Independent Contractor Agreement Checklist: Protect Your Rights

Working as an independent contractor offers flexibility and autonomy, but it also means you are responsible for protecting yourself legally. Unlike employees, contractors typically do not get the benefit of labor law protections, employer-provided insurance, or guaranteed severance. The contractor agreement you sign defines your entire working relationship, and getting it wrong can cost you money, rights, and future opportunities.

Here is a practical checklist of the most important things to review before signing any independent contractor agreement.

Scope of Work

The agreement should clearly define what you are being hired to do. Vague language like "provide consulting services as directed" gives the client unlimited ability to expand your workload without additional compensation. Look for specific deliverables, milestones, and boundaries. If the scope is not well defined, you are vulnerable to scope creep, which is one of the most common problems contractors face.

Payment Terms and Schedule

Know exactly how much you will be paid, when, and under what conditions. Key questions to answer: Is payment based on hourly rates, project milestones, or deliverables? What is the payment timeline (net 15, net 30, net 60)? Are there any conditions that must be met before payment is released? What happens if the client pays late?

A good agreement includes late payment penalties or interest charges to incentivize timely payment. If the contract is silent on late payments, you have little leverage when invoices go unpaid for weeks or months.

Intellectual Property Ownership

This is one of the most critical sections for any contractor who creates work product. Many agreements include a "work for hire" clause that assigns all intellectual property rights to the client. This means everything you create during the engagement belongs to them, including tools, templates, and processes you developed independently.

Consider negotiating to retain ownership of pre-existing IP, general tools and methodologies you bring to the project, and any work product created outside the specific scope. Our guide on freelance contract essentials covers IP rights in more detail.

Termination Clauses

Understand how either party can end the relationship. Look for the notice period required, whether the client can terminate "for convenience" (meaning for any reason at any time), what happens to unpaid work if the contract is terminated early, and whether you are entitled to a kill fee or payment for work completed up to the termination date.

Contracts that allow the client to terminate immediately without paying for completed work are a serious red flag. You should always be compensated for work you have already delivered.

Non-Compete and Non-Solicitation

Many contractor agreements include non-compete clauses that restrict your ability to work with the client's competitors during and after the engagement. Some also include non-solicitation clauses that prevent you from working directly with the client's customers or hiring their employees.

As a contractor who relies on multiple clients for income, broad non-compete clauses can seriously damage your livelihood. Push for narrow restrictions with clear time limits and geographic boundaries.

Liability and Indemnification

Many contractor agreements include indemnification clauses that make you responsible for any claims, damages, or losses arising from your work. While some level of responsibility is reasonable, watch for clauses that make you liable for the client's negligence or for damages that far exceed your contract value. Consider whether you need professional liability insurance and whether a liability cap makes sense.

Misclassification Risk

If the agreement treats you as an independent contractor but the working relationship looks more like employment (set hours, company equipment, direct supervision, exclusive arrangement), you may be misclassified. Misclassification can create tax problems for both you and the client, and you may be missing out on employee benefits and protections you are legally entitled to.

Before You Sign

Read the entire agreement, not just the payment section. Negotiate the terms that do not work for you. Most clients expect some back and forth on contractor agreements, and a willingness to negotiate is actually a sign of professionalism.

Use Fine Print Fighters to quickly scan your contractor agreement for red flags and get a clear breakdown of the clauses that matter most.

Disclaimer: This article is for educational purposes only and does not constitute legal advice. For questions about your specific situation, consult a qualified attorney in your jurisdiction.