Employment / Labour Law
Independent Contractor Agreement
An independent contractor agreement is a legal document between a payor and the payee. It’s an all-encompassing document that outlines the details of the work to be performed, terms of the agreement, compensation and any additional clauses.
You should always have the rights and expectations of the parties reduced to writing. Having a carefully crafted independent contractor agreement setting out the intentions of the parties is crucial. It is highly recommended that you should always seek legal advice to fully appreciate your rights and responsibilities, and legal ramifications of signing an agreement to make sure you don’t end up creating an employer-employee relationship inadvertently, if you are the party hiring the independent contractor. In contrast, if you are a worker, you want to make sure that if you are signing an agreement, you want to be sure whether you are going to be deemed as an employee or an independent contractor.
The following issues should be addressed in the agreement
1. Control - Who decides monthly remuneration? Who decides the time, place, and manner in which the work is to be done? Any notice requirement before you can stop working? Do you work exclusively for that company? The more control the business over its independent contractor, the more likely it is for a Court to find that an employment relationship is established.
2. Ownership of tools & the cost of using the tools - When workers purchase or rent equipment or large tools that require major investments and costly maintenance, it usually indicates that they are self-employed individuals, because they may incur losses when replacing or repairing their equipment.
3. Chance of profit / risk of loss - Who bares the risk of loss? Who bears the operating costs? The more the independent contractor is shield off from risk of loss, the highly the likelihood he/she will be deemed to be an employee.
4. Economic dependency & Integration - Does the worker have commercial activities with multiple clients rather than just one client – the payor? Does the payment from the payer constitutes the main of the worker’s income?
It's substance over form and a lot of legal issues are involved, and a well-drafted independent contractor agreement save everyone's headache down the road.
HTW Law can help. Call us now at 647-849-6582 or send us a message if you have some legal questions / inquiries or want to schedule an appointment with HTW Law.