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Independent Contractor Agreement

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INDEPENDENT CONTRACTOR AGREEMENT

THIS INDEPENDENT CONTRACTOR AGREEMENT (the "Agreement") dated this 21st day of July, 2018

BETWEEN:

______________________ of ______________________________
(the "Client")

- AND -

______________________ of ______________________________
(the "Contractor")

BACKGROUND:

  1. The Client is of the opinion that the Contractor has the necessary qualifications, experience and abilities to provide services to the Client.
  2. The Contractor is agreeable to providing such services to the Client on the terms and conditions set out in this Agreement.

IN CONSIDERATION OF the matters described above and of the mutual benefits and obligations set forth in this Agreement, the receipt and sufficiency of which consideration is hereby acknowledged, the Client and the Contractor (individually the "Party" and collectively the "Parties" to this Agreement) agree as follows:

  1. Services Provided
  2. The Client hereby agrees to engage the Contractor to provide the Client with the following services (the "Services"):
    • _______________________________________________________________
      _______________________________________________________________.
  3. The Services will also include any other tasks which the Parties may agree on. The Contractor hereby agrees to provide such Services to the Client.
  4. Term of Agreement
  5. The term of this Agreement (the "Term") will begin on the date of this Agreement and will remain in full force and effect until the completion of the Services, subject to earlier termination as provided in this Agreement. The Term of this Agreement may be extended with the written consent of the Parties.
  6. Performance
  7. The Parties agree to do everything necessary to ensure that the terms of this Agreement take effect.
  8. Currency
  9. Except as otherwise provided in this Agreement, all monetary amounts referred to in this Agreement are in USD (US Dollars).
  10. Compensation
  11. The Contractor will charge the Client a flat fee of $__________ for the Services (the "Compensation").
  12. The Client will be invoiced when the Services are complete.
  13. Invoices submitted by the Contractor to the Client are due within 30 days of receipt.
  14. In the event that this Agreement is terminated by the Client prior to completion of the Services but where the Services have been partially performed, the Contractor will be entitled to pro rata payment of the Compensation to the date of termination provided that there has been no breach of contract on the part of the Contractor.
  15. The Compensation as stated in this Agreement does not include sales tax, or other applicable duties as may be required by law. Any sales tax and duties required by law will be charged to the Client in addition to the Compensation.
  16. Reimbursement of Expenses
  17. The Contractor will be reimbursed from time to time for reasonable and necessary expenses incurred by the Contractor in connection with providing the Services.
  18. All expenses must be pre-approved by the Client.
  19. Confidentiality
  20. Confidential information (the "Confidential Information") refers to any data or information relating to the Client, whether business or personal, which would reasonably be considered to be private or proprietary to the Client and that is not generally known and where the release of that Confidential Information could reasonably be expected to cause harm to the Client.
  21. The Contractor agrees that they will not disclose, divulge, reveal, report or use, for any purpose, any confidential information which the Contractor has obtained, except as authorized by the Client or as required by law. The obligations of confidentiality will apply during the term of this Agreement and will survive indefinitely upon termination of this Agreement.
  22. Ownership of Intellectual Property
  23. All intellectual property and related material, including any trade secrets, moral rights, goodwill, relevant registrations or applications for registration, and rights in any patent, copyright, trademark, trade dress, industrial design and trade name (the "Intellectual Property") that is developed or produced under this Agreement, is a "work made for hire" and will be the sole property of the Client. The use of the Intellectual Property by the Client will not be restricted in any manner.
  24. The Contractor may not use the Intellectual Property for any purpose other than that contracted for in this Agreement except with the written consent of the Client. The Contractor will be responsible for any and all damages resulting from the unauthorized use of the Intellectual Property.
  25. Return of Property
  26. Upon the expiry or termination of this Agreement, the Contractor will return to the Client any property, documentation, records, or Confidential Information which is the property of the Client.
  27. Capacity/Independent Contractor
  28. In providing the Services under this Agreement it is expressly agreed that the Contractor is acting as an independent contractor and not as an employee. The Contractor and the Client acknowledge that this Agreement does not create a partnership or joint venture between them, and is exclusively a contract for service. The Client is not required to pay, or make any contributions to, any social security, local, state or federal tax, unemployment compensation, workers' compensation, insurance premium, profit-sharing, pension or any other employee benefit for the Contractor during the Term. The Contractor is responsible for paying, and complying with reporting requirements for, all local, state and federal taxes related to payments made to the Contractor under this Agreement.
  29. Notice
  30. All notices, requests, demands or other communications required or permitted by the terms of this Agreement will be given in writing and delivered to the Parties at the following addresses:
    1. ______________________
      ______________________________
    2. ______________________
      ______________________________

    or to such other address as either Party may from time to time notify the other, and will be deemed to be properly delivered (a) immediately upon being served personally, (b) two days after being deposited with the postal service if served by registered mail, or (c) the following day after being deposited with an overnight courier.

  31. Indemnification
  32. Except to the extent paid in settlement from any applicable insurance policies, and to the extent permitted by applicable law, each Party agrees to indemnify and hold harmless the other Party, and its respective affiliates, officers, agents, employees, and permitted successors and assigns against any and all claims, losses, damages, liabilities, penalties, punitive damages, expenses, reasonable legal fees and costs of any kind or amount whatsoever, which result from or arise out of any act or omission of the indemnifying party, its respective affiliates, officers, agents, employees, and permitted successors and assigns that occurs in connection with this Agreement. This indemnification will survive the termination of this Agreement.
  33. Modification of Agreement
  34. Any amendment or modification of this Agreement or additional obligation assumed by either Party in connection with this Agreement will only be binding if evidenced in writing signed by each Party or an authorized representative of each Party.
  35. Time of the Essence
  36. Time is of the essence in this Agreement. No extension or variation of this Agreement will operate as a waiver of this provision.
  37. Assignment
  38. The Contractor will not voluntarily, or by operation of law, assign or otherwise transfer its obligations under this Agreement without the prior written consent of the Client.
  39. Entire Agreement
  40. It is agreed that there is no representation, warranty, collateral agreement or condition affecting this Agreement except as expressly provided in this Agreement.
  41. Enurement
  42. This Agreement will enure to the benefit of and be binding on the Parties and their respective heirs, executors, administrators and permitted successors and assigns.
  43. Titles/Headings
  44. Headings are inserted for the convenience of the Parties only and are not to be considered when interpreting this Agreement.
  45. Gender
  46. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
  47. Governing Law
  48. This Agreement will be governed by and construed in accordance with the laws of the State of ____________________
  49. Severability
  50. In the event that any of the provisions of this Agreement are held to be invalid or unenforceable in whole or in part, all other provisions will nevertheless continue to be valid and enforceable with the invalid or unenforceable parts severed from the remainder of this Agreement.
  51. Waiver
  52. The waiver by either Party of a breach, default, delay or omission of any of the provisions of this Agreement by the other Party will not be construed as a waiver of any subsequent breach of the same or other provisions.

IN WITNESS WHEREOF the Parties have duly affixed their signatures under hand and seal on this 21st day of July, 2018.

 

_______________________________
______________________(Client)

 

_______________________________
______________________(Contractor)


Independent Contractor Agreement

Alternate Names:

An Independent Contractor Agreement is also known as a:

  • Subcontractor Agreement
  • Consulting Agreement
  • Freelance Contract
  • General Contractor Agreement
  • Consulting Services Agreement

What is an independent contractor?

Also known as a consultant or freelancer, an independent contractor is a business or individual that is typically self-employed and provides a product or service for a customer in exchange for monetary compensation.

What is an Independent Contractor Agreement?

An Independent Contractor Agreement is a written contract that spells out the terms of the working arrangement between a contractor and client, including:

  • A description of the services provided
  • Terms and length of the project or service
  • Payment details (including deposits, retainers, and other billing details)
  • Confidentiality, non-solicitation, and dispute resolution clauses

Who can use an Independent Contractor Agreement?

Contractors, freelancers, or consultants who wish to have a written agreement with their client can create an Independent Contractor Agreement. Likewise, customers, clients, or businesses who hire contractors and wish to outline the service arrangement through a written contract.

What is the difference between an independent contractor and an employee?

While there are many ways to distinguish an employee from a contractor, here are some of the most common ways an employer (or client) can differentiate between the two types of workers.

Independent Contractor

  • May have more than one customer
  • Sends invoices to his or her customers
  • Uses their own tools or equipment
  • Has a personal investment in contracting business and may incur profit and loss as a result
  • Customers have little overview of the work or services being provided
  • Has signed an Independent Contractor Agreement
  • Works on a fixed-term basis
  • May hire employees or subcontractors to help complete services
  • Does not receive employment benefits from clients or customers

Employee

  • Employer controls how the employee's work is carried out, and when and where the employee works
  • Employer controls the employee's wages
  • May receive employment benefits, such as medical, pension, vacation, or sick pay
  • Has signed an Employment Contract
  • May undergo employment reviews
  • Receives in-house training
  • Employer creates his or her job description

Why should businesses classify workers properly?

Keeping track of who is an employee and who is a contractor ensures a business is in a position to file taxes properly and comply with employment law.

Employers must pay a portion of payroll taxes on employees, whereas independent contractors conduct their own personal tax filings.

What happens when employees are misclassified as independent contractors?

The U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS) conduct regular company audits with the goal of finding employees who have been misclassified as contractors.

The consequences for such misclassifications can range in severity depending on whether or not the misclassification is intentional, unintentional, or fraudulent.

The ramifications for classifying employees as independent contractors can include:

  • A $50 fine for each unfiled W-2 form
  • Monetary penalties from failing to withhold income taxes (potentially 1.5% of paid wages, 40% of FICA taxes not taken from employee wages, and potentially interest for late filing)
  • A failure-to-pay tax penalty, which can total anywhere between 0.5% and 25% of the employer's taxes depending on how long the employer has misclassified the employee and failed to pay the appropriate taxes

The IRS might also impose additional fines and penalties if they suspect fraud or intentional employee misclassification.

How do I protect the company's confidential information when working with a contractor?

Confidentiality is a concern for customers who may be entrusting private or sensitive information to an independent contractor who has been hired to carry out a service for the company.

In a contractor agreement, you can include terms to prevent a freelancer from divulging information about your business. There are also terms about non-solicitation and non-competition in the event there are conflicts of interest in the industry or a risk of competition. It should be noted that if the contractor fails to comply with these terms, it would put them in breach of the contract.

Who owns the intellectual property created by an independent contractor?

Under U.S. copyright law the initial owner of the copyright in a "work for hire" is the person commissioning the work and not the person who actually created the work.

Section 101 of the Copyright Act defines a "work for hire" to include work by employees in the course of employment, including creative work developed by an independent contractor in certain circumstances like a translation, a contribution to a collective work, and more.

Alternatively, this contractor agreement can be tailored so the contractor retains complete ownership of the intellectual property but gives the company license to use the material.

Related Documents:

  • Consulting Agreement: similar to an Independent Contractor Agreement, this contract is used to outline the arrangement between a consultant and customer
  • Service Agreement: a contract used to cover the terms of a service between a customer and service provider
  • Employment Contract: a contract used between an employer and employee to address the terms of employment
Sample Independent Contractor Agreement

Sample

Independent Contractor Agreement

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