Independent Contractor Employment Agreements

Implement Consultant Contracts Before Engaging 1099 Professionals

Among the many things that a company should incorporate in its independent contractor hiring process and its 1099 records, is the written consulting agreement. This employment agreement should clearly define terms of the job, the services to be performed, method and terms of compensation, independent contractor status, the circumstances that lead to termination of the consultant contract and much more.

Manage Risk by Tailoring Your Independent Consulting Agreement

Although you can find generic employment agreements that your company can use for its independent contractors, it’s best to make the consultant contracts as tailored as possible to your company and the IC’s services. It’s common for a solid employment agreement to have several iterations between the 1099 worker and the company before it’s finalized. Be sure to keep all drafts in the company’s 1099 records as part of your corporate compliance plan.

If the independent contractor already has an employment agreement he or she uses when initiating services with a company, it’s perfectly fine to use that as a starting point. But make sure that the language is examined very carefully and changed where necessary. The agreement courtesy of the IC will oftentimes have terms that favor his or her best interest.

Manage Risk by Highlighting Conditions Within the Independent Consultant Contract

An independent contractor employment agreement should cover all the bases. Your company will need to ensure that at the very least, the basic conditions of the job are on record. Then, if you need to branch out to include additional language, you can. Perform a quick audit risk assessment of your own by examining your contracts against the essentials outlined below:

• Terms of service. Be careful when creating a timeline for the independent contractor’s services; too long of a timeframe could work against your company. Best practices are to make the initial agreement for six months and then renegotiate a new employment agreement to extend the timeline if needed.
• Services to perform. It’s best to focus on what the end-product or results should be, not how the independent contractor should produce those results. This part of the 1099 consulting agreement needs to be carefully worded so as not to imply an employer-employee relationship. This will also help establish the worker as a consultant in the eyes of a government agency in the event of a 1099 audit.
• Independent contractor status. This is an extremely important step in the 1099 consultant contract process. Put in writing that the worker is an independent contractor and what rights that status entails. Include language from common guidelines by applicable state and federal agencies that clearly define what a 1099 professional is and how he or she is to be treated during the time services are performed for your company.
• Payment terms. The independent contractor can be paid by milestones or a fixed fee. The latter is the most common option. Decide whether you will pay the worker in one lump sum or in payments, and then make sure that language is present in the independent consultant contract.

Disclaimer: The content in this Web site is designed to provide educational information and should not be considered legal advice.

Create a solid independent contractor employment agreement with Secure Talent. Contact us today online or call 800.778.0197.