Hiring Independent Contractors FAQ

Questions:

• What is an independent contractor?
• What are the benefits of hiring independent contractors?
• What are the risks of hiring independent contractors?
• How do government agencies determine whether workers are ICs or employees?
• Should I ask freelancers and consultants to sign written independent contractor agreements?
• Is there anything I can do during the hiring process to make sure the worker I hire is really an independent contractor?
• Once I hire an IC, are there steps I can take to avoid classification problems with government agencies?
• Who owns intellectual property created by independent contractors?

Answer:

What is an independent contractor?

Independent contractors (ICs) are people who contract to perform services for others, but aren't legally employees. Because many employment laws and tax rules that cover employees don't apply to ICs, businesses can often save time, money, and headaches by hiring ICs instead of employees.

ICs may call themselves by a variety of names -- freelancers, consultants, the self-employed, entrepreneurs, or business owners.