Independent Contractor Agreement - Illinois

ILLINOIS INDEPENDENT CONTRACTOR SERVICES AGREEMENT

CLASSIFICATION NOTICE: Calling a worker an independent contractor does not determine legal status. Illinois uses different tests for different laws. The parties must structure and operate the relationship consistently with each applicable test.

This Independent Contractor Services Agreement (the “Agreement”) is entered as of [__/__/____] by and between:

The Company and Contractor are each a “Party” and together the “Parties.”

1. SERVICES AND STATEMENTS OF WORK

1.1 Engagement

The Company engages Contractor to perform the services described in one or more statements of work (“SOWs”). Contractor accepts the engagement subject to this Agreement.

1.2 Required SOW Terms

Each SOW must identify:

• the products or services and their value;
• deliverables and objective acceptance criteria;
• project dates and requested deadlines;
• the rate and method of compensation;
• the payment date or an objective mechanism for determining it;
• the payment method;
• the deadline, if any, for submitting an invoice or other list of completed products or services;
• approved expenses;
• required licenses, insurance, and security controls; and
• Company property, systems, or worksites Contractor may use.

1.3 Changes

A change to scope, price, or deadline is effective only in a writing signed by both Parties. The Company may define the desired result, specifications, lawful security requirements, and requested deadlines without directing Contractor's day-to-day manner or means of performance.

2. TERM AND WORK OPPORTUNITIES

2.1 Term

This Agreement begins on [__/__/____] and continues until [__/__/____ / completion of all SOWs], unless earlier terminated under Section 12.

2.2 No Guaranteed Work

Unless an SOW expressly states otherwise, the Company is not required to offer a minimum amount of work, and Contractor may accept or reject a proposed assignment without penalty.

3. INDEPENDENT BUSINESS AND CLASSIFICATION

3.1 Intended Relationship

The Parties intend a business-to-business relationship. Contractor is not authorized to bind the Company, sign in the Company's name, hire on the Company's behalf, or represent that Contractor is the Company's employee or agent.

3.2 Contractor's Control

Subject to the agreed result and lawful project requirements, Contractor controls the time, manner, method, sequence, and place of performance. Contractor will ordinarily:

☐ set its own schedule;

☐ receive no direct day-to-day supervision;

☐ supply its ordinary tools, equipment, workspace, and business expenses;

☐ decide how to perform the work and allocate qualified personnel;

☐ remain free to provide services to other clients; and

☐ remain responsible for correcting work that does not meet agreed acceptance criteria.

The Parties will update their practices if the actual relationship differs from these selections.

3.3 Independently Established Business

Contractor represents that it operates an independently established trade, occupation, profession, or business of the same nature as the Services. Contractor will maintain appropriate evidence, which may include:

☐ other clients;

☐ business registration and separate financial records;

☐ advertising, a website, or business listings;

☐ licenses required for the Services;

☐ insurance in Contractor's business name; and

☐ Contractor's opportunity for profit or loss through its business decisions.

3.4 Illinois Unemployment-Insurance Test

Under 820 ILCS 405/212, services performed by an individual for an employing unit are treated as employment unless all three statutory conditions are proven:

1. the individual is and will continue to be free from control or direction over performance, both under the contract and in fact;
2. the service is outside the usual course of the business for which it is performed or outside all places of business of that enterprise; and
3. the individual is engaged in an independently established trade, occupation, profession, or business.

The Parties intend their actual relationship—not merely this Agreement—to satisfy each applicable condition. The Company must not use this form to classify a worker when the facts do not support the classification.

3.5 Construction Services Warning

The Illinois Employee Classification Act, 820 ILCS 185/1 et seq., applies to construction as defined in that Act and contains its own status test and compliance duties. It is not the general unemployment-insurance test for all professional services.

☐ The Services do not include construction as defined by 820 ILCS 185/5.

☐ The Services may include construction. Do not sign or begin work until Illinois counsel reviews the engagement under 820 ILCS 185/10 and all applicable notice, recordkeeping, reporting, and insurance duties.

3.6 Separate Federal Review

Federal tax classification is a separate inquiry based on the actual relationship. The Parties will review the current IRS rules before work begins and whenever the facts change. No contract label controls a government determination.

3.7 Reclassification

If an agency or court determines that Contractor or any individual performing Services is an employee for a particular law, the Parties will comply with that determination. Nothing in this Agreement waives wages, taxes, insurance, benefits, or other rights or obligations that cannot lawfully be waived.

4. ILLINOIS FREELANCE WORKER PROTECTION ACT

4.1 Coverage Checklist

The Illinois Freelance Worker Protection Act (“FWPA”), 820 ILCS 193/1 et seq., generally applies when all applicable elements below are met:

☐ Contractor is a natural person.

☐ Contractor is hired as an independent contractor to provide products or services in Illinois or for a contracting entity located in Illinois.

☐ Compensation is at least $500 under one contract or aggregated across contracts between the same Parties during the immediately preceding 120 days.

☐ The Services are not construction.

☐ Contractor is not performing as an employee under the exclusions stated in 820 ILCS 193/5.

☐ The Company is not the United States, Illinois, a unit of local government, or a foreign government.

Coverage must be evaluated from the statutory definitions. The FWPA does not itself determine whether a worker is correctly classified as an employee or independent contractor.

4.2 Written Contract and Copy

If the FWPA applies, this Agreement and each applicable SOW must be in writing, must contain the information required by 820 ILCS 193/15, and must be furnished to Contractor physically or electronically. The Company will retain the contract for at least two years and make it available to the Illinois Department of Labor on request.

4.3 Payment

If the FWPA applies:

• the Company will pay the contracted amount on or before the date due under the contract;
• the SOW's payment date or mechanism must produce a date no later than 30 days after completion of the Services;
• if the contract does not specify a payment date or mechanism, payment is due no later than 30 days after completion; and
• after Contractor begins preparing the product or performing the Services, the Company will not condition timely payment on Contractor accepting less than the contracted compensation.

4.4 Protected Activity

The Company will not threaten, intimidate, discipline, harass, deny a freelance opportunity to, or otherwise penalize Contractor for exercising or attempting to exercise a right under the FWPA.

4.5 Remedies and Nonwaiver Notice

Section 30 of the FWPA provides civil remedies that include double underpayment plus costs and reasonable attorney's fees for untimely final compensation, specified contract remedies, and specified remedies for prohibited retaliation. Under Section 35, FWPA rights generally cannot be waived by contract. This Agreement does not limit any nonwaivable remedy or shorten a statutory filing period.

5. COMPENSATION, INVOICES, AND TAXES

5.1 Fees

The Company will pay the fees stated in each SOW. Select a pricing method:

☐ fixed project price

☐ milestone price

☐ per-unit price

☐ hourly rate: $[________]

☐ other: [________________________________]

5.2 Invoices and Payment

Contractor will submit an itemized invoice [weekly / monthly / by milestone / not required]. Unless an earlier date is stated in the SOW, the Company will pay undisputed amounts on [SPECIFIC DATE OR OBJECTIVE PAYMENT MECHANISM], never later than any deadline imposed by the FWPA when it applies.

The Company must identify a disputed item in writing within [____] days. It will pay undisputed portions when due while the Parties work promptly to resolve the dispute.

5.3 Expenses

Contractor bears ordinary business expenses. The Company will reimburse only expenses expressly approved in the SOW and supported by receipts.

5.4 Taxes and Information Reporting

Contractor is responsible for taxes and filings imposed on Contractor's business and personnel. The Company may report payments and withhold amounts when required by then-current law. This allocation does not determine worker status or eliminate any liability imposed by law.

6. PERSONNEL AND SUBCONTRACTORS

6.1 Personnel

Contractor chooses, directs, and pays its personnel. Contractor is responsible for their qualifications, compensation, tax treatment, supervision, and compliance with this Agreement.

6.2 Subcontractors

☐ Contractor may use qualified subcontractors without prior consent.

☐ Contractor must obtain the Company's written consent before a subcontractor receives access to Company systems, personal information, or a restricted worksite.

Contractor remains responsible for subcontracted work. Approval does not authorize the Company to direct a subcontractor's day-to-day work.

7. INTELLECTUAL PROPERTY

7.1 Background Materials

Each Party retains ownership of materials developed independently of this Agreement and identified in the SOW as background materials.

7.2 Commissioned Works and Assignment

A specially ordered or commissioned work qualifies as a “work made for hire” under 17 U.S.C. § 101 only if it falls within a statutory category and the Parties expressly agree in a signed writing. To the extent a paid deliverable qualifies, the Parties agree it is a work made for hire for the Company.

As a separate fallback, upon full payment for the applicable deliverable, Contractor assigns to the Company all transferable right, title, and interest in that deliverable, excluding identified background materials and third-party materials.

7.3 Background-Material License

Contractor grants the Company a [perpetual / term-limited], [worldwide], [royalty-free] license to identified background materials embedded in a paid deliverable only to the extent needed to use that deliverable.

7.4 Third-Party Materials

Contractor will identify third-party materials and applicable license terms before delivery. The Company is not required to accept material whose license conflicts with the SOW.

8. CONFIDENTIALITY AND DATA SECURITY

8.1 Confidential Information

“Confidential Information” means nonpublic information disclosed for the engagement that is marked confidential or reasonably understood to be confidential. It excludes information Contractor documents was already known without duty, independently developed, lawfully received without restriction, or publicly available without breach.

8.2 Duties

The receiving Party will:

• use Confidential Information only for this Agreement;
• disclose it only to personnel who need it and are bound to protect it;
• use reasonable safeguards appropriate to its sensitivity; and
• return or destroy it on request, subject to lawful retention and routine backup practices.

8.3 Required Disclosure and Incidents

A Party may disclose information when legally required. When permitted, it will give prompt notice and reasonable cooperation regarding protective relief. Contractor will notify the Company without unreasonable delay after discovering unauthorized access to Company data.

9. LICENSES, INSURANCE, AND PERFORMANCE

9.1 Licenses

Contractor will maintain licenses and permits legally required for the Services and notify the Company promptly of a suspension, restriction, or lapse.

9.2 Negotiated Insurance

During each SOW, Contractor will maintain the selected coverage:

☐ commercial general liability: $[____________]

☐ professional liability / errors and omissions: $[____________]

☐ automobile liability: $[____________]

☐ cyber / privacy liability: $[____________]

☐ workers' compensation or evidence reviewed by counsel that coverage is not required

Insurance documents are evidence of coverage only and do not determine worker status.

9.3 Performance and Acceptance

Contractor will perform professionally, safely, and according to the SOW. The Company will review each deliverable within [____] business days. A rejection must identify the unmet acceptance criterion. Contractor will correct a valid nonconformity within [____] business days or another agreed period.

9.4 Records

Each Party will maintain records reasonably needed to support invoices, classification review, licenses, insurance, security obligations, and tax reporting for [____] years or any longer period required by law. The FWPA two-year contract-retention requirement in Section 4.2 controls when applicable.

10. REPRESENTATIONS AND COMPLIANCE

Each Party represents that it has authority to sign this Agreement. Contractor further represents that:

1. performance will not breach another agreement;
2. Contractor will not introduce third-party material without authority and required notices;
3. Contractor will comply with laws specifically applicable to the Services;
4. Contractor is not relying on this Agreement alone to establish independent-contractor status; and
5. information provided in the classification checklist is accurate and will be updated if circumstances change.

11. INDEMNITY AND LIMITATION OF LIABILITY

11.1 Contractor Indemnity

Contractor will defend and indemnify the Company from a third-party claim to the extent caused by Contractor's negligence, willful misconduct, breach of confidentiality, or infringement by a deliverable, subject to prompt notice and Contractor's control of the defense.

11.2 Company Indemnity

The Company will defend and indemnify Contractor from a third-party claim to the extent caused by Company materials, Company instructions that Contractor timely identified as unlawful, or the Company's negligence or willful misconduct.

11.3 Classification and Statutory Obligations

Neither Party is indemnified for taxes, wages, penalties, insurance obligations, or benefits imposed because of that Party's own direction, control, reporting failure, or misrepresentation. No provision waives obligations owed to a worker or government or limits FWPA rights or remedies.

11.4 Liability Cap

Except for unpaid fees, fraud, willful misconduct, confidentiality or data-security breach, infringement, indemnity obligations, FWPA liability, or liability that cannot lawfully be limited, each Party's aggregate liability is limited to [FEES PAID OR PAYABLE UNDER THE AFFECTED SOW / $________].

Neither Party is liable for consequential, incidental, or special damages to the extent the exclusion is enforceable, except for damages payable to a third party under a covered indemnity.

12. TERMINATION

12.1 Convenience

Either Party may terminate an SOW or this Agreement on [____] days' written notice. The Company will pay contracted compensation for completed Services and authorized noncancelable commitments by the applicable due date.

12.2 Cause

A Party may terminate for material breach not cured within [____] days after detailed written notice. No cure period is required for unlawful conduct, deliberate misuse of Confidential Information, or a breach that cannot reasonably be cured.

12.3 Effect

On termination, Contractor will stop work as directed, deliver paid work in progress, return Company property, submit a final invoice, and protect Confidential Information. Sections intended by their nature to survive will remain effective. Termination does not extend a payment deadline or permit a reduction prohibited by the FWPA.

13. DISPUTES

13.1 Governing Law

Illinois law governs this Agreement, without applying rules that would select another jurisdiction's law.

13.2 Forum

An action relating to this Agreement must be filed in a state or federal court with subject-matter jurisdiction located in [COUNTY], Illinois. Each Party consents to personal jurisdiction and may raise any nonwaivable venue objection.

13.3 No Predispute Jury Waiver or Arbitration Clause

This Agreement intentionally contains no predispute jury-trial waiver and no arbitration clause. The Parties may agree to mediation, arbitration, or a lawful waiver after a dispute arises in a separate signed writing identifying the dispute and procedure.

13.4 Equitable Relief

A Party may request temporary or permanent equitable relief when available under applicable law. This provision does not eliminate any required showing, bond, defense, or remedy limitation.

14. GENERAL TERMS

1. Notices. Notices must be in writing and delivered by personal delivery, nationally recognized courier, certified mail, or confirmed email to the addresses stated above.
2. Assignment. Neither Party may assign this Agreement without written consent, except to a successor in a merger or sale of substantially all relevant assets that assumes the Agreement in writing.
3. No authority. Contractor may not incur obligations in the Company's name.
4. No exclusivity. The engagement is nonexclusive unless a specific SOW, reviewed by counsel, states a narrowly tailored exception.
5. Entire agreement. This Agreement and signed SOWs are the complete agreement on their subject matter.
6. Amendment. An amendment must be in a writing signed by both Parties.
7. Severability. An unenforceable provision will be narrowed only to the extent permitted; the remainder continues in effect.
8. Waiver. Failure to enforce a provision is not a continuing waiver. No waiver applies to a nonwaivable statutory right.
9. Counterparts and electronic signatures. The Parties may sign counterparts and use electronic signatures.
10. Order of precedence. A signed SOW controls over this Agreement only when it identifies the provision being changed.

15. SIGNATURES

EXHIBIT A — STATEMENT OF WORK

If the FWPA applies, the payment date or mechanism above must require payment no later than 30 days after completion.

Company signature: [________________________________] Date: [__/__/____]

Contractor signature: [________________________________] Date: [__/__/____]

Copy furnished to Contractor on [__/__/____] by [EMAIL / PAPER / OTHER: __________].

EXHIBIT B — ILLINOIS CLASSIFICATION CHECKLIST

Complete before work begins and update if the facts change.

☐ Contractor is free from control or direction under the contract.

☐ Contractor is free from control or direction in actual performance.

☐ The Services are outside the usual course of the Company's business, or are performed outside all Company places of business.

☐ Contractor operates an independently established trade, occupation, profession, or business.

☐ Contractor may serve other clients and accept or reject assignments.

☐ Contractor supplies ordinary tools, equipment, workspace, and business expenses.

☐ Company instructions are limited to results, specifications, lawful requirements, and requested deadlines.

☐ The FWPA coverage checklist was completed.

☐ The construction-services warning was reviewed.

☐ Company and Contractor separately reviewed federal tax classification.

Reviewed by Company: [________________________________] Date: [__/__/____]

Reviewed by Contractor: [________________________________] Date: [__/__/____]

SOURCES AND REFERENCES

• Illinois General Assembly, 820 ILCS 405/212: https://www.ilga.gov/ftp/ILCS/Ch%200820/Act%200405/082004050K212.html
• Illinois General Assembly, Freelance Worker Protection Act, 820 ILCS 193/: https://www.ilga.gov/Legislation/ILCS/Articles?ActID=4441&ChapterID=68&Print=True
• Illinois Department of Labor, Freelance Worker Protection Act: https://labor.illinois.gov/laws-rules/legal/freelance-worker-protection-act.html
• Illinois General Assembly, Employee Classification Act, 820 ILCS 185/: https://www.ilga.gov/Legislation/ILCS/Articles?ActID=2898&ChapterID=68&Print=True
• Illinois Department of Labor, Worker Misclassification: https://labor.illinois.gov/employees/employer-misclassification-of-workers.html
• IRS, Independent Contractor Defined: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined
• IRS, Instructions for Forms 1099-MISC and 1099-NEC: https://www.irs.gov/instructions/i1099mec
• U.S. Copyright Office, Circular 30, Works Made for Hire: https://www.copyright.gov/circs/circ30.pdf

Illinois-specific independent-contractor agreement. Legal and tax review required before use.