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Independent Contractor

Whether you are an independent contractor or are seeking the services of one, US Legal Forms has the independent contractor forms you have been searching for. Simply select your State and choose the appropriate form for your situation. View Independent Contractor agreements by Subject Matter.

What is an independent contractor? A person or business who performs services for another person under an express or implied agreement and who is not subject to the other's control, or right to control, the manner and means of performing the services. The general rule is, if the employer has the right to control both what a person must be do, as well as how it is to be done, that person is an employee.

Why is the distinction between independent contractor and employee important? The distinction is important because the status of a worker defines his or her rights and remedies in various situations, including, most importantly for the IRS, whose obligation it is to pay unemployment, income withholding and Social Security taxes. Thus, an employer may be liable for income tax and employee social security and Medicare taxes which were not withheld based upon the improper classification of an employee as an independent contractor.

Factors to consider in determining whether a person is an independent contractor or an employee.

The degree of control exercised by the company: An employer has the right to control an employee. Thus, it is important to determine whether the company had the right to direct and control the workers not only as to the results desired, but also as to the details, manner and means by which the results were accomplished.
Do the workers carry on an independent business or do they regularly worked in the course of the company's general business: Have the parties advertised or generally offered their services to others; Have they as individuals, or as a group, used a business name in dealing with company for the purpose of contracting their services; whether they listed themselves in any business capacity in city or telephone directories; whether they maintained their own offices or place of work; whether they procured necessary licenses for the carrying on of their activities; whether they supplied their own tools or equipment; and any other evidence tending to show that they were carrying on an independent business as individuals or as a group.
The term and duration of the relationship between the company and the workers: The relationship of an independent contractor generally contemplates the completion of an agreed service and result within a stipulated period of time. On the other hand, an employment relationship generally contemplates a continuous rendering of services for an indefinite time.
The opportunity to make a profit, or the risk of taking an out-of-pocket loss: Generally, an employee does not have the opportunity to make a profit, nor does he take the risk of out-of-pocket loss when working for an employer. Thus, an employee is generally paid on a time or piece-work or commission basis, whereas an independent contractor is ordinarily paid an agreed amount, or according to an agreed formula, for a given job.

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