An Independent Contractor Agreement is an essential document for any company hiring a freelancer. It provides clear details about the project, how payment will be made, and when the agreement will end.
It also can include a confidentiality clause to protect your business’ trade secrets. It can be customized to your needs and ready for use in minutes.
Definition of Independent Contractor
Independent contractors offer a specialized skill set to small businesses, which can be beneficial when an employee is not available. They also provide flexibility in scheduling and fewer tax obligations.
The Internal Revenue Service (IRS) defines an independent contractor as a self-employed person performing work for another business. They are responsible for submitting invoices and taxes.
Generally, the IRS determines whether someone is an independent contractor or employee based on a number of factors.
Control: If a company retains control over the worker’s hours, tools and work product, it suggests an employment relationship.
Extent of personal services: If a company requires the worker to assign work to specific individuals, it suggests an employment relationship.
Continuity of relationship: If a company assigns an independent contractor to multiple projects in a row, it suggests an employment relationship.
Term of Agreement
The term of an independent contractor agreement is typically a fixed period of time. This gives both parties the option to terminate the relationship if the work is no longer needed or desired by either party.
Depending on the nature of the services provided, it might also be helpful to include terms regarding payment and payment logistics. These can include payment frequency, initial deposits, and invoicing.
The contract should also contain a non-compete clause, which states that the contractor is not allowed to provide services for competitors during the period of the agreement. This allows the company to protect their business and intellectual property. It can also ensure that the contractor will not share sensitive information with others. This can be particularly useful if the company has proprietary or trade secrets.
Non-Disclosure of Confidential Information
There are many business secrets that an independent contractor may need to keep secret while performing work for you. Such secrets can be things like the company’s know-how, a product that you wish to sell, or information about your customers.
This is where a non-disclosure agreement can help you and your contractor protect your company’s intellectual property. It also gives you some legal ramifications should the contractor accidentally disclose confidential information.
Generally, the independent contractor is required to keep confidential information they receive from you, both during the project and after it has ended.
A well-written non-disclosure agreement will ensure you and your independent contractor have clear expectations about what confidential information is. It will also make it easier to enforce the contract should your contractor try to reveal this information without a written agreement.
Termination
If your company decides to terminate the agreement with your contractor, you should do so in a timely fashion. You can do this by providing the contractor with written notice and following all of your contractual termination notice provisions to the letter.
If you are unhappy with the performance of your contractor, you may need to talk to them about their performance before you officially terminate their contract. This will allow them to improve their work before it is too late.
Termination is a tough decision, and it can cause a lot of resentment amongst both parties involved. However, it is best to do so in a professional manner.
