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Advantages of Independent Contactor Agreement

By Edited Jun 8, 2015 0 1

Hiring contractual workers or independent contractors (IC) are beneficial. Businesses can often save money by having them instead of employees. However, there should be a written independent contractor agreement to avoid disputes or any disagreements.

The law doesn't require to put anything in writing when hiring ICs. An employer may talk to the IC, agree on the terms of arrangement and have an oral agreement which is legally binding.

But, most often, oral agreements result to misunderstandings because there is no clear written statement. Hence, having a written independent contractor agreement is very important to settle any dispute in case it arises. And it would be much safer to depend on a written agreement which would clearly set the details of the relationship.

Basically, IC agreement includes the specific work task or the description of services that the IC would perform, when they are to be performed and when it will be completed, conditions of payment, frequency of giving an account regarding progress of work, IC's obligation in ensuring confidentiality of company information and operations, and that the IC's work product that will be owned exclusively and guarantee of exercising professionalism and quality.

Advantages of Hiring Independent Contractors

An independent contractor is a person who provides specialized services on a per-project basis. ICs include architects, plumbers, bookkeepers and piano tuners.

Hiring ICs is advantageous in business. Primarily, it saves money since they are independent business persons and employers need not have to pay expenses for employees such as payroll taxes, employee benefits, and insurance premiums.

Also, you don't have to get Social Security and Medicare, pay other expenses, and provide supplies, tools and a good place to work. And since tax rules and employment laws don't apply to ICs, businesses may also save time, aside from money.

In addition, ICs lessens the worries of employers on the laws regarding employers overtime, rest breaks, time off, and they don't have to worry about finding work for them since ICS usually work on a project basis.

ICs also have certain level of skill and flexibility that cannot be obtained by other employees. An employer may pay an IC to do a specific task without paying for the training because he is more likely have enough experience to do a difficult project. This will be an advantage to the employer especially when he doesn't know what to do.

Additionally, hiring ICS also lessens exposure to some types of lawsuits.

Copyright Ownership on Independent Contractors

If you are the employer and you are going to hire an IC to create a work of authorship like computer program, written artwork, multimedia work, musical work or photographs, you should know about copyright ownership.

Copyright ownership is vital since you may not own the copyright to the IC's work unless you have a written assignment of it. This should be obtained before the IC starts to work, and it must be included in the independent contractor agreement.

However, there are also exclusions on this rule. When you hire an IC for a specially commissioned work, you own the copyright. Nevertheless, this is not automatic and you still need to put this in a written agreement clearly stating that the work is for hire.

Importance of Independent Contractor Agreement

A written independent contractor agreement primarily provides legal protection. It also helps in avoiding disputes. However, drafting a complete and legally acceptable independent contractor agreement needs a deep understanding of corporate and labor laws.

Hence, it is advisable to consult an expert and competent corporate attorney before formulating the contract to make sure that everything that will be included follows the laws.



May 20, 2010 10:20am
Agreed it is indispensable to have a written agreement. However, you may have misspoken when you state that "tax rules and employment laws don’t apply to" independent contractors. There are plenty of tax rules and employment laws left to follow if you hire independent contractors, and you must make sure that you are following them all correctly. That is why it is so advisable to hire experts and make sure that your business does not inadvertently violate any of those laws.
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