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Independent Contractor
Agreements
Your business must have a good form of agreement when hiring independent
contractors. A good agreement covers the following:
- Services to be performed. This part of the contract should
carefully spell out the services to be performed. Make sure you have spelled
out all of the things you expect the independent contractor to do for his
compensation.
- Timing. The contract should spell out when the services are to be
performed. Also consider a late-penalty fee if the services are not
performed on time, or a bonus if finished early.
- Payment. The payment clause of the contract should address the
amount to be paid, the manner payment is to be paid (on an hourly basis? on
a project basis?), and when payments would be due. From the company's
perspective, it will want to ensure that it is reasonably satisfied with the
quality and scope of services rendered by the contractor before being
obligated to pay the entire amount.
- Reporting. The contract can also address how often the contractor
needs to report on his progress, and who to report to. Be careful
here-excessive control over the activities of the contractor might result in
him being deemed an "employee" for tax purposes.
- Confidentiality obligations. The contract should make clear that
the contractor must keep proprietary information it learns about the company
confidential, and not use such information other than for the benefit of the
company.
- Work for hire. The contract should typically provide that the
work product developed by the contractor for the company will be deemed
"work for hire" under the copyright laws and owned solely by the company
(and not the contractor).
- Warranties. Make sure to spell out any warranties from the
contractor, such as the contractor warranty that the services will be
performed in a high quality, professional and timely manner.
- Subcontractors. If the contractor expects to use any
subcontractors, consider providing that you have approval over these
subcontractors and that they execute an appropriate agreement with you.
Click here to view a
sample
Independent Contractor Agreement.