Independent Contractor Agreement - Minnesota

INDEPENDENT CONTRACTOR AGREEMENT

(Minnesota)

TABLE OF CONTENTS

1. Parties
2. Scope of Services
3. Term
4. Compensation and Payment Terms
5. Independent Contractor Status
6. Tax Obligations
7. Benefits Exclusion
8. Insurance Requirements
9. Intellectual Property and Work Product
10. Confidentiality
11. Non-Competition
12. Indemnification
13. Termination
14. Dispute Resolution
15. General Provisions
16. Minnesota-Specific Notes
17. Signatures

1. PARTIES

This Independent Contractor Agreement ("Agreement") is entered into as of [__/__/____] (the "Effective Date") by and between:

Client: [CLIENT FULL LEGAL NAME], a [________________________________] organized under the laws of [________________________________], with a principal address at [________________________________] ("Client");

Contractor: [CONTRACTOR FULL LEGAL NAME], a [________________________________] with a principal address at [________________________________], Tax ID/SSN: [________________________________] ("Contractor").

2. SCOPE OF SERVICES

2.1 Contractor shall perform the following services ("Services"):
[________________________________]

2.2 Contractor shall deliver the following deliverables ("Deliverables"):
[________________________________]

2.3 Contractor retains sole discretion over the means, methods, techniques, and procedures for performing the Services, subject only to the results and specifications agreed upon by the Parties.

3. TERM

3.1 This Agreement shall commence on [__/__/____] and continue until [__/__/____], unless earlier terminated pursuant to Section 13 ("Term").

3.2 The Parties may extend the Term by mutual written agreement.

4. COMPENSATION AND PAYMENT TERMS

4.1 Client shall pay Contractor [________________________________] for the Services as follows:

☐ Fixed fee of $[________________________________]
☐ Hourly rate of $[____] per hour
☐ Per-project rate of $[________________________________]
☐ Other: [________________________________]

4.2 Contractor shall submit invoices [________________________________] (e.g., monthly, upon milestone completion).

4.3 Client shall pay each invoice within [____] days of receipt.

4.4 Contractor is responsible for all expenses incurred in performing the Services unless otherwise agreed in writing.

5. INDEPENDENT CONTRACTOR STATUS

5.1 Relationship. The parties intend an independent-contractor relationship. Actual worker classification under applicable tax, labor, and other law depends on how the work is performed, including control, financial arrangements, and the parties' relationship. Contractor may not bind Client or act as its agent without written authorization.

5.2 Minnesota classification. Minn. Stat. § 181.722, subd. 3, uses the applicable workers' compensation and unemployment-insurance tests to determine employment status for that section. The factors below are a factual record, not a substitute for those tests. The Parties shall confirm each statement against actual practice and remove any that is untrue:

Behavioral Control Factors:

• Client does not provide instructions on how to perform the Services
• Client does not provide training to Contractor
• Client does not supervise the manner and means of Contractor's work

Financial Control Factors:

• Contractor pays own business expenses
• Contractor has the opportunity for profit or loss
• Contractor is paid by the project or job, not by time
• Contractor has a significant investment in tools, equipment, and facilities

Relationship Factors:

• This written Agreement establishes an independent contractor relationship
• The engagement is for a defined project or period, not permanent
• Contractor does not receive employee benefits
• Contractor has the ability to offer services to others simultaneously
• Contractor possesses specialized skills and operates independently

5.3 Contractor shall not hold itself out as an employee of Client and shall have no authority to bind Client.

6. TAX OBLIGATIONS

6.1 If Contractor is properly classified as an independent contractor under applicable law, Client will pay Contractor without employee payroll withholding. The Parties shall comply with any withholding duty that applies to the actual relationship.

6.2 Contractor is responsible for income and self-employment taxes applicable to amounts paid under a properly classified independent-contractor relationship.

6.3 Misclassification may lead to compensatory damages and civil penalties under Minn. Stat. § 181.722, subd. 4, and to tax consequences under applicable law.

6.4 Client shall issue Form 1099-NEC or another information return when required by current federal law and IRS instructions.

6.5 Contractor shall provide Client with a completed IRS Form W-9 prior to commencement of Services.

7. BENEFITS EXCLUSION

7.1 The Parties do not intend this Agreement to provide employee benefits. Eligibility for statutory workers' compensation, unemployment insurance, and other protections depends on applicable law and the actual relationship.

8. INSURANCE REQUIREMENTS

8.1 Contractor shall maintain, at Contractor's own expense, the following insurance coverage during the Term:

☐ Commercial general liability insurance with minimum coverage of $[________________________________]
☐ Professional liability / errors and omissions insurance with minimum coverage of $[________________________________]
☐ Workers' compensation insurance (if Contractor employs others)
☐ Other: [________________________________]

8.2 Contractor shall provide certificates of insurance upon Client's request.

9. INTELLECTUAL PROPERTY AND WORK PRODUCT

9.1 All Deliverables, work product, inventions, and materials created by Contractor in the course of performing the Services ("Work Product") shall be the sole and exclusive property of Client.

9.2 Contractor hereby assigns to Client all right, title, and interest in and to the Work Product, including all intellectual property rights.

9.3 To the extent any Work Product constitutes a "work made for hire" under federal copyright law (17 U.S.C. § 101), Contractor agrees that Client is the author.

9.4 Contractor shall execute all documents reasonably necessary to perfect Client's ownership of the Work Product.

10. CONFIDENTIALITY

10.1 "Confidential Information" means all non-public information disclosed by either Party, including business plans, client lists, financial data, trade secrets, and technical information.

10.2 Each Party shall hold the other Party's Confidential Information in strict confidence and shall not disclose it to third parties without prior written consent.

10.3 Confidentiality obligations shall survive termination of this Agreement for a period of [____] years.

11. NON-COMPETITION

☐ Not included. Non-compete agreements are void and unenforceable in Minnesota under Minn. Stat. § 181.988 (effective July 1, 2023). This Agreement does not include a non-competition provision.

☐ Non-solicitation provision (alternative). During the Term and for [____] months thereafter, Contractor shall not directly solicit Client's employees or customers with whom Contractor had material contact during the engagement.

12. INDEMNIFICATION

12.1 Contractor shall indemnify, defend, and hold harmless Client and its officers, directors, employees, and agents from third-party claims, damages, losses, and reasonable expenses (including reasonable attorneys' fees) to the extent caused by Contractor's breach of this Agreement or negligent or willful acts or omissions. This allocation does not transfer Client's own tax, wage, insurance, or other statutory duties, and a claim about worker classification alone does not trigger indemnity.

12.2 Client shall indemnify, defend, and hold harmless Contractor from any claims, damages, losses, and expenses arising from Client's breach of this Agreement or negligent acts or omissions.

13. TERMINATION

13.1 Either Party may terminate this Agreement upon [____] days' written notice.

13.2 Either Party may terminate immediately upon written notice if the other Party materially breaches this Agreement and fails to cure within [____] days of notice.

13.3 Upon termination, Contractor shall deliver all completed and in-progress Work Product to Client and shall be compensated for Services satisfactorily performed through the termination date.

14. DISPUTE RESOLUTION

14.1 The Parties shall first attempt to resolve disputes through good-faith negotiation.

14.2 If negotiation fails, disputes shall be resolved by:

☐ Mediation in [________________________________], Minnesota, followed by binding arbitration under the rules of [________________________________].
☐ Binding Arbitration in [________________________________], Minnesota, administered by [________________________________].
☐ Litigation in the courts of the State of Minnesota, [________________________________] County.

14.3 This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota.

15. GENERAL PROVISIONS

15.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties and supersedes all prior negotiations and agreements.

15.2 Amendments. No modification shall be effective unless in writing and signed by both Parties.

15.3 Severability. If any provision is held unenforceable, the remaining provisions shall continue in full force and effect.

15.4 Assignment. Contractor may not assign this Agreement without Client's prior written consent.

15.5 Notices. All notices shall be in writing and delivered to the addresses set forth above.

15.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.

16. MINNESOTA-SPECIFIC NOTES

Classification Test: Minnesota uses a hybrid/variable approach:

• General misclassification (Minn. Stat. § 181.722): Employment status is determined using the applicable workers' compensation and unemployment insurance program tests and rules under subdivision 3. The behavioral, financial, and relationship categories above help record facts but do not replace those tests.
• Construction industry (Minn. Stat. § 181.723): Specific multi-factor test including business entity requirement, separate business location, written contract, and other criteria
• Workers' compensation (Minn. Stat. § 176.011) and unemployment insurance (Minn. Stat. § 268.035): Apply each program's governing test and rules.

Non-Compete Ban (Minn. Stat. § 181.988): Minnesota banned non-compete agreements effective July 1, 2023. Non-competes entered into after that date are void and unenforceable. Non-solicitation agreements and confidentiality agreements remain permissible.

Misclassification Penalties (Minn. Stat. § 181.722):

• Compensatory damages (back wages, minimum wage, overtime, value of benefits including health insurance and retirement plans)
• Penalty of up to $10,000 for each improperly classified individual
• Penalty of up to $10,000 for each violation of subdivision 1's prohibited classification, reporting, or agreement activities
• Penalty of $1,000 for each person who delays, obstructs, or fails to cooperate with the commissioner's investigation, with each day treated as a separate violation

Construction Industry Requirements (Minn. Stat. § 181.723): Contractors must be a business entity, maintain a separate business location, have a written contract specifying the work, and satisfy additional statutory criteria.

Key Case Law:

• Minnesota Chapter of Associated Builders & Contractors v. Blissenbach, No. 25-1480 (8th Cir. Oct. 24, 2025) (construction IC classification)

17. SIGNATURES

CLIENT:

Signature: [________________________________]
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

CONTRACTOR:

Signature: [________________________________]
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

This document is a template provided for informational purposes only. It does not constitute legal advice. Consult a qualified Minnesota attorney before execution.