Independent Employment Agreement
Particularly in tough economic times, job seekers may need to be creative with regard to their employment options. Foregoing the traditional employer-employee relationship, many people are branding themselves consultants and independent contractors and reentering the workforce. Imperative to success, however, is the proper development and execution of the independent employment agreement and adherence to the Internal Revenue Service's definition of just who is and is not an independent employee.
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Parties
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The first section of any independent employment agreement should indicate the parties between whom the agreement is being made. Both the independent contractor and the client for whom he is being asked to work must have their names or their company names clearly stated.
Services
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Exactly what services the independent contractor will provide and how he will accomplish them must be outlined in clear, concise language. There should also be a section that states what is expected of the client. Whatever is required of the client so that the independent contractor can effectively perform his duties must be made clear from the outset.
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Length of Contract
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Because the independent contractor is not an employee of the client, length of contract is an important part of the agreement. An open-ended agreement could too closely resemble an employer-employee relationship and would arouse the suspicion of the IRS. In addition to indicating start and end dates of the contract, these agreements often include late-penalty clauses and bonuses for early completion.
Progress
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The independent contractor agreement needs to include an agreeable method for determining performance and quality of the work performed. How, when and to whom the contractor needs to report should be included in the agreement.
Subcontractors
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If the contractor will require the services of someone else to satisfactorily perform his duties, the use of these subcontractors must be specified in the initial agreement between client and contractor.
Payment
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How much compensation the independent contractor will receive must be stated in the agreement. It is important to clearly include the amount to be paid, its structure (i.e. per hour/per job), method of payment and due dates. Additionally, payment schedules may be set out to correspond with completion of specific services as they are rendered, i.e. payments made as goals are met.
Confidentiality
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As a protection to the client, the contractor typically signs a confidentiality agreement that is separate from the independent contractor agreement. If none exists, however, a confidentiality clause can be included in the contractor's agreement. It generally will offer protection of the client's proprietary information.
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References
- Photo Credit signing a contract image by William Berry from Fotolia.com
