Contract Glossary
Independent Contractor
Definition
An independent contractor does work for you but isn't your employee. They control how, when, and where they work. The distinction matters for taxes, benefits, IP ownership, and liability, and getting it wrong is expensive.
In Practice
You hire a designer through Upwork and pay them $4,000/month. They use their own equipment, set their own hours, and work for other clients too. That's an independent contractor. But if you start requiring them to work 9-5, attend your team meetings, use your equipment, and work exclusively for you, you've created an employment relationship regardless of what the contract says. The IRS and state labor departments look at reality, not labels. Misclassification penalties can include back taxes, overtime pay, and benefits, easily $50,000+ per worker.
Common in these contract types
Related contract clauses
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