Independent Contractor
Commercial Contract
Table of Contents:
Wages and Benefits
Taxes
Indemnification
Independent Contractor
When a company is outsourcing some operations or functions to a contractor, the contract should clearly define the relationship between the parties to dispel any misunderstandings regarding vicarious liability and/or employment obligations.
In the following exemplars, the contractor functions independently of the company, rejecting any principal-agent relationship:
Exemplar C39-1
The parties agree that the relationship between them is that of independent contractor and that neither party shall have any authority to represent or bind the other and that neither party shall hold itself out or have any authority as an agent of the other for any purpose whatsoever. Nothing herein shall be construed as creating a principal and agent, joint venture, or any other type of relationship besides independent contractor between Client and Company.
Exemplar C39-2
It is the express intention of the parties that SUPPLIER perform the services under this Agreement as an independent contractor. Nothing in this Agreement will in any way be construed to constitute SUPPLIER as an agent, employee, or representative of CLIENT, its parent company, its subsidiaries, or any of their affiliates. Without limiting the generality of the foregoing, SUPPLIER is not authorized to bind CLIENT to any liability or obligation or to represent that SUPPLIER has any such authority.
In the following exemplars, the company disclaims and rejects any responsibility as an employer of the contractor’s employees, including payment of wages and benefits, and taxes thereon:
Wages and Benefits
Exemplar C39-3
Company and Client shall each remain solely responsible for the payment of all wages and benefits for each of their own respective employees, and neither party shall be responsible for the withholding or payment of any payroll deductions or taxes, or the provision of workers’ compensation or unemployment insurance coverage, for or on behalf of employees of the other party or for any payment or expense in respect of claims arising under the other party’s employee benefit plans. As between Company and Client, Company shall remain specifically responsible for any applicable federal, state or local withholding or income taxes, paying Social Security taxes, and providing unemployment compensation and workers’ compensation insurance or coverage for its employees and contractors providing services hereunder. Client will not pay any of Company’s employees directly or advance any funds to them.
Exemplar C39-4
SUPPLIER acknowledges and agrees that Assigned Employees will not receive benefits from CLIENT either as a consultant or employee, including without limitation paid vacation, sick leave, medical insurance, and 401(k) participation, and will require Assigned Employees to sign agreements acknowledging that they are not entitled to holidays, vacations, disability benefits, insurance, pensions, or retirement plans, or any other benefits offered or provided by CLIENT to CLIENT’s employees.
Exemplar C39-5
Notwithstanding the foregoing Contractor agrees that it is at all times responsible for wages and withholding, workers compensation, unemployment compensation and employee benefits such as health insurance and retirement and agrees to a) accept responsibility for the employment eligibility of its employees and contractors; b) verify the employment eligibility of each of its employees and contractors in accordance with any local immigration requirements; and c) maintain any locally required immigration documentation with respect to each employee and contractor, as applicable.
Taxes
Exemplar C39-6
Employees of Contractor who perform Services as Personnel hereunder shall remain employees of Contractor. Contractor shall be responsible for the tax withholdings, payment of salaries, unemployment insurance, workers’ disability and compensation, Social Security contributions and employee benefits such as vacation, sick pay, insurance, pension, and profit-sharing benefits of such Contractor employees. In connection with this Agreement, each party is an independent contractor and as such will not have any authority to bind or commit the other. Nothing herein shall be deemed or construed to create a joint venture, partnership, or agency relationship between the parties for any purpose.
Exemplar C39-7
Client shall have no liability to pay any amounts to Contractor Personnel, or otherwise provide Contractor personnel with benefits and/or pay or withhold any payroll taxes imposed on amounts earned by Contractor personnel.
Indemnification
In addition, the company may require the contractor to indemnify the company against any employment-related claims asserted by contractor’s personnel (for other exemplars related to employment claims, see the section entitled “Indemnification: Employment Claims”):
Exemplar C39-8
Contractor agrees to indemnify, defend, and hold harmless Client and its officers, directors, shareholders, employees, agents, representatives, subsidiaries, affiliates, successors, and assigns, from and against all claims, demands, suits (regardless of legal theory), losses, damages, costs, expenses, fines, and penalties, including, but not limited to, reasonable attorneys’ fees and disbursements, of any kind whatsoever, that arise out of, result from, or are in connection with Contractor’s employees, including, but not limited to, hiring, termination, discipline, evaluation, and resolution of complaints and grievances.