Template · Offers and pre-employment
Independent contractor agreement
In short
An independent contractor agreement template is a ready-to-edit contract between a business and a self-employed person or firm that sets out the services, deliverables, fees, invoicing, ownership of work, confidentiality and termination. This version is written for US 1099 engagements and includes clauses that support, but cannot by themselves establish, contractor status.
Independent Contractor Agreement template
Independent Contractor Agreement
Fill in every [Placeholder]. Attach a Statement of Work (Exhibit A) describing the project. A contract does not decide worker classification: how the relationship works in practice does. Have counsel review the agreement for each state where contractors work.
Parties and effective date
This Independent Contractor Agreement ("Agreement") is entered into as of [Effective Date] between [Company Legal Name], a [State] [corporation / LLC] with its principal office at [Company Address] ("Company"), and [Contractor Legal Name or Business Name], [an individual / a State entity type] with an address at [Contractor Address] ("Contractor").
1. Services
Contractor will provide the services and deliverables described in the Statement of Work attached as Exhibit A ("Services"). Additional work requires a new or amended Statement of Work signed by both parties. Contractor determines the method, details and means of performing the Services, subject only to the deliverables, specifications and deadlines in the Statement of Work.
2. Term
This Agreement begins on the Effective Date and continues until [End Date / completion of the Services in Exhibit A], unless ended earlier under Section 10.
3. Fees and invoicing
Company will pay Contractor [a fixed fee of $[Amount] for the project / $[Rate] per hour / $[Amount] per deliverable], as set out in Exhibit A. Contractor will invoice Company [monthly / on completion of each milestone], with a description of Services performed [and hours worked]. Company will pay undisputed invoices within [30] days of receipt. Contractor is responsible for its own business expenses unless Exhibit A lists reimbursable expenses approved in writing in advance. Contractor will provide a completed IRS Form W-9 before the first payment.
4. Independent contractor relationship
Contractor is an independent contractor and not an employee, partner or agent of Company. Contractor is not entitled to Company's employee benefits, and Company will not withhold income taxes or pay Social Security, Medicare or unemployment taxes for Contractor. Contractor is responsible for all taxes on fees received and will maintain any licenses and registrations required to perform the Services. Contractor sets its own working hours, provides its own tools and equipment except as stated in Exhibit A, and may perform services for other clients during the term, provided it complies with Section 6.
5. Ownership of work product
All deliverables and work product created by Contractor specifically for Company under this Agreement ("Work Product") will be owned by Company upon full payment. To the extent any Work Product is not a work made for hire under US copyright law, Contractor assigns to Company all right, title and interest in it. Contractor keeps ownership of its pre-existing materials, tools and know-how ("Contractor Materials") and grants Company a non-exclusive, perpetual, royalty-free license to use any Contractor Materials included in the Work Product.
6. Confidentiality
Contractor will keep confidential all non-public information received from Company, including business plans, customer data, employee data, pricing and technical information ("Confidential Information"), will use it only to perform the Services and will return or destroy it at the end of the engagement. These obligations last for [3] years after this Agreement ends, and indefinitely for trade secrets and personal data. This section does not apply to information that is public through no fault of Contractor, already known to Contractor or required to be disclosed by law. Nothing in this Agreement prevents Contractor from reporting possible violations of law to a government agency, and notice is given of the immunity provisions of the Defend Trade Secrets Act, 18 U.S.C. section 1833(b).
7. Data protection and security
If Contractor has access to personal information of Company's employees, candidates or customers, Contractor will process it only on Company's instructions, protect it with reasonable security measures and notify Company within [72] hours of becoming aware of any unauthorized access.
8. Insurance and indemnity
Contractor will maintain [general liability insurance of at least $[Amount] per occurrence / professional liability insurance of at least $[Amount]] [and workers' compensation insurance where required by law] during the term and provide certificates on request. Each party will indemnify the other against third-party claims arising from its own negligence, willful misconduct or breach of this Agreement.
9. Non-solicitation
[Optional:] During the term and for [12] months after, Contractor will not solicit any Company employee it worked with under this Agreement to leave Company. [Check state law before including any restrictive covenant.]
10. Termination
Either party may end this Agreement for convenience with [14] days' written notice, or immediately on written notice if the other party materially breaches it and does not cure the breach within [10] days. On termination, Company will pay for Services performed and accepted through the termination date, and Contractor will deliver all completed and in-progress Work Product and return Company property and Confidential Information.
11. General
This Agreement, with Exhibit A, is the entire agreement between the parties on its subject and replaces any prior understandings. It may be amended only in a writing signed by both parties. Contractor may not assign or subcontract the Services without Company's written consent. This Agreement is governed by the laws of the State of [State]. If any provision is unenforceable, the rest remains in effect. Notices must be in writing to the addresses above or by email to [Company Notice Email] and [Contractor Notice Email].
Signatures
- Company authorized signer name and title
- Company signature
- Date
- Contractor name (and business name, if any)
- Contractor signature
- Date
Exhibit A: Statement of Work
- Project name
- Description of services
- Deliverables and acceptance criteria
- Milestones and due dates
- Fee structure and amount
- Approved reimbursable expenses (if any)
- Company-provided access or equipment (if any)
- Company project contact
How to use this template
- Run a classification check before drafting: if you will set the hours, train the person, supervise daily work or have them do your core ongoing work indefinitely, this is probably employment, not a contract.
- Write a Statement of Work that defines deliverables and deadlines rather than hours and duties, and attach it as Exhibit A.
- Choose a fee model (fixed project fee, milestone or hourly) and set invoice and payment terms the contractor can rely on.
- Decide what IP the company must own and keep the contractor's pre-existing tools and know-how separate.
- Collect a Form W-9 and a certificate of insurance before work starts, and set the contractor up as a vendor rather than in payroll.
- Have both parties sign, store the agreement with vendor records, and issue Form 1099-NEC each January for payments above the IRS threshold.
- Review active contractor engagements at least yearly to confirm the way the work actually runs still matches the contract.
What this agreement can and cannot do
A contractor agreement sets the commercial terms: what work, for how much, who owns it and how either side can end it. What it cannot do is make someone a contractor. The IRS, the Department of Labor, state labor and unemployment agencies and courts all look at how the relationship works in practice. A signed contract calling someone "independent" carries little weight if the company sets their schedule, trains them like staff and has them doing the same core work as employees for two years.
That is the main difference from an employment contract template: an employment contract assumes control, benefits and payroll withholding, while a contractor agreement assumes the opposite and has to be backed up by how the work is managed. For short-term workers you do intend to employ, a temporary employment contract is the right document.
The classification tests in plain terms
Three frameworks come up most often in the US:
- IRS common-law test. Looks at behavioral control (does the company direct how the work is done), financial control (does the worker invest in tools, carry expenses, have a chance of profit or loss) and the relationship (benefits, permanence, whether the work is a key part of the business).
- FLSA economic reality test. The Department of Labor asks whether the worker is economically dependent on the business or truly in business for themselves. Its guidance on this test has changed several times in recent years, so check the current position.
- [ABC test](/glossary/abc-test/). Used in California, Massachusetts, New Jersey and other states for some or all purposes. The worker is an employee unless the business shows the worker is free from control, the work is outside the usual course of the business, and the worker is customarily engaged in an independently established trade.
Under an ABC test, a call center that hires "1099 agents" to answer its own customer calls will very likely fail the B prong, because answering calls is the business. Our worker classification glossary entry covers the consequences: back taxes, unpaid overtime, benefits claims and penalties.
Clauses that matter most
Scope through a Statement of Work. Define outcomes and deliverables, not hours and job duties. A statement of work that reads like a job description is a classification warning sign.
IP assignment. Under US copyright law, work by a contractor is not automatically owned by the client. Without a written assignment, the contractor may own the code, content or designs you paid for.
Confidentiality with whistleblower carve-outs. Include the Defend Trade Secrets Act immunity notice; without it, an employer may lose the right to exemplary damages and attorney fees in a trade secret suit against an individual. Keep confidentiality from blocking reports to government agencies.
Restrictive covenants. Non-competes for contractors are hard to justify and unenforceable or restricted in several states. A narrow non-solicitation of employees is usually the most you need.
Termination for convenience. Short mutual notice periods fit a business-to-business relationship. Clauses that let only the company end the deal look more like employment.
Contractors at volume
Companies using dozens or hundreds of freelancers, such as freelance recruiters, trainers or interpreters, run into two problems: inconsistent paperwork and classification drift as engagements roll on for years. Standardize this agreement with a short SOW per project, onboard contractors through vendor management rather than HR onboarding, and keep them off employee systems, all-hands meetings and org charts. A vendors workspace helps keep agreements, W-9s, insurance certificates and SOWs together.
If you need people who work set hours under your supervision, use a staffing agency or employ them directly. Misclassifying a large group of workers is one of the more expensive employment mistakes a company can make, and state agencies often find it through a single unemployment claim.
Common mistakes
- Converting a departing employee into a contractor doing the same job, same hours, same manager.
- Paying contractors through payroll or giving them company email signatures that read as staff titles.
- No IP assignment, discovered only when the company tries to sell or license the work.
- Open-ended engagements with no SOW renewal, so a six-week project quietly becomes three years.
- Assuming the contract protects you in an ABC-test state. Rules vary by state, and some states apply different tests for wage, tax and unemployment purposes.
Frequently asked questions
What should an independent contractor agreement include?
The parties, scope of services or a Statement of Work, term, fees and invoicing, a clear independent contractor relationship clause, IP ownership, confidentiality, insurance and indemnity, termination terms, governing law and signatures.
Does a 1099 contractor agreement make someone a contractor?
No. Classification depends on how the work is actually controlled and performed. The contract helps document intent, but agencies and courts look past the label.
What is the difference between a contractor agreement and a freelance contract template?
They are largely the same document. Freelance contracts are often written from the freelancer's side and lean toward payment protection; a company's contractor agreement usually puts more weight on IP, confidentiality and classification language.
Who owns work created by an independent contractor?
Under US copyright law, the contractor generally owns it unless there is a written assignment or the work falls into a narrow work-made-for-hire category agreed in writing. Always include an IP assignment clause.
What tax forms do I need for an independent contractor?
Collect Form W-9 before the first payment. After year end, issue Form 1099-NEC to the contractor and file it with the IRS if payments meet the reporting threshold. No income tax or FICA is withheld unless backup withholding applies.
Can an independent contractor sign a non-compete?
Sometimes, but enforceability depends on state law, and some states ban or sharply limit non-competes. A strong non-compete can also suggest the worker is not running an independent business. A narrow non-solicitation clause is usually safer.