include a clause to extend the agreement. In writing, make clear what you are spectating and requiring from the work. It is essential to be specific to be able to refer back to it in case of future questions.

Payment Schedule:

An independent contractor agreement should include the terms for paying the independent contractor, such as an hourly or flat rate, by check or direct deposit; It should indicate when the contractor will receive payment, which can be after the project is completed or in portions as the project advances. The agreement should include details about who is responsible for the cost of required materials and supplies, noting expenses that the hiring company must reimburse.

Confidentiality Agreement:

Protecting the livelihood of the intellectual property of your business is vital. Having non-employees possibly divulging sensitive information from your business can be detrimental.

Liquidation Clause:

This one is especially vital in the case that one of the parties is in breach of contract. The purpose of a liquidation clause is to provide a safety-net by allowing a rough estimate of the losses and damages one might inquire if there is a breach of the other party. Be specific and outline the time frame in which the work and contract should be terminated. As well as, upon which grounds such Agreement could be infringed and give a reason for earlier termination.

Indemnification Clause:

An independent contractor agreement generally includes key elements that provide legal protections and guarantees, usually for the hiring company. Including an indemnification clause serves to indemnify, and hold harmless the company and its affiliates such as their officers, directors, employees, etc from and against all losses, damages, and liabilities of whatever kind arising from any injuries or breaches of representation.

To sum up, professionals can either work as employees or independent contractors, to protect your business from the various possible liabilities, include in every independent contractor agreement, the relationship of the parties, time allocated to complete any work, the payment schedule, a confidentiality agreement, a liquidation clause, and an indemnification clause. If you have your own independent contractor agreement you would like to have reviewed by qualified attorneys at Valencia & Torres Law, contact us by clicking here.

2018-07-17T00:45:00+00:00 July 16th, 2018|Business and Corporate Law|0 Comments

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