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How to Create an Independent Contractor Agreement

The Importance of an Agreement

Our independent contractor agreement gives you great flexibility in structuring the agreement according to your own specific needs. This agreement will only take you about 10 minutes to complete but is robust enough to provide thorough protection for both parties over the life of the business relationship.


Choosing the Right Business Relationship

The company or entity hiring the contractor can choose exactly how it wants the business relationship to proceed, and can customize the following important terms:

  • Whether the contractor is to be paid hourly, on a salary, salary plus commission, solely on commission, or on a custom pay structure
  • What benefits the contractor will receive, if any
  • Whether the contractor or the company is responsible for covering the contractor’s out-of-pocket business expenses
  • The contractor’s job duties and services
  • Whether the contractor is allowed to engage in any other outside employment while working for the company
  • Whether the parties are required to submit disputes to binding arbitration
  • Options to include confidentiality, non-compete, and non-solicitation provisions
  • When and how the agreement will expire or be terminated by the parties
  • Under what circumstances the contractor will receive severance pay, if any
  • Any other specific terms or conditions the parties have agreed upon

Party Information and Dates

You will begin the form by entering in the full legal names of the contractor and hiring party. Note that the form calls the hiring party “Company,” but this can also be just an individual or any type of business entity.

An important term in this section is the agreement length. Selecting ‘Indefinite term’ will allow the contractor to be terminated at any time, with or without cause. This is an at-will contractor relationship, akin to at-will employment. Selecting ‘Fixed term’ will allow you to specify the exact length of the term the contractor will provide services for. Select 'When the job is done' if this agreement will end when the contractor completes his or her services.

Job Description

Next you will complete the job description by including the relevant services the contractor will perform. There is no need to include every individual service the contractor will be responsible for, because the agreement allows the company to assign new duties that are reasonable within the scope of the agreement. Simply including the general job duties will suffice. You will also be able to select whether or not the contractor is allowed to engage in outside employment for other businesses while performing the services under this agreement. This term is usually negotiated upfront with the contractor to ensure all parties are on the same page.

Compensation and Benefits

Next, you will be able to specify the pay structure by choosing between hourly pay, a salary, salary plus commission, solely commission, or some other custom pay structure. You will then have the option to list any benefits the contractor will receive. This part is optional, since you can always agree on benefits at a later time with the contractor or in a different agreement.

Provisions

On the next step you can decide whether you want to include confidentiality, non-compete, and non-solicitation provisions. The confidentiality provisions will prevent unwanted disclosure of the company’s confidential information and trade secrets by the contractor.

The non-compete provision will prevent the contractor from engaging in any direct or indirect competition with the company during the agreement and for a period of time thereafter.

Finally, the non-solicitation provision prevents the contractor from adversely interfering with any of the company’s business relationships; for instance, by trying to lure away the company’s own employees. It’s usually a good idea to include these provisions unless you want to outline them in a separate agreement. Again, these provisions will likely need to be negotiated between the parties upfront.

Additional Terms

As CastingWords LLC describes, the final section indicates which state’s laws will govern the agreement. Usually, the company lists its principal place of business as the governing state. Other options would be to use the company’s state of incorporation or the state where the two parties are conducting any business together.

You can then add any additional terms and conditions you want included. This allows you complete flexibility to tailor the document to reflect the specific situation and true intent of the parties, but be sure to preview the independent contractor agreement first so that you know what’s already been included. After that, just follow the instructions at the end of the document to formally execute it and make sure all parties get a copy of the final version. That’s it, you’re done!

How LegalNature Can Help You with Your Legal Form Needs

LegalNature can help you with all of your personal legal form needs. Let us help you get started today. Click here to create your independent contractor agreement now.

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