The 5 Most Important Clauses To Read and Understand Before Agreeing To Work With An Independent Contractor
If you haven’t been burned by a contractor, are you even a business owner?
*cries in solidarity* 😭
I vividly remember a scenario that happened in my early days of entrepreneurship that still haunts me to this day…
And more importantly reminds me of why I’m so passionate about teaching small business owners to incorporate contracts in their business.
Even better, it’s the very reason that I created The Contract Template Shop so that incorporating contracts could be truly SIMPLE.
More on that in a second! But first, back to that story that still haunts me.
The first time I went to expand my law firm, I used a staffing agency and without me knowing, someone on my team signed a contract to hire a paralegal.
Turns out this “paralegal” was an absolute nightmare. Now, I’m not here to bash her — but let’s just say she didn’t deliver and we let her go with swiftness.
So we hired another one (from the same agency). And you guessed it… she was equally not good.
Cue deciding we would never work with this agency again and politely letting them know their agency wasn’t “meeting expectations.”
And this is where the haunting really takes place and where the lesson was unfortunately learned…
They said, “Sure, we can be done. But you owe us $5k first.” 🤯
When I say my jaw literally DROPPED. I thought surely that couldn’t be right, so I turned to the contract. And unfortunately yes, that was correct.
Thanks to minimum fees and other silly little things I didn’t have the opportunity to read and agree to (another lesson), we did, in fact, owe them five grand.
I share that story with you to say: READ. YOUR. CONTRACTS.
As a small business owner or solopreneur, one of the best and easiest ways to expand your team is to hire independent contractors versus full time employees (this is something I do for my own business and LOVE), but before signing on the dotted line, make sure you know what you’re agreeing to.
In this blog post, you’ll learn what clauses to look for so that you can go into the working relationship confidently and not end up in a mess like I did above!
5 Contract Clauses To Fully Understand Before Working With An Independent Contractor or Service Provider
Scope of Work
A well-crafted contract spells out the exact tasks, deliverables and responsibilities of the independent contractor, which ensures that everyone is aligned on what is expected.
Before agreeing to work with an independent contractor, make sure that you fully understand what their scope of work includes so that you never run into misunderstandings, avoid scope creep on your end, and can successfully uphold the boundaries of the contractor in order to maintain a positive working relationship!
Payment Terms
In addition to the scope of work details, as the person hiring the contractor, you of course want to fully understand the specific payment terms, including how much you’ll owe, when the payments are due and under what conditions.
Being crystal clear on this information up front can remove all confusion and reduce any potential payment disputes in the future!
Project Timeline
If you’re working with a contractor on a project basis, it’s important to understand the specificities of the timeline of the project, including a start and end date, as well as any important project milestones.
These details will help with planning and ensure that time-sensitive tasks are completed as expected.
If you plan to be working with a contractor for an extended period of time with no designated end date, you want to make sure you understand any information about how either party can exit the agreement if needed and how that needs to be navigated.
Quality Assurance
One of the reasons that working with independent contractors as a business owner can feel scary is because you want to know that the work being done is being done well and it can often feel like you are the only one capable of that.
If you can relate to feeling that way, I want you to know you aren’t alone!
Your business often feels like your baby and it’s normal to want to be in control of all the moving parts so that you know the quality of your projects or services are being upheld to your standards.
But here’s a piece of encouragement that I want to offer as someone that very willingly hires contractors on a regular basis to help in my business:
There are professionals out there who can do certain work wayyyyy better than you can! And no, that’s not a knock on your skills. Just like you have specific expertise in your field, so do they.
But that doesn’t mean you have to compromise your quality standards when you hire them.
Before agreeing to work with an independent contractor, make sure that their contract has a clause that addresses quality assurance so that you can hand over work to them with confidence.
This provides an avenue for you to hold the contractor accountable for the quality of work and make sure that it meets your standards before ever being presented to your audience!
If that clause is missing, ASK THEM ABOUT IT! Or if it doesn't feel right, find someone else that takes your concern about quality into consideration.
Intellectual Property Rights
One of the biggest questions that comes up for business owners hiring independent contractors is, “who owns the deliverables?”
And it’s a great question! This is why reviewing a contractor's intellectual property rights clause in their contract is so key.
This part of the contract is especially important for creative or technical tasks that someone will be doing for you, such as content creation, video editing, etc.
The contract should always stipulate who owns the finished work and any intellectual property generated to prevent future disputes over ownership and usage rights.
Start Working With Independent Contractors With Confidence
Overall, working with independent contractors can be a GREAT way to expand your business without having to hire a full time employee, but with anything in business, you want to make sure you do it RIGHT!
In this scenario, the best thing you can do is read the contract that an independent contractor presents to you and make sure you fully understand what you’re getting into.
OH and if the contractor doesn’t have a contract? Welllll, that’s a red flag in my book and I would recommend working with someone who does! 🚩
(And if they don’t understand why you’re not comfortable working with them without a contract in place, feel free to point them my way. 😉)
If you aren’t sure where to start with outsourcing to contractors, this blog post provides a full list that could serve as a great starting point.
And if you happen to BE a contractor reading this and are looking for some help implementing contracts in your business, here’s a few resources for you specifically:
⭐️ 6 Things To Include In Your Independent Contractor Agreements
⭐️ The Hardest Working Clauses In Your Independent Contractor Agreements
⭐️ Independent Contractor Agreement Template – created for businesses that are ready to outsource work to independent contractors (*not full-time employees), this customizable agreement template ensures both parties are on the same page about important terms, conditions, and expectations.
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If we haven’t had the chance to *virtually* meet yet, hey I’m Amber – not a regular lawyer, but a cool lawyer that helps online business owners sell without getting sued.
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