Independent Contractor Agreement (California)
Parties
This agreement takes effect on [Agreement date].
It is made by [Company (name and entity details)] (the "Company") and [Contractor (name and details)] (the "Contractor"). The Contractor is an individual or a business that provides services to others in its own name.
Key Terms
"Services" means the work described as follows: [Itemized Services and the value of each].
"Deliverables" means the items to be delivered to the Company as follows: [Deliverables].
"Classification Basis" means the statutory test or exemption on which the parties rely to treat the Contractor as an independent contractor under California law, namely: the ABC test in Labor Code section 2775.
"Business Location" means the Contractor's business location, which is separate from the Company's location and may be the Contractor's home: [Contractor's business location (may be the Contractor's home)].
"Registrations" means the business license or business tax registration the Contractor holds where the local jurisdiction requires one, and any professional license, permit or certification needed for the Services: [Contractor's business license or tax registration and any professional license].
"Start Date" means [Start date].
"Initial Term" means 6 months from the Start Date.
"Fees" means the amounts payable for the Services: [Fees (rate and method of compensation)]. The Fees are set by the Contractor's rate for the work and are the whole of the Contractor's compensation.
"Payment Period" means 30 days, counted from completion of the relevant Services, and never more than 30 days.
"Submission Deadline" means the date by which the Contractor must give the Company a list of the Services performed, being within 5 days after completing the Services or each milestone.
"Background Materials" means the tools, templates, code, methods and other materials that the Contractor owned or developed before the Start Date or develops independently of the Services, including: [Background Materials and any prior inventions the Contractor excludes].
"Liability Cap" means the Fees paid or payable under this agreement in the 12 months before the claim arose.
"Forum" means the courts sitting in Los Angeles County, California.
Independent Contractor Status
The parties intend the Contractor to be an independent contractor under the ABC test in Labor Code section 2775, and the Classification Basis is that test. The Company must show, and the parties confirm on the facts, that: (a) the Contractor is free from the Company's control and direction in performing the Services, both under this agreement and in practice; (b) the Services are outside the usual course of the Company's business; and (c) the Contractor is customarily engaged in an independently established trade, occupation or business of the same nature as the Services. If any of these three conditions stops being true, the Company must tell the Contractor promptly and the parties will meet to restructure or end the engagement.
The Contractor decides how, when and where to carry out the Services, using its own methods, judgment and staff, and the Company (or, where the Classification Basis is the referral agency exemption, the client) directs only the results it needs and the deadlines it sets for them. The Company will not supervise the Contractor's methods, set the Contractor's daily hours, require attendance at routine staff meetings, or provide training other than a briefing on the Company's specifications and applicable safety or legal requirements. The Contractor supplies the equipment and workspace it needs, except for any Company system access that the Services cannot be done without.
The Contractor is, and will remain throughout this agreement, in business for itself. It may offer the same kind of services to other clients, advertise them to the public, accept or decline any other engagement and work for the Company's competitors, subject only to the Confidentiality and Intellectual Property clauses. The Company does not promise the Contractor any volume of work after the Services and will not penalize the Contractor for taking other work.
The Contractor will keep its Registrations in force while it performs the Services, will give the Company a copy on request, and must tell the Company promptly if one is suspended, cancelled or lapses. The Contractor is responsible for any business or professional license that the Services require and will not perform any work for which the law requires a contractor's state license that it does not hold.
The Contractor pays its own federal, state and local income tax, self-employment tax and any business tax on the Fees, and receives no wages, withholding or employee benefits from the Company. Before the first payment, the Contractor gives the Company a completed IRS Form W-9. The Company reports the Fees to the tax authorities as non-employee compensation and withholds only if the law requires it, for example backup withholding.
If an agency or court decides that the Contractor was an employee of the Company for any period, the parties will work together in good faith to deal with the consequences. Each party may raise any right it has under the law. The parties agree that the Fees were intended to pay for all the Contractor's time and expenses, and that any employee-law amount found due for that period is to be offset against the Fees already paid, to the extent the law allows. Nothing in this clause waives a right that cannot lawfully be waived.
Services
The Contractor will perform the Services with the skill and care of a competent professional in its field, will deliver any Deliverables to the specification in this agreement, and will tell the Company promptly of anything likely to delay or prevent delivery. The Contractor decides which of its own personnel and, subject to any consent this agreement requires for subcontracting, which subcontractors assist, remains responsible for their work, and must ensure that each of them is bound by terms that protect the Company's Confidential Information and assign their work to the Contractor so that it can be assigned onward.
Either party may propose a change to the Services. A change takes effect only when both parties agree in writing on the change, its effect on the Fees and its effect on the schedule.
Term and Termination
This agreement begins on the Start Date and continues for the Initial Term. It then ends, unless the parties agree in writing to extend it, and it may end sooner under this clause.
Either party may end this agreement for any reason by giving the other at least 30 days written notice.
Either party may end this agreement immediately by written notice if the other commits a material breach and does not remedy it within 15 days after written notice describing it, or if the other becomes insolvent or ceases business.
On expiry or termination the Contractor stops work, delivers all completed and partly completed Work Product and returns the Company's property. The Company pays, by the date set under the Fees and Payment clauses, the Fees earned and the expenses approved up to the end date. The clauses that by their nature are meant to continue, including Confidentiality, Intellectual Property, Indemnification and Limitation of Liability, remain in force.
Fees and Payment
The Company will pay the Contractor the Fees for the Services. The Fees are the whole of the Contractor's compensation for the Services, and the Contractor sets its own rate. The rate, the method of compensation and the itemized Services and their value are as stated in the Key Terms.
The Company will pay each undisputed invoice by the date stated in the invoice schedule or, if none is stated, within the Payment Period after the Services or the relevant milestone are completed. In no case may payment be made later than 30 days after completion of the Contractor's Services. The Company may withhold only the amount it disputes in good faith, tells the Contractor of the dispute within 7 days after the Submission Deadline, and pays the rest.
After the Contractor has started work, the Company will not make timely payment conditional on the Contractor accepting less than the Fees, providing more services or goods than this agreement requires, or granting intellectual property rights beyond those this agreement gives. A request for more work or rights may be made only as a separate written change under the Services clause, with its own payment.
The Contractor will give the Company a list of the Services performed, with an invoice, by the Submission Deadline. The list must itemize the Services, the time or quantity and the amount charged for each, and any reimbursable expense. If the Contractor submits the list after the Submission Deadline, payment is still due within the Payment Period counted from completion of the relevant Services.
The Company will reimburse reasonable out-of-pocket expenses that it approved in writing before they were incurred and that the Contractor documents. Any other cost of performing the Services is the Contractor's.
Freelance Worker Protection
This agreement is the written contract for the Services. It states each party's name and mailing address ([Company mailing address] for the Company and [Contractor mailing address] for the Contractor), an itemized list of the Services and the value of each, the rate and method of compensation, the date on which the Company will pay or the way that date is set, and the date by which the Contractor must submit its list of Services. The Company will give the Contractor a copy signed by the Company, on paper or electronically, and will keep a copy of this agreement for at least four years.
The Contractor's rights under California's Freelance Worker Protection Act cannot be waived by this agreement, and no term of this agreement is to be read as waiving them. The Company will not penalize, threaten or take any other adverse action against the Contractor, or do anything likely to deter the Contractor, for opposing a practice the Act prohibits, taking part in a proceeding to enforce it, or asserting rights under it. The remedies the Act provides remain available in addition to the remedies in this agreement.
Confidentiality
"Confidential Information" means non-public information that the Company discloses to the Contractor, or that the Contractor learns while performing the Services, that is marked confidential or that a reasonable person would treat as confidential, including business plans, customer data, source code and trade secrets. It excludes information that is or becomes public without the Contractor's fault, that the Contractor already knew or developed independently, or that a third party gave the Contractor without a duty of confidence.
The Contractor will use Confidential Information only to perform the Services, will protect it with at least the care it applies to its own confidential information and not less than reasonable care, and will disclose it only to those who need it for the Services and are bound by duties of confidence at least as protective as these. The duty lasts for three years after this agreement ends and, for a trade secret, for as long as it remains one.
When this agreement ends, or earlier on the Company's request, the Contractor will return or securely delete the Company's Confidential Information and property in its control and, on request, confirm in writing that it has done so. It may keep one archival copy where the law requires and one copy of its own correspondence and invoices, and those copies stay confidential.
Nothing in this agreement stops the Contractor from reporting a possible violation of law to a government agency, from taking part in an investigation or proceeding, from testifying truthfully, or from discussing or disclosing information about unlawful acts in the workplace. The Contractor does not need the Company's permission to do any of these things and does not have to tell the Company that it has.
Under 18 U.S.C. section 1833(b), an individual is not criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret in confidence to a federal, state or local government official or to an attorney solely to report or investigate a suspected violation of law, or in a complaint or other document filed in a lawsuit or other proceeding if the filing is made under seal. An individual who files a lawsuit for retaliation for reporting a suspected violation may disclose the trade secret to his or her attorney and use it in the court proceeding if the individual files any document containing it under seal and does not disclose it except by court order.
Intellectual Property
"Work Product" means everything the Contractor creates, conceives or reduces to practice, alone or with others, in performing the Services or as a result of them, including the Deliverables, software, designs, writings, data and inventions, and all intellectual property rights in them, but excluding the Background Materials.
The Contractor hereby assigns to the Company all right, title and interest in the Work Product, including all copyright and patent rights, effective when the Work Product is created and, for each payment milestone, once the corresponding Fees are paid. Until payment, the Company has a non-exclusive license to use the Work Product for the Services. The Contractor will promptly disclose Work Product to the Company in writing.
The parties agree that no Work Product is a work made for hire and that this agreement does not create an employment relationship for the Contractor or for any individual who creates Work Product. The Company obtains ownership only by the assignment in the clause above. The Contractor acknowledges that, in California, a signed written agreement that treats a commissioned work as a work made for hire can make the commissioning party the employer of the individual author for workers' compensation and unemployment insurance purposes, and the parties have chosen an assignment to avoid that.
The Contractor keeps all rights in the Background Materials. To the extent any Background Materials are included in the Work Product or are needed to use it, the Contractor grants the Company a non-exclusive, worldwide, perpetual, royalty-free license to use, copy and modify them as part of the Work Product, which the Company may transfer with the Work Product.
The assignment of Work Product does not reach an invention that the Contractor developed entirely on its own time without using the Company's equipment, supplies, facilities or trade secret information, except an invention that relates at the time of conception or reduction to practice to the Company's business or its actual or demonstrably anticipated research or development, or that results from work the Contractor did for the Company. Labor Code section 2870 applies to employees, but the parties apply its limits here so that the assignment does not depend on how the Contractor is classified. The Company has given the Contractor this written notice. The Contractor lists in the Background Materials any inventions it owns before the Start Date that it excludes from this agreement, and will tell the Company in writing if it believes another invention is excluded; the Contractor carries the burden of showing an invention qualifies. The Company will not ask the Contractor to assign an invention that is excluded, and the Contractor will disclose inventions made during the term in confidence so the Company can check.
To the extent the law allows, the Contractor waives, and will not assert against the Company or its successors and licensees, any right of attribution, integrity or similar personal right in the Work Product. If the Work Product includes a work of visual art within 17 U.S.C. section 106A, the Contractor waives the rights that section gives in the Work Product delivered and in its modification, display and reproduction by the Company.
The Contractor will sign the documents and take the steps the Company reasonably asks, at the Company's cost and without further fee beyond reimbursed expenses and, after the term, the Contractor's standard hourly rate for its time, to register, perfect and enforce the Company's rights in the Work Product. If the Contractor cannot be found or does not sign within 10 days of a written request, it appoints the Company as its agent to sign for that limited purpose only.
The Contractor warrants that the Work Product will be its original work except for material the Company provides or the Contractor identifies in writing as third-party or open-source, that it has the right to assign it, and that it knows of no obligation to another person that conflicts with this agreement. The Contractor will tell the Company of any third-party or open-source component before including it.
Restrictive Covenants
Nothing in this agreement restricts the Contractor from engaging in a lawful profession, trade or business of any kind, including for the Company's competitors, during or after this agreement. The agreement contains no non-competition covenant and no restriction on the Contractor's soliciting or working for the Company's customers or personnel, other than the Contractor's duty not to use or disclose Confidential Information. The Company will not attempt to enforce any such restriction.
Insurance
During the term the Contractor will maintain [Insurance required], and will give the Company a certificate of insurance on request. If the Contractor has employees, it will also carry workers' compensation insurance for them as the law requires.
Compliance
Each party will comply with the laws that apply to its own performance of this agreement. The Contractor is responsible for any employee, subcontractor or assistant it engages, including their pay and the taxes and insurance the law requires, and must not use anyone to perform the Services who is not authorized to work in the United States.
Indemnification
The Contractor will defend the Company against, and pay the damages and reasonable costs finally awarded or agreed in settlement of, a claim by a third party that the Work Product as delivered infringes its intellectual property rights, or that arises from the Contractor's gross negligence or willful misconduct, except to the extent the Company's own conduct, instructions or changes caused it.
The Company will defend the Contractor against, and pay damages and reasonable costs finally awarded or agreed in settlement of, a third-party claim that arises from the Company's materials, data or specifications that the Contractor used as instructed, or from the Company's gross negligence or willful misconduct.
A party seeking indemnity must tell the other promptly of the claim and let it control the defense with counsel of its choice, and must give reasonable help at the indemnifying party's cost. The indemnifying party may not settle a claim in a way that admits fault by, or imposes an obligation on, the other party without that party's written consent, which must not be unreasonably withheld.
Limitation of Liability
To the extent the law allows, neither party is liable to the other for indirect, consequential, special or punitive damages, or for lost profits, arising out of this agreement. This does not limit liability for fraud, willful misconduct, breach of confidentiality, the indemnities, or the Company's duty to pay the Fees.
To the extent the law allows, each party's total liability arising out of this agreement is limited to the Liability Cap. The cap does not apply to the Company's duty to pay the Fees, to fraud or willful misconduct, to liability for death or personal injury caused by negligence, or to the indemnities in respect of third-party intellectual property claims.
General
A notice must be in writing and sent to the party's address in this agreement or to a new address that party notified, by hand, by recognized courier or by email with a copy by one of those means. A notice is received when delivered by hand or courier or, if sent by email, on the next business day after it is sent.
Neither party may assign this agreement or subcontract its core obligations without the other's written consent, which must not be unreasonably withheld, except that the Company may assign it to a successor to its business. The Contractor remains responsible for its subcontractors.
Neither party is liable for delay or failure to perform, other than a payment obligation, caused by an event beyond its reasonable control. The affected party must tell the other promptly, take reasonable steps to limit the effect and resume as soon as it can. If the event lasts more than 30 days, either party may end this agreement by written notice, and the Company pays for Services performed to that date.
Governing Law and Disputes
This agreement is governed by the law of the State of California, without regard to its conflict-of-laws rules. Each party submits to the non-exclusive jurisdiction of the Forum for any dispute about it. Before starting proceedings, the parties will try to resolve the dispute by a meeting of senior representatives within 14 days after written notice of it.
General
A breach of the Confidentiality or Intellectual Property clauses may cause harm that damages cannot repair, and the affected party may ask a court for an injunction or other equitable relief to stop or prevent it, in addition to its other remedies.
This agreement is the whole agreement between the parties about the Services and replaces earlier discussions and understandings. A change is effective only if in writing and signed by both parties. If a provision is unenforceable, the rest remains in force, and a failure to enforce a right is not a waiver of it. The parties may sign in counterparts and electronically.