What to Include in an Independent Contractor Agreement: Complete Checklist
Not all clauses carry equal weight. Some are legally required, some are strongly recommended, and some add polish. This checklist ranks every provision by priority so you know exactly what your agreement needs for your situation.
Updated 30 March 2026
Omitting any of these creates legal exposure or classification risk
Parties Identification
Full legal names and addresses of both the company and contractor. Include entity type (LLC, Corp, sole proprietor). If the contractor operates through an entity, the agreement should be with the entity, not the individual. This protects against personal liability claims and strengthens the independent contractor classification. Include tax ID numbers (EIN for entities, SSN for sole proprietors) or reference the attached W-9.
Scope of Services
Detailed description of deliverables, acceptance criteria, and performance standards. Be specific: "develop a responsive web application with 5 pages, user authentication, and API integration" is enforceable; "provide development services" is not. Attach an Exhibit A with technical specifications, milestones, and acceptance testing procedures. The scope should describe what the contractor delivers, never how they do the work (that distinction matters for classification).
Independent Contractor Status Clause
Explicit declaration that the contractor is not an employee, partner, joint venturer, or agent. Must state that the contractor: controls their own schedule, provides their own tools and equipment, can work for other clients, receives no employee benefits, and is responsible for their own taxes. This clause must reflect the actual relationship. If the contract says "independent contractor" but the company treats the worker like an employee, the clause will not prevent reclassification.
Payment Terms
Rate or fee structure (project-based, hourly, retainer), invoicing schedule, payment method, and due date (Net 15 or Net 30 are standard). Include late payment penalties: 1.5% monthly interest is the most common rate. For project-based work, define milestone payments tied to deliverable acceptance. For hourly work, specify maximum hours per period and invoice frequency. State whether expenses are reimbursable and, if so, which categories require pre-approval.
Tax Obligations
State that the contractor is solely responsible for all taxes, including federal and state income tax, self-employment tax (15.3%), and any local taxes. Require a completed W-9 form before the first payment. Confirm the company will issue Form 1099-NEC for payments of $600 or more in a calendar year. This clause creates a documented paper trail showing both parties understood and agreed to the tax treatment at the time of contracting.
Termination Provisions
Define how either party can end the agreement. Include: notice period for convenience termination (30 days is standard), grounds for immediate termination (material breach, fraud, insolvency, failure to perform), payment obligations through the termination date, work product handoff procedure and timeline (10 business days is typical), and return of company materials and confidential information. Without clear termination terms, you may face disputes over final payments and unfinished deliverables.
Governing Law
Specify which state's laws govern the agreement. This determines which classification test applies, enforceability of non-compete and confidentiality provisions, and available remedies. If the company and contractor are in different states, the governing law clause prevents disputes about jurisdiction. Generally, choose the state where the company is headquartered, but be aware that the contractor's state labor laws may still apply regardless of the contract provision.
Strongly recommended for most engagements; omission increases risk
Intellectual Property Assignment
Without an explicit assignment, the contractor owns all IP by default under US copyright law. Specify whether work product is assigned to the company, licensed, or jointly owned. Address pre-existing IP (what the contractor brings to the project), background IP (tools and frameworks developed independently), and newly created IP. For work-for-hire to apply, both the work must fall into one of 9 statutory categories and the parties must agree in writing. Most contractor work does not qualify automatically.
Confidentiality and Non-Disclosure
Define confidential information broadly but include standard exclusions: publicly available information, information the contractor already knew, information received from third parties without restriction, and information independently developed. Specify the survival period (2 years for general business info, 3 to 5 years for trade secrets). Include return and destruction requirements upon termination. If you need stronger protections, use a separate NDA in addition to the confidentiality clause.
Insurance Requirements
Require the contractor to maintain: general liability insurance ($1M per occurrence, $2M aggregate is standard), professional liability (errors and omissions) insurance ($1M), and workers' compensation coverage if the contractor has employees or if required by state law. For construction contractors, also require commercial auto insurance and an umbrella policy. Request a certificate of insurance naming the company as an additional insured. Verify coverage before the first payment.
Dispute Resolution Mechanism
Specify a mediation-first requirement before arbitration or litigation. Mediation resolves 70% to 80% of commercial disputes at a fraction of litigation costs. If mediation fails, binding arbitration under AAA Commercial Rules or JAMS is faster and cheaper than court. Include the venue (city and state), language, and whether the prevailing party recovers attorney fees. Average arbitration costs $20,000 to $50,000; average commercial litigation costs $100,000 to $300,000.
Indemnification
Mutual indemnification is the fairest approach: each party indemnifies the other against claims arising from their own negligence or breach. The contractor indemnifies the company for claims arising from the contractor's work, tax obligations, and employee misclassification. The company indemnifies the contractor for claims arising from the company's use of deliverables. Cap indemnification liability at a reasonable amount (total contract value or 12 months of fees).
Adds professionalism and addresses edge cases
Non-Solicitation Clause
Prevents the contractor from soliciting the company's clients or employees for 12 to 24 months after termination. Unlike broad non-competes, non-solicitation clauses are enforceable in most states because they restrict contact with specific people, not the ability to work in an industry. This is the preferred restriction for contractor relationships because it does not undermine the contractor's independent status.
Change Order Process
Establishes a formal procedure for scope modifications. Require that all changes be documented in writing, approved by both parties, and include revised timelines and compensation before work begins. Without this, scope creep disputes are almost inevitable on projects lasting more than 30 days. Reference an Exhibit or Amendment format in the agreement.
Force Majeure
Excuses performance delays caused by events beyond either party's control: natural disasters, pandemics, government orders, wars, internet outages, and supply chain disruptions. Post-COVID, this clause has become standard in virtually all commercial agreements. Define the notification requirements (written notice within 5 business days) and the maximum suspension period (typically 30 to 90 days before either party can terminate).
Subcontracting Rights
Specify whether the contractor can subcontract portions of the work. The ability to subcontract supports independent contractor classification because it demonstrates the contractor operates a business, not just provides personal services. Options: unrestricted subcontracting, subcontracting with prior written approval, or no subcontracting allowed. If subcontracting is permitted, the contractor should remain responsible for the quality and timeliness of all work.
Representations and Warranties
Each party represents they have the authority to enter the agreement, the contractor warrants the work will be original and not infringe third-party IP, and the contractor warrants they are properly licensed for any regulated work (CPA, PE, attorney). Include a warranty period for deliverables (30 to 90 days for software, 12 months for construction). This provides a contractual basis for claims if deliverables are defective.
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