Independent contractor agreements are not simply helpful to have. They are critical to ensuring that your business is able to pass Washington State’s independent contractor tests, as administered by the Department of Labor & Industries (for workers compensation purposes) and Employment Security Department (for unemployment insurance purposes).
Do you have an independent contractor agreement? If you hire independent contractors and you don’t have a written contract, get this corrected ASAP. If you do have a contract, is it a properly drafted agreement? Was it drafted by an attorney who is familiar with L&I/ESD’s independent contractor tests, and how these tests are applied? Some independent contractor agreements are worse than not having any at all. Below is a list of recommended and/or critical features of Washington State independent contractor agreements:
- Proper description of your company’s business
- A proper description of the contractor’s independent business.
- Recital of intention to comply with applicable independent contractor statutes (for what this may be worth).
- A simple statement of company’s services to the contractor.
- A simple statement of contractor’s services to your company.
- A robust statement of contractor’s independent contractor status, including the various provisions required by law.
- A robust disclaimer of direction/control of contractor (further, the contract should eliminate direction/control language).
- Contract provisions addressing each element of applicable independent contractor tests.
- Contract provision identifying other bases on which the contractor may be exempt from employment taxes.
- Fee agreement, including billing/invoicing arrangement appropriate to independent contractor status.
- Record of contractor’s Unified Business Identifier (UBI)
- Record of contractor’s other license numbers
- Representation by contractor that he or she is fully licensed to do business in Washington State.
The above list is not exhaustive. Do consult with an experienced independent contractor attorney in preparing your independent contractor agreements. Agreements prepared without the advice of experienced legal counsel will invariably fall short, particularly given Washington’s strict independent contractor law framework. For more on drafting independent contractor agreements and other IC compliance matters, check out Mercer Law PLLC’s 1099 Review™.
