--- name: independent-contractor-agreement title: Independent Contractor Agreement description: Drafts a U.S. independent contractor agreement with misclassification guardrails, IP assignment, confidentiality, and 1099-NEC tax terms. Use when engaging freelancers, consultants, or service providers, or converting an employee to a contractor relationship. author: CaseMark author_url: https://github.com/CaseMark/skills/tree/main/skills/legal/independent-contractor-agreement license: Apache-2.0 version: 0.1.0 execution_mode: open jurisdiction: us practice: contracts language: en --- # Independent Contractor Agreement Drafts a results-oriented ICA that survives IRS and state misclassification scrutiny while protecting both parties on IP, confidentiality, and liability. ## Prerequisites Gather before drafting: 1. **Parties** — legal names, entity type/state of formation, addresses, authorized signatories 2. **Scope** — deliverables, milestones, acceptance criteria, start/end dates 3. **Compensation** — fixed fee, hourly, retainer, or milestone-based; reimbursable expenses 4. **Governing state** — determines applicable classification test (ABC vs. economic-realities) 5. **IP sensitivity** — pre-existing contractor IP vs. novel work product 6. **Insurance** — coverage types and minimums for the engagement ## Agreement Sections ### 1. Parties and Recitals - Legal names, entity type, formation state, address - Confirm signatory authority (board resolution / operating agreement if entity) - One-sentence engagement purpose ### 2. Scope of Services - Specific deliverables with measurable acceptance criteria - Milestones and deadlines - **State explicitly:** contractor controls manner, means, method, and schedule - List exclusions to prevent scope creep ### 3. Compensation and Payment | Element | Requirement | |---|---| | Rate/fee | Exact amount or formula | | Invoicing | Contractor submits invoices; net 15/30 | | Expenses | Itemized reimbursables; receipts required | | Taxes | Contractor solely responsible (federal/state/local + self-employment) | | No withholding | No income tax, FICA, FUTA, or state UI withheld | | 1099-NEC | Hiring party issues 1099-NEC; no W-2 | | Late payment | Interest rate or penalty if applicable | ### 4. Contractor Classification Include affirmative statements that contractor: - Retains full control over manner and means of performance - Provides own tools, equipment, and workspace (note exceptions) - May work for other clients concurrently - Bears risk of profit or loss - Receives no employee benefits (health, retirement, PTO, workers' comp) - Is not supervised or subject to set hours **Jurisdiction-specific tests:** | Framework | Test | |---|---| | Federal/IRS | Common law control (behavioral, financial, relationship type) | | FLSA | Economic realities | | CA, NJ, MA + others | ABC test — Part B (outside usual course of business) is highest risk | ### 5. Term and Termination | Trigger | Notice | |---|---| | Without cause | 15–30 days written | | Material breach (uncured) | Written + 10-day cure; immediate if uncurable | | Insolvency/bankruptcy | Immediate | On termination: deliver work in progress, return property, submit final invoice. Hiring party pays for accepted work through termination date. ### 6. Confidentiality - **Scope:** trade secrets, business strategies, customer lists, financial data, proprietary processes, anything marked or reasonably understood as confidential - **Duration:** 2–5 years general; indefinite for trade secrets - **Carve-outs:** publicly available, independently developed, received from third party, legally compelled (with prompt notice) - **Return/destroy** all materials on termination ### 7. Intellectual Property Use belt-and-suspenders approach: 1. All deliverables are works made for hire under 17 U.S.C. § 101 — verify eligible category 2. Fallback assignment of all right, title, and interest (worldwide, perpetual) for anything not qualifying as WMFH 3. Contractor executes additional documents to perfect ownership 4. Pre-existing contractor IP listed on Exhibit A; non-exclusive license granted for use as embedded in deliverables 5. Moral rights waiver for copyrightable creative works ### 8. Representations and Warranties **Contractor:** authority to contract, no conflicting obligations, possesses required skills/licenses, work meets professional standards, deliverables non-infringing, compliance with applicable laws. **Hiring party:** authority to contract, reasonable cooperation, timely information. ### 9. Indemnification and Liability | Party | Indemnifies against | |---|---| | Contractor | Breach, negligence/willful misconduct, IP infringement, bodily injury/property damage | | Hiring party | Breach, negligence/willful misconduct | - Liability cap: total fees paid (carve-out for confidentiality/IP breaches) - Exclude consequential, incidental, punitive damages (same carve-outs) **Contractor insurance minimums:** | Type | Minimum | |---|---| | Commercial general liability | $1M occurrence / $2M aggregate | | Professional liability (E&O) | $1M per claim | | Workers' comp (if contractor has employees) | Statutory | Require certificates of insurance; hiring party named as additional insured on GL. ### 10. Dispute Resolution - Escalation: good-faith negotiation → mediation (30 days) → binding arbitration (AAA Commercial Rules) - Seat: governing state; fees split equally; each party bears own attorneys' fees - Governing law and exclusive venue for non-arbitrable claims: governing state courts ### 11. General Provisions - Entire agreement / merger clause - Written amendments signed by both parties - No contractor assignment without consent; hiring party may assign to successors/affiliates - Severability; no waiver by failure to enforce - Notices via email + overnight courier - Force majeure (exclude payment obligations) - Counterparts; e-signatures valid under ESIGN Act / UETA ### Signature Block Both parties sign with name, title (if entity), and date. ## Pitfalls and Checks - **Never use supervision language** — avoid "direct," "supervise," "report to," "schedule set by" — these flag misclassification - **California ABC test:** Part B (core business work) is near-impossible to satisfy; recommend separate CA counsel review - **Non-competes:** void/restricted in CA, MN, ND, OK; limited enforceability elsewhere — assess before including - **Multi-state work:** identify all states where services are performed; each may apply its own classification test - **Never guarantee IC status:** include disclaimer; recommend client consult tax counsel - **Gig/platform engagements:** verify current NLRB independent contractor standard