Drafting a contractor agreement that survives scrutiny
The document cannot make someone a contractor, but a bad one can help prove they were not.
Esshaki Legal Media TeamCurrent as of May 2024
Classification depends on the working relationship rather than the paperwork.
The agreement still matters, in two ways: it should reflect a relationship that
genuinely is independent, and it should not contain terms that contradict that.
Terms consistent with independence: a defined scope or project rather than
open-ended availability; control over how and when the work is performed;
the contractor supplying their own equipment; freedom to work for others; payment
by deliverable or invoice rather than by hour on a payroll cycle; the contractor
carrying their own insurance and holding any required licenses.
Terms that undermine it: set hours, a requirement to work on site under
supervision, an exclusivity clause, company-supplied equipment and email, a
prohibition on subcontracting, participation in employee benefits, or a
termination clause that reads like an employment relationship.
Provisions to include for other reasons: ownership of work product, which
does not vest in the hiring party by default for many categories of work and
needs an express assignment; confidentiality; and indemnity for the contractor’s
own tax and insurance obligations, which does not prevent a reclassification but
allocates the cost between the parties.
And review the relationship periodically. Contractor arrangements drift toward
employment as the engagement lengthens, and the document written at the start
stops describing what is happening.