A subcontractor agreement is a written document between a contractor and a subcontractor. A subcontractor is known as someone who is paying their own taxes as a result of their self-employment. A contractor will hire a subcontractor in order to help with a project. Before hiring a subcontractor, it’s important to review your agreement to see if you are legally allowed to hire a subcontractor. If you are, a written subcontractor agreement will help protect you in case of any issue that may arise as a result of the working arrangement.
Clauses to Include
Scope of work: This section describes the project and the subcontractor’s responsibilities. This is important because this explains expectations.
Duration of Work: Mention any deadlines here. Is the work on as needed basis? If so, describe the project.
Billing/Payment: Mention if payment is per hour or a fixed price payable at the end of the project? Are there milestones for payment? Is a deposit available? Do you want invoices detailing the work done? Indicate exactly what you’re paying for so that the sub-contractor knows exactly what is expected to be paid.
Independent Contractor: Indicate in this written document that the subcontractor is an independent contractor and you are not responsible for withholding taxes from their payment.
Confidential Information or Non-disclosure: This is important to include if the project details must remain confidential (if applicable). Do you want the subcontractor to keep this information private? If so, include this point within this clause in the legal document. Also address consequences for sharing information when violating this clause.
Non-compete: Include a clause that forbids the subcontractor from contacting the clients and offering a better deal for the work. Consult local state laws to determine if a non-compete clause is valid.
Work for Hire: This is important as it will tell the subcontractor that they hold no rights to the work after the project is submitted. The contractor is now the owner of the work that the subcontractor products.
Assignment: Be sure to mention whether or not the subcontractor can subcontract this work to another person.