What is an independent contractor agreement?

An independent contractor agreement is a legally binding U.S. contract between a business (client) and a self-employed worker (contractor) that defines the scope of work, payment terms, intellectual property rights, confidentiality obligations, and other terms of the engagement. Unlike an employment contract, it establishes that the American worker is not an employee and is responsible for their own taxes, insurance, and benefits.

What is the difference between an independent contractor and an employee?

The key distinction is the degree of control the hiring party has over how the work is done. A U.S. employee works under the direction of the employer, follows a set schedule, uses company equipment, and receives benefits. An American independent contractor controls how and when the work is completed, uses their own tools, may work for multiple clients simultaneously, and handles their own taxes. The IRS uses several factors to evaluate classification, and getting it wrong can result in significant penalties.

Why is worker classification important?

Correct classification determines tax obligations, benefit eligibility, and liability exposure. If a U.S. business classifies a worker as an independent contractor but treats them like an employee, the IRS and American state agencies can reclassify the relationship. This can result in back taxes, penalties, and potential lawsuits for unpaid overtime, benefits, and workers' compensation.

Who owns the intellectual property created by a contractor?

By default under U.S. copyright law, the creator owns the copyright. For the American client to own work product created by a contractor, the agreement must include an explicit IP assignment clause. Without this clause, the contractor may retain rights to the work even after being paid. This differs from the employment context, where works created within the scope of U.S. employment are automatically owned by the employer.

Can I include a non-compete clause in a contractor agreement?

It depends on the U.S. state. California, Oklahoma, North Dakota, and Minnesota have effectively banned non-compete clauses for most workers, including independent contractors. Other American states allow reasonable non-competes if they are limited in scope, duration, and geography. Non-solicitation clauses (restricting the contractor from poaching clients or employees) are generally more enforceable and may be a better alternative.

Does a contractor agreement need to be notarized?

No. A U.S. independent contractor agreement does not need to be notarized to be legally enforceable in the United States. A signed agreement with the names, signatures, and date is sufficient. Both American parties should keep a signed copy for their records.

What happens if a contractor breaches the agreement?

If a contractor breaches the agreement, the U.S. client can pursue remedies outlined in the contract. These typically include withholding payment for incomplete work, seeking monetary damages for losses caused by the breach, or obtaining injunctive relief for violations of confidentiality or non-compete clauses. The specific remedies depend on the contract terms and applicable American state law.

Do I need to issue a 1099 to an independent contractor?

Yes. If you pay a U.S. independent contractor $600 or more during a tax year, you are required to file a Form 1099-NEC with the IRS and provide a copy to the contractor. This American reporting requirement applies to payments made to individuals, partnerships, and most LLCs. The contractor is responsible for paying their own income and self-employment taxes on the reported amount.

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CONTRACTOR AGREEMENT

Subcontractor Services Agreement · Governed By The Law Of The State Of California

GENERAL CONTRACTOR

Summit Construction Group, Inc.

5500 Industrial Boulevard, Suite 200, Sacramento, CA 95826

SUBCONTRACTOR

ProWire Electrical Services, LLC

1280 Spark Avenue, Unit 4, Sacramento, CA 95815

Riverside Plaza Mixed-Use Development · Electrical

Start: May 1, 2026 · State: California

PARTIES

This Contractor Agreement (this "Agreement") is entered into as of May 1, 2026 by and between Summit Construction Group, Inc. (Contractor License No. CSLB #987654; tel. (916) 555-0180; email office@summitcg.com) ("General Contractor" or "GC"), and ProWire Electrical Services, LLC (Trade: Electrical; License No. C-10 #1024456; tel. (916) 555-0291; email bids@prowireelectric.com) ("Subcontractor"). This Agreement is governed by the law of the State of California and governs the terms under which Subcontractor shall perform work on the project described herein for Project Owner Riverside Development Partners, LLC.

SCOPE OF WORK

Subcontractor shall furnish all labor, supervision, materials, equipment, tools, and expertise necessary to perform the following scope of work on the project known as Riverside Plaza Mixed-Use Development, located at 900 Riverside Drive, Sacramento, CA 95818:

Trade / Specialty: Electrical.

Scope: Complete electrical rough-in and finish for Floors 1-4, including:
- Service entrance and main distribution panel
- Branch circuit wiring for all residential and commercial units
- Lighting fixture installation
- Fire alarm system wiring
- Low-voltage data/communications rough-in
- Parking garage lighting and EV charger pre-wire.

Subcontractor shall perform all work in a good and workmanlike manner, in accordance with the project plans, specifications, and applicable building codes, and shall coordinate with the GC and other trades to avoid delay or interference.

PROJECT SCHEDULE

Subcontractor shall commence work on or about May 1, 2026. All work shall be substantially completed no later than October 31, 2026, subject to approved change orders and excusable delays. Subcontractor shall maintain a schedule consistent with the GC’s overall project schedule, provide sufficient manpower, and notify the GC immediately of any circumstance that may cause delay. Persistent failure to maintain schedule may be deemed a material breach.

MATERIALS AND EQUIPMENT

Materials Responsibility: Subcontractor shall furnish the materials required for the scope of work. All materials furnished by Subcontractor shall be new, of good quality, and conform to the project specifications and applicable codes. Subcontractor is responsible for proper storage, handling, and protection of materials on site.

CONTRACTOR LICENSING AND COMPLIANCE

Subcontractor represents and warrants that it holds, and shall maintain at all times during performance, every license, registration, and certification required for its trade under the law of the State of California and any applicable local jurisdiction, and that all such licenses are in good standing.

State Licensing Standard (California). Licensing is governed by Cal. Bus. and Prof. Code §7065 et seq. (Contractors State License Board / CSLB). California imposes the harshest unlicensed-contractor penalty in the nation. Under Cal. Bus. and Prof. Code §7031(a), a contractor who was not duly licensed at all times during performance may NOT bring or maintain any action to collect compensation for work requiring a license — the "shield." Under §7031(b), the person who hired the contractor may recover ALL compensation paid for the unlicensed work — the "sword" — even if the work was performed flawlessly (MW Erectors, Inc. v. Niederhauser Stair and Rail, Inc., 36 Cal. 4th 412 (2005)).

Subcontractor shall provide proof of licensure on request, shall not perform any work requiring a license it does not hold, and shall comply with all applicable building, electrical, plumbing, mechanical, and energy codes, as well as immigration-verification requirements under 8 U.S.C. §1324a (Form I-9).

INDEPENDENT CONTRACTOR STATUS

Subcontractor is an independent contractor and not an employee, agent, or joint venturer of the GC. Subcontractor is solely responsible for all federal, state, and local taxes on the compensation (including self-employment tax under IRC §§1401–1402 (self-employment tax; Schedule SE)), shall furnish IRS Form W-9, and the GC shall report payments on IRS Form 1099-NEC, required under IRC §6041A for non-employee compensation of $600 or more. Subcontractor is responsible for hiring, supervising, and compensating its own workforce in compliance with the Fair Labor Standards Act (29 U.S.C. §201 et seq. (Fair Labor Standards Act)) and applicable state wage-and-hour law, and retains control over the manner and means of the work subject to the plans, specifications, schedule, and applicable codes.

SITE CONDITIONS AND SAFETY

Subcontractor acknowledges that it has inspected, or had the opportunity to inspect, the project site and is familiar with the site conditions; Subcontractor shall not be entitled to additional compensation for conditions that were known or reasonably discoverable before execution. Subcontractor shall keep the work area clean, orderly, and safe, remove debris regularly, and perform a final cleanup of all affected areas upon completion.

COMPENSATION AND PAYMENT

In consideration for the work, the GC shall pay Subcontractor the total contract price of $285,000.00 ("Contract Price"), subject to adjustment for approved change orders.

Payment Schedule: Bi-weekly progress payments. Subcontractor shall submit payment applications detailing the work completed; the GC shall process payment within thirty (30) days of a properly submitted application.

Retainage: the GC shall withhold 10% of each progress payment, released within thirty (30) days of final completion and acceptance, upon submission of all required closeout documentation and lien waivers.

The GC’s obligation to pay is contingent upon the GC’s receipt of corresponding payment from the Project Owner ("pay-when-paid"); however, if the GC does not receive Owner payment within ninety (90) days of Subcontractor’s application, the GC shall make reasonable efforts to pursue payment from the Owner on Subcontractor’s behalf.

CHANGE ORDERS

Change Orders: no change to the scope, price, or schedule shall be made without a written change order signed by both Parties. All change orders must be approved in writing by the GC before the changed or additional work begins; work performed without an approved change order is not compensable. Change-order pricing shall be actual cost plus a reasonable markup not to exceed fifteen percent (15%) for overhead and profit unless otherwise agreed in writing.

10.

LIEN WAIVERS AND MECHANICS-LIEN NOTICE

Subcontractor shall provide the GC with a conditional lien waiver with each progress-payment application and an unconditional lien waiver upon receipt of each payment, in the form required by the mechanics-lien law of the State of California (Cal. Civ. Code §§8400–8494), together with waivers from all sub-subcontractors and suppliers upon final payment.

Mechanics-Lien Notice (California). A 20-day preliminary notice must be served on the owner, direct contractor, and construction lender within 20 days of first furnishing labor or materials (Cal. Civ. Code §§8200–8216); late service limits the claim to work furnished in the 20 days before notice. A direct contractor must record the lien within 90 days after completion of the work of improvement (or 60 days after a recorded notice of completion/cessation); a subcontractor, within 90 days after completion or 30 days after a notice of completion.

The GC may withhold payment if required waivers are not provided. Subcontractor shall indemnify the GC and the Owner against any mechanics lien, stop notice, or bond claim arising from Subcontractor’s work, and shall cause any such lien to be released or bonded within ten (10) business days of written notice.

11.

INSURANCE

Insurance Requirements: Subcontractor shall maintain, at its sole expense, throughout the term and for two (2) years after final completion:
• Commercial General Liability: minimum coverage of $2,000,000 per occurrence / $4,000,000 aggregate, including premises/operations, products/completed operations, and contractual liability.
• Workers’ Compensation: as required by the law of the State of California, with employer’s-liability limits of not less than $500,000.
• Commercial Automobile Liability: minimum combined single limit of $1,000,000 per accident for owned, hired, and non-owned vehicles.

Additional Insured: the GC and the Project Owner shall be named as additional insureds on a primary and non-contributory basis.

Subcontractor shall provide certificates of insurance before commencing work and at least thirty (30) days’ notice of cancellation or material change. Failure to maintain required insurance is a material breach.

12.

OSHA COMPLIANCE AND SAFETY

Subcontractor shall comply with all applicable safety laws and standards, including the Occupational Safety and Health Act of 1970, 29 U.S.C. §§651 et seq., the Construction Industry Standards at 29 C.F.R. Part 1926, the Hazard Communication Standard at 29 C.F.R. §1910.1200, and applicable state-plan OSHA programs. Subcontractor shall provide and enforce PPE, conduct safety meetings, maintain required safety records (including OSHA 300 logs), immediately report all incidents to the GC, comply with the GC’s site-specific safety plan, and ensure all equipment and scaffolding are in safe condition. The GC may remove from the project any worker who violates safety rules.

13.

PERMITS AND INSPECTIONS

Permits and Inspections: responsibility for obtaining permits rests with the General Contractor. The GC shall obtain the general building permit and major permits; Subcontractor shall obtain any trade-specific permits (e.g., electrical, plumbing) required for its scope at its expense unless otherwise agreed. Subcontractor shall not cover or conceal inspectable elements until the required inspections are completed and approved.

14.

WARRANTY

Subcontractor warrants that all work shall be free from defects in workmanship and materials for 1 year from substantial completion from substantial completion ("Warranty Period"). During the Warranty Period, Subcontractor shall promptly correct any defective work at its own expense, responding within forty-eight (48) hours and commencing corrective work within seven (7) days of notice (sooner if the defect poses a safety hazard). The warranty for corrective work shall extend to the greater of the remaining original Warranty Period or one (1) year from completion of the corrective work, and is in addition to any manufacturer warranties.

15.

CONSTRUCTION-DEFECT RIGHT TO CURE

Before commencing any litigation arising from an alleged construction defect, the claiming party shall comply with the pre-suit notice-and-cure process of the State of California under Cal. Civ. Code §§895–945.5 (Right to Repair Act, SB 800). For new residential construction, SB 800 establishes a mandatory pre-litigation notice-and-repair process: the homeowner must give written notice of the claimed defect and allow the builder an opportunity to inspect and offer to repair before filing suit. Subcontractor shall be afforded a reasonable opportunity to inspect and to offer to repair, settle, or dispute the claim before suit is filed.

16.

INDEMNIFICATION

Subcontractor shall indemnify, defend, and hold harmless the GC, the Project Owner, and their officers, directors, employees, and agents from claims, damages, losses, and expenses (including reasonable attorney fees) arising from: (a) Subcontractor’s breach of this Agreement; (b) bodily injury or property damage caused by the negligent acts or willful misconduct of Subcontractor or its sub-subcontractors; (c) any claim by Subcontractor’s workers or suppliers for unpaid wages or amounts; (d) any mechanics lien or bond claim arising from Subcontractor’s work; and (e) any violation of law or code by Subcontractor. This obligation is limited to the extent permitted by the anti-indemnity law of the State of California and survives completion or termination.

17.

TERMINATION AND DISPUTE RESOLUTION

Termination for Cause: the GC may terminate immediately on written notice if Subcontractor fails to perform per the plans or codes, fails to maintain progress and does not cure within forty-eight (48) hours, loses required licensure or insurance, becomes insolvent, or materially breaches. Termination for Convenience: the GC may terminate on seven (7) days’ written notice, paying for work satisfactorily performed plus reasonable demobilization costs but no lost profits on unperformed work.

Dispute Resolution: any dispute shall be resolved by binding arbitration. Arbitration shall be conducted under the Construction Industry Arbitration Rules of the American Arbitration Association, governed by the Federal Arbitration Act (9 U.S.C. §§1 et seq.), seated in the State of California; the award is final and enforceable in any court of competent jurisdiction. Pending resolution, Subcontractor shall continue to perform unless the GC directs otherwise in writing.

18.

GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflict-of-laws principles. Any legal action arising under this Agreement shall be brought exclusively in the courts located in the State of California, to whose jurisdiction and venue the Parties consent.

19.

ENTIRE AGREEMENT

This Agreement, together with all exhibits, addenda, and change orders, constitutes the entire agreement between the Parties and supersedes all prior agreements and understandings. No amendment is valid unless in writing and signed by both Parties. If any provision is held invalid, the remaining provisions continue in full force and effect. Notices shall be in writing and deemed delivered when personally delivered, sent by certified mail, or sent by email to the addresses specified in this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.

GENERAL CONTRACTOR

Michael Torres

Authorized Representative

Summit Construction Group, Inc.

Date: ____________________

SUBCONTRACTOR

ProWire Electrical Services, LLC

Subcontractor

Date: ____________________

Available as a print-ready PDF or an editable Microsoft Word (.docx) file.

What Is a Contractor Agreement?

A contractor agreement (also called an independent contractor agreement or freelance contract) is a legally binding document between a business and a self-employed individual or company hired to perform specific work. It defines the scope of services, payment terms, intellectual property ownership, confidentiality obligations, and the relationship between the parties.

Unlike an employment contract, a contractor agreement establishes that the hired party is not an employee. The contractor controls how and when the work is done, uses their own tools and equipment, and is responsible for their own taxes, insurance, and benefits. This distinction is critical because misclassifying a worker can lead to significant tax penalties and legal liability.

In the United States, contractor agreements are governed by state contract law. The IRS uses a multi-factor test to determine whether a worker is truly an independent contractor or should be classified as an employee. A well-drafted contractor agreement supports proper classification by clearly defining the relationship and the contractor's independence.

What's Covered in This Template

Doxuno's United States contractor agreement template includes all essential clauses for a compliant, enforceable independent contractor relationship — suitable for American businesses and contractors in all 50 states.

Parties & Engagement

Scope of Work

Compensation & Payment

Term & Termination

Intellectual Property

Confidentiality

Independent Contractor Status

Indemnification

Non-Compete & Non-Solicitation

Insurance & Compliance

Dispute Resolution

Governing Law

How to Create Your Contractor Agreement

Doxuno's template walks you through every section so you can build a solid contractor agreement in minutes.

1
Identify the parties
Enter the full legal names, addresses, and contact details for the hiring company and the independent contractor. If the contractor operates through an LLC or corporation, use the entity name rather than a personal name.
2
Define the scope of work
Describe the specific services, deliverables, milestones, and deadlines. Being as detailed as possible helps prevent scope creep and reduces the chance of disputes over what was agreed.
3
Set compensation and payment terms
Specify the payment amount (hourly rate, fixed project fee, or retainer), invoicing schedule, payment method, and any expense reimbursement policies. Include late payment penalties if needed.
4
Address IP ownership and confidentiality
Determine who owns the intellectual property created during the engagement. Typically, the client retains all rights to work product. Add confidentiality obligations to protect sensitive business information shared during the project.
5
Review clauses and download
Review the termination provisions, non-compete and non-solicitation clauses (if applicable), indemnification, and governing law. Download the completed contractor agreement as a professional PDF ready for both parties to sign.

Why Doxuno documents are different

Four things that make our templates more thorough than AI-generated drafts and more current than static template libraries.

Accurate

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Drafted with legal expertise for each jurisdiction, far more thorough than AI-generated drafts that copy generic clauses across borders.

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Templates carrying statute references are continuously updated as the law changes. Your document always reflects the current legal framework.

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Continue editing in Word after download. Add custom clauses, reuse the template for similar agreements, or share with a colleague for collaborative review.

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Legal Considerations for US Contractor Agreements

Getting the U.S. contractor relationship right from the start protects both American parties from tax issues, liability disputes, and classification problems down the road.

This template is provided for informational purposes and does not constitute legal advice. For complex engagements, high-value projects, or if you are uncertain about worker classification, consult a licensed attorney.

Reviewed by legal professionals. The content on this page and the template clauses have been reviewed by licensed attorneys in the United States to ensure accuracy and legal soundness for standard independent contractor engagements.

Worker Classification (IRS Guidelines)

The IRS evaluates three categories when determining U.S. worker classification: behavioral control (does the company control how the work is done?), financial control (does the worker have unreimbursed expenses, opportunity for profit or loss?), and the type of relationship (are there employee benefits, is the relationship permanent?). A properly drafted American contractor agreement addresses all three areas.

California AB5 and the ABC Test

California's Assembly Bill 5 (AB5) codified the ABC test for classifying workers. Under this test, a worker is presumed to be an employee unless the hiring entity proves: (A) the worker is free from control, (B) the work is outside the usual course of the business, and (C) the worker has an independently established trade. Several other states have adopted similar standards. If either party is based in California, ensure the agreement reflects these requirements.

Intellectual Property Assignment

Under U.S. copyright law, the default rule is that the creator owns the copyright. For contractors, this means the client does not automatically own the work product unless the agreement includes an explicit IP assignment clause. This is one of the most important provisions in any American contractor agreement and should not be overlooked.

Non-Compete Enforceability

Non-compete clauses for U.S. independent contractors are difficult to enforce in many states and are outright banned in California, Oklahoma, North Dakota, and Minnesota. Even in American states that allow them, courts require that non-competes be reasonable in scope, duration, and geographic area. Non-solicitation clauses (preventing the contractor from poaching clients or employees) are generally more enforceable in the United States and may be a better alternative.

Frequently Asked Questions

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