Crafting Agreements with Independent Contractors


Two businessmen shaking hands after crafting agreements for independent contractors

When companies enter into handshake deals or loosely written agreements with independent contractors, miscommunications and hard feelings often follow. Even honest, hard-working people don’t always fully articulate their expectations, responsibilities, and ideas surrounding compensation. When otherwise good people are not on the same page, work stoppages may occur, and worst-case scenarios such as civil litigation may prove necessary.

That’s why industry leaders require thoughtful contracts when hiring independent contractors to perform select duties. At George, Murray, Shipley, Bell, LLP, our experienced team of corporate and commercial law professionals works with business leaders to ensure smartly articulated contracts are written to protect all parties.

What Are Independent Contractors?

When outsourcing work, it’s essential that company leaders make informed decisions regarding independent contractors. Assigning tasks to people outside your workforce may not always pass legal muster. Misclassification can result in the government imposing penalties on you or your organization. Before delegating work, consider whether people meet the following standards commonly associated with independent contractors:

  • They are self-employed
  • They typically operate a company
  • They pay their own taxes
  • They are not supervised
  • They possess their own tools & equipment

One of the missteps some organizations make involves not necessarily distinguishing employees from independent contractors. Issuing regular paychecks, taking out taxes, and ongoing oversight blurs the legal line. Before signing contracts, it’s crucial to be on firm footing regarding the status of someone you are paying to perform duties. Clear legally-binding contracts minimize the risk of error and business misunderstandings.

Necessary Elements of Agreements with Independent Contractors

Although some organizations use “boilerplate” contracts when hiring independent contractors, this method eventually proves costly. That’s largely because the intricate details not outlined in contracts too often emerge as the source of business disputes. As an experienced corporate and commercial law firm, our seasoned lawyers urge decision-makers to think through all of the pertinent details and incorporate them into contracts. When working with independent contractors, these rank among the essential elements:

  • Detailed description of the services and duties
  • Assurance of independent contractor status
  • Length of project and timelines
  • Exclusivity, confidentiality & intellectual property rights
  • Payment schedules and monetary transfer methods
  • Indemnification & severability

It may be in an organization’s best interest to include language that creates a dispute resolution procedure. For example, contracts that make arbitration mandatory generally avoid costly and protracted civil litigation. This element serves as one of the fundamental reasons that companies use contracts when outsourcing work to independent contractors.

Contact an Experienced Corporate and Commercial Law Firm in Ontario

At George, Murray, Shipley, Bell, LLP, we work closely with business leaders to craft contracts that indicate the rights, responsibilities, and duties of all parties. Concise agreements with effective dispute resolution mechanisms keep projects progressing on time and on budget. If you are considering hiring independent contractors, contact George, Murray, Shipley, Bell, LLP, and schedule a consultation today.