A California Independent Contractor Agreement is designed for persons or business entities who wish to hire other persons or business entities to work on an independent contractor (that is, non-employee) basis in California.
Merely calling such a person an independent contractor, rather than an employee, does not necessarily change the nature of the relationship. In other words, the relationship contemplated must properly be an independent contractor relationship; if it is, then this agreement will define the terms of the independent contractor relationship, in a manner generally favorable to the contracting party.
Otherwise, an employment agreement should be used, and W-2 payroll status and payroll taxes, unemployment compensation, workers’ compensation, and the like will apply.
While there are many factors to consider, the key factor is control: If the worker has little or no control over the how, when, and where of performing the duties required, then that worker is likely an employee. A secretary who is told to report every morning at 8 AM, answer the phone and file in accordance with company policy, take lunch between 12 – 1 PM, and to punch out at 5 PM, is a classic example of an employee. Such an employee typically incurs no expenses, takes no risk of profit or loss, and works for only one employer.
A computer consultant who is hired to perform computer network maintenance, but who can determine within reason when, how, where, and by whom (his or her employees or subcontractors may actually do the work) such maintenance is performed, and who has other clients, is a classic example of an independent contractor.
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In conjunction with this explanation, the declarations in Section 11 of the Agreement are a good starting point to determine whether the worker being hired is properly classified as an independent contractor: If these declarations don’t ring true or sound appropriate for your business, the worker is likely properly classified as an employee, and this Agreement should not be used.
Section 3 of the Agreement assigns all intellectual property produced by the independent contractor to the hiring party. This section may be deleted if it is not apply under the circumstances. Note that the use of “work for hire” copyright assignment agreements or provisions in California automatically makes the worker an employee.
Additionally, non-compete provisions are also generally illegal and unenforceable under California law. These words and provisions thus purposely do not appear in the Agreement and should not be added.
If you have any questions regarding the foregoing, or about the suitability of our California independent agreement for, or modifying it to fit your specific needs, you are encouraged to consult with and employ a California employment law attorney.
