As businesses continue to adapt to the changing landscape of work during the ongoing pandemic, more and more companies are turning to independent contractors to fill gaps in their workforce. However, before beginning work with a contractor, it is essential to have an independent contractor agreement in place. This agreement sets out the terms of the relationship between the business and the contractor and ensures that both parties are clear on their rights and responsibilities. California has specific laws that govern independent contractor agreements, and it is important to be aware of these laws when creating an agreement in 2021.

In California, the determination of whether an individual is an independent contractor or an employee is made using an ABC test. This test looks at three factors: whether the worker is free from the control and direction of the hiring entity; whether the worker performs work outside of the usual course of the hiring entity’s business; and whether the worker is customarily engaged in an independently established trade, occupation, or business. If the worker fails to meet all three of these requirements, they are considered an employee, not an independent contractor.

When drafting an independent contractor agreement in California in 2021, it is essential to ensure that the agreement is in compliance with the ABC test. The agreement should clearly state that the contractor is free to perform work as they see fit, and that the hiring entity will not be involved in directing or controlling the contractor’s work. The agreement should also outline the specific services that the contractor will provide and ensure that these services are outside of the usual course of the hiring entity’s business. Finally, the agreement should indicate that the contractor is engaged in an independently established trade or business and that they have control over their own work schedule and how they perform their work.

It is also important to note that in 2021, California has updated its legal requirements for independent contractor agreements. As of January 1, 2021, the new California law (AB 2257) provides additional exceptions for certain professions, enabling more workers to potentially qualify as independent contractors. However, it is essential to review the specific requirements for each profession and ensure that the agreement complies with these requirements.

When drafting an independent contractor agreement in California in 2021, it is advisable to consult with an experienced attorney to ensure compliance with all legal requirements. Additionally, it is also recommended to include provisions related to confidentiality, intellectual property, and termination in the agreement to protect both parties’ interests.

In conclusion, an independent contractor agreement is essential for any business that engages the services of contractors. In California in 2021, it is important to ensure compliance with the ABC test and to be aware of the specific legal requirements for each profession. By consulting with an experienced attorney and including comprehensive provisions in the agreement, both the business and the contractor can be protected and clear on their rights and responsibilities.