Red Flags to Watch for in an Independent Contractor Agreement

Written by Nicola Brown on January 9, 2017

As an independent contractor, you will soon become familiar with the practice of reviewing and signing an independent contractor agreement with each of your new clients. This is a crucial stage of the client relationship, and you should take care to spend some time reading your contracts closely. It’s the only way to ensure you’re on the same page about the expectations and legal obligations required of both parties.

Copyright

Copyright is one of the most important sections of an independent contractor agreement, especially for creative workers. In U.S. copyright law, the ownership of work produced automatically belongs to the creator, unless otherwise specified. In this section, you need to be clear on what your client has the right to do with your work, where, for how long and with what compensation and attribution to you.

Beware of sweeping terms, like “exclusive,” “worldwide,” “in any medium now known or later developed” and “in perpetuity.” These terms are designed to ensure there’s no way you can demand additional compensation for your work in any way after it’s handed over. You should also make sure the words “work for hire” do not appear anywhere in your contract; these words give your client legal authorship of your work.

Be aware of any mention of moral rights, as well. You should request the inclusion of the line, “The contractor retains all mandatory moral rights,” to ensure it’s explicitly stated that proper attribution will be given to you and protect you from distortion of your work in any way that could hurt your reputation.

Scope Creep

This is one of the most prevalent issues for freelancers, but it can be dealt with up front in your independent contractor agreement. Be sure the terms of what you’re expected to deliver are clear and finite. Make sure to include wording that deals with work falling outside this scope and how you will handle it.

For instance, you should limit the number of revisions you will make to a piece of work, so you don’t find yourself putting in double or triple the hours on revisions you’re not paid for. In one of my contracts, I include a line that states, “Any and all work in excess of that outlined in this contract will be compensated at a rate of $X per hour and will be discussed on a case-by-case basis.”

Kill Fee

Another particularly pertinent clause for creative workers to include in their contract is a kill fee. Imagine you’re just coming to the end of finishing a huge load of work for a client when the client comes back to you saying they’ve changed their mind about the work and aren’t going to use what you’re in the process of producing. Unfortunately, this is commonplace in the shifting world of creative work. Without a clause in your contract stipulating how you’ll be paid for work that isn’t used or published, you aren’t necessarily going to be paid for those hours you’ve just put in.

Indemnity

You’d rarely find yourself in a situation where you’re suddenly liable for huge losses on the part of your client, but you should make sure you’re protected financially, if something disastrous happens. Ensure the wording in your indemnity clause doesn’t state you’ll pay for legal fees, losses, damages, etc. for your client. In many cases, your client will be a larger business, while you’re just one person.

If you’re not registered as a corporation or a limited liability entity (many independent contractors are registered as sole proprietors), such clauses can sometimes leave your personal assets — like your personal bank accounts, house, etc. — vulnerable if your client suffers big losses related to the work or your working relationship. So make sure you read this clause closely and understand what’s at stake if anything goes wrong.

Columbia University created a handy resource for all different types of freelance workers to check which clauses and the types of wording in a contract that are beneficial and those that are harmful to freelancers. You may also want a lawyer to review your contract prior to signing, especially since the wording can be full of confusing jargon.

A bit of extra time spent reviewing your contracts up front will give you peace of mind and save you hassle further down the line, if anything goes sideways.

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