Digital Signature Legitimacy for Independent Contractor Agreement in United States

How to eSign a document: digital signature legitimacy for Independent Contractor Agreement in United States

everybody matt johnston matt the lawyer here and we're back still talking about independent contractors and the relationship between independent contractors and the companies that hire them in our previous video we talked about some of the things that a hiring company needs to think about and in this con in this video we're going to talk about the contract itself and some of the things that you might want to consider including in the contract so before we get started be sure you click the little subscription button that you see down there as well as click the bell that will tell you when you were when we have got new content out that you can see so in the last video we talked about some of the materials some of the material questions that a hiring company wants to be asking themselves and their independent contractor when they're going into the um into the the dilemma of whether or not to hire an independent contractor or not so one of the indicators of a true independent contractor relationship is the contract itself and it's not the only indicator so please don't think that oh all i need is a contract and then i have an independent contractor no that's not enough some of the elements that you want to put into the contract certainly do help obviously you want to state that this is an independent contractor agreement but there's a couple of other provisions that i think companies need to think about and the first is what i call contractor statements these are a few statements kind of related to the subjects that i talked about in the last video things like you're an independent business you have an ein number you'll provide crop client and customer references upon request you'll provide documents such as company brochures things of that nature upon request things that the contractor can do to prove and show that they are an independent contractor and that they're an independent business so not just a contractor but a business that is not economically dependent upon the one contract that they're getting ready to sign with your company so that's one of the key factors is are they an independent business that is not economically dependent upon this one gig so those are some of the things that you can put into the contractor statements that are available another thing to consider is the scope of work so what one of the things that i see every once in a while particularly in technology fields or in computer coding and things like that are scope of work statements that are simply saying we want you to code some stuff we think it's going to be about 30 hours a week we'll send you projects as needed um that's not going to be enough you were basically hiring a worker and you just want to call them an independent contractor and that's probably not going to cut it the reason being is there's no specificity and you want to have a scope of work that's specific you want to have specific timelines deliverables interim deliverables you can also have meetings you can also do those sorts of things but you offer a discreet project there's nothing wrong with having a series of projects that are going on but i generally recommend that the scope of work for any one contract be very specific and be very focused on one task one deliverable or at least a series of related deliverables it is very dangerous to have um just an open-ended sort of contract for specific kinds of work the next thing to think about is also how you're going to go about paying the contractor a lot of independent contractors end up being operated on what is called time and materials basis meaning you're going to pay me you're going to pay the contractor an hourly rate for the work that they're doing and any incidental expenses that they incur so time and materials the problem with the time and materials in particular when you're dealing with an open-ended ill-defined sort of when we need you we'll send you work type of thing is that it looks an awful lot like an hourly wage or it could look like an hourly wage to also incentivize efficient working you want to incentivize the contractor to be efficient with their time and more specifically your money so you may want to consider project or phase based billing so when phase one is completed you're gonna get a payment when phase two is completed you'll get a payment or one payment for an entire project even if you break out that payment into monthly payments or or quarterly payments or something like that or phase payments as i mentioned before a fixed fee or a project fee also helps with one of the indicators of how an independent contractor can make a profit and that is by being efficient with their time and processes hourly work does not actually incentivize a contractor to be efficient with their time and their effort but a project fee does so if the project let's say the project is three months long it involves coding uh you know something that's very important for a project that accompanies or they're launching an app or something like that we're going to pay you x number of dollars for this whole project we'll pay you you know a quarter up front and then the you know one quarter after another quarter after the first month another quarter after the second month and another quarter after the last one that's your fee that's all you're getting that's it okay maybe you have provision for expenses that's fine but this is the fee that you're going to get that incentivizes the contractor to figure out a way to make a profit based upon what there is versus if you just did it time and materials and it's a one person shop it looks an awful lot like an hourly contract and that may not be enough so looking at some of the contractual relationships that you have with your independent contractor is going to go a long way to making sure that you are hiring an independent contractor and that our good friends at the department of labor don't start investigating you for trying to misclassify what should be an employee as an independent contractor they really look down on that and i do believe as i said many times before i think the biden administration is going to issue a rule that will make it much more difficult so when you're looking at an independent contractor relationship the contract does matter the terms of the contract do matter just as much as the actual real world relationship between you and the contractor if you have any questions about whether or not you're the person that you're looking to hire should be an employee or independent contractor you should really consult counsel how you doing you can give me a call you can schedule a consultation through our link that's going to see you're going to see down there in the show notes in the meantime if you want to see some other information that we are putting out you can click this button up here and if you would be so kind as to click the subscribe button that you see right up here i would really appreciate it in the meantime stay safe out there and go out and watch some live soccer we'll talk to you later bye