Independent Contractor Agreement - South Dakota

INDEPENDENT CONTRACTOR AGREEMENT

State of South Dakota

Table of Contents

1. Parties
2. Recitals
3. Scope of Services
4. Term and Termination
5. Compensation and Payment
6. Independent Contractor Status
7. Tax Obligations
8. No Employee Benefits
9. Insurance
10. Intellectual Property
11. Confidentiality
12. Trade Restrictions
13. Indemnification
14. Dispute Resolution
15. South Dakota-Specific Notices
16. General Provisions
17. Signatures

1. PARTIES

CLASSIFICATION WARNING: This Agreement records the Parties' intended relationship. It does not override a worker-status determination required by South Dakota or federal law.

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

Company/Client:
Name: [________________________________]
Address: [________________________________]
City: [________________________________] State: South Dakota ZIP: [____]
EIN/Tax ID: [________________________________]

Independent Contractor:
Name: [________________________________]
DBA (if applicable): [________________________________]
Address: [________________________________]
City: [________________________________] State: [____] ZIP: [____]
SSN/EIN: [________________________________]

2. RECITALS

WHEREAS, Company desires to engage Contractor to perform certain services; and

WHEREAS, Contractor represents that Contractor is customarily engaged in an independently established trade, occupation, profession, or business;

NOW, THEREFORE, in consideration of the mutual covenants herein, the Parties agree as follows:

3. SCOPE OF SERVICES

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

3.2. Deliverables: [________________________________]

3.3. Contractor shall determine the manner, method, and means of performing the Services.

4. TERM AND TERMINATION

4.1. Term. This Agreement begins on [__/__/____] and continues through [__/__/____].

4.2. Future Work and Termination for Convenience. Either Party may end future work opportunities upon [____] days' written notice. Unless a signed statement of work provides otherwise, an accepted project remains binding through completion and is not terminable at will without the payment or liability stated here: [________________________________].

4.3. Termination for Cause. Either Party may terminate immediately upon material breach if not cured within [____] days.

4.4. Effect of Termination. Contractor shall deliver conforming completed work and paid work in progress. Company shall pay undisputed fees and approved expenses earned through the effective termination date, subject to any agreed project-cancellation terms.

5. COMPENSATION AND PAYMENT

5.1. Compensation.

☐ Fixed fee of $[________________________________]
☐ Per-project or per-unit rate of $[________________________________]
☐ Milestone-based payments per Exhibit A
☐ Hourly rate of $[________________________________] per hour (select only if it accurately describes the engagement after classification review)
☐ Other: [________________________________]

5.2. Invoicing. Contractor shall submit invoices [________________________________].

5.3. Payment Terms. Payment due within [____] days of valid invoice.

5.4. Expenses. Contractor bears all expenses unless pre-approved. Pre-approved: [________________________________]

6. SOUTH DAKOTA CLASSIFICATION REVIEW

6.1. Intent; Actual Facts Control. The Parties intend an independent business-to-business relationship. No agency, joint venture, or partnership is created. This recital, a Form 1099, or a tax election does not decide worker status under a law that applies its own test.

6.2. Reemployment-Assistance Two-Prong Test. Under SDCL § 61-1-11, services performed by an individual for wages are employment unless BOTH prongs are established to the Department of Labor and Regulation's satisfaction:

Prong 1 — Freedom from Control:
☐ Contractor has been and will continue to be free from control or direction over the performance of Services, both under this Agreement and in fact

Prong 2 — Independently Established Business:
☐ Contractor is customarily engaged in an independently established trade, occupation, profession, or business

6.3. Right-of-Control Record. Black Hills Adventure Lodging, LLC v. South Dakota Department of Labor & Regulation, 2025 S.D. 4, identifies four considerations for the first prong: direct evidence of the right of control, method of payment, furnishing of major equipment, and the right to terminate at will without liability. The Parties state that the selected facts are accurate:

☐ Contractor controls the ordinary manner and means of performing the Services, subject to agreed results, lawful requirements, worksite rules, and deadlines.

☐ Contractor may accept or decline proposed projects and determines ordinary work hours and sequence.

☐ Contractor supplies the major tools, equipment, facilities, personnel, and materials identified in Exhibit A.

☐ Contractor bears ordinary business expenses and invoices by project, milestone, unit, or another method stated in Exhibit A.

☐ Once accepted, a project is not terminable at will without the payment or liability stated in Section 4 and Exhibit A.

6.4. Independently Established Business Record. Under Black Hills Adventure Lodging, the second prong requires a fact-intensive, totality-of-the-circumstances showing of a venture that is actually independent of and not dependent on this relationship. Mere permission to work for others is not enough, and the absence of another current client is not automatically dispositive.

☐ Contractor has an enterprise that exists apart from Company and can survive termination of this relationship.

☐ Contractor has a proprietary interest in that enterprise and can operate it without Company's permission.

☐ Contractor publicly offers similar services, has performed them for others, or otherwise documents actual involvement in an independent market.

☐ Contractor bears business risk, including investment, expenses, profit or loss, and the market risk of unemployment.

☐ Contractor maintains the licenses, registrations, insurance, records, and business location actually required for the Services.

6.5. No Waiver; Reclassification. If an agency or court determines that Contractor or any individual performing Services is an employee for a particular law, the Parties shall comply with that determination. Nothing in this Agreement waives compensation, taxes, insurance, benefits, remedies, or other rights or obligations that cannot lawfully be waived.

7. TAX OBLIGATIONS

7.1. Contractor is responsible for taxes and filings legally imposed on Contractor's business and personnel.

7.2. Company may report payments and withhold amounts when required by then-current law.

7.3. Company shall issue Form 1099-NEC or another information return only when required by then-current federal law and IRS instructions. Information reporting does not by itself determine worker status.

7.4. Contractor shall provide a properly completed Form W-9 or other required tax documentation before payment.

8. NO EMPLOYEE BENEFITS

8.1. Company does not promise Contractor participation in an employee benefit plan unless an applicable plan document, a signed writing, or governing law provides otherwise.

8.2. This section does not decide status or waive any benefit, compensation, tax, insurance, or other right that follows from a legal determination that an employment relationship exists.

9. INSURANCE

9.1. Contractor shall maintain the coverage selected for the Services:

☐ General liability insurance: $[________________________________] minimum
☐ Professional liability insurance: $[________________________________] minimum
☐ Workers' compensation insurance or other coverage evidence reviewed by counsel or an insurance professional
☐ Commercial auto insurance (if applicable)

9.2. Workers' Compensation Review. SDCL § 62-1-3 defines an employee for workers' compensation purposes. SDCL §§ 62-1-19 and 62-1-20 permit only an eligible independent contractor who is not an employer or general contractor and is not covered under a workers' compensation policy to use the Division of Insurance's notarized affidavit of exempt status. The affidavit creates a rebuttable presumption; it is not a blanket waiver or conclusive classification.

9.3. Contracting Chains. SDCL § 62-3-10 may impose compensation liability through principal, intermediate-contractor, and subcontractor relationships when its conditions apply, and § 62-3-18 bars contracts from relieving an employer of obligations created by Title 62. Before work begins, the Parties shall obtain a coverage analysis for each tier and collect current evidence required by counsel or the insurer.

10. INTELLECTUAL PROPERTY

10.1. Background Materials. Each Party retains ownership of materials developed independently of this Agreement and identified in Exhibit A as background materials.

10.2. 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 listed 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 Company under 17 U.S.C. § 201(b).

As a separate fallback, upon full payment for the applicable Deliverable, Contractor assigns to Company all transferable right, title, and interest in that Deliverable, excluding identified background and third-party materials. This signed Agreement and the applicable signed statement of work are intended to satisfy 17 U.S.C. § 204(a).

10.3. Background-Material License. Contractor grants 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.

10.4. Visual Art and Third-Party Materials. No waiver under 17 U.S.C. § 106A is effective unless a signed writing expressly and specifically identifies the covered work and uses. Contractor shall identify third-party materials and applicable license terms before delivery.

11. CONFIDENTIALITY

11.1. Definition. "Confidential Information" means all non-public information disclosed by Company.

11.2. Obligations. Maintain strict confidence, no disclosure without consent, use solely for Services.

11.3. Exceptions. Publicly available, previously known, independently developed, or legally required.

11.4. Duration. Survives for [____] years. Trade secrets protected under the South Dakota Uniform Trade Secrets Act (SDCL § 37-29-1 et seq.).

12. TRADE RESTRICTIONS

12.1. No General Contractor Noncompetition Covenant. SDCL § 53-9-8 makes a contract restraining a lawful profession, trade, or business void to that extent unless a statutory exception applies. This template therefore contains no general post-termination noncompetition or customer/worker nonsolicitation covenant for an ordinary independent contractor.

12.2. Narrow Statutory Exceptions. SDCL § 53-9-12 addresses only qualifying independent contractors who are captive insurance producers. SDCL § 53-9-11 applies to employees, and § 53-9-11.2 imposes additional current limits for specified practitioners and community-services providers. Any proposed restriction must be separately drafted and reviewed under the exception actually applicable to the relationship.

12.3. Confidentiality Not Expanded. Section 11 protects qualifying confidential information and trade secrets. It does not prohibit lawful competition, use of general skill and knowledge, or conduct protected by governing law.

13. INDEMNIFICATION

13.1. Contractor shall indemnify and defend 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.

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

13.3. Neither Party may settle a claim in a manner that admits fault by, imposes nonmonetary duties on, or fails to release the other Party without that Party's written consent. No indemnity shifts or waives a statutory employment, tax, wage, workers' compensation, or reemployment-assistance duty that cannot lawfully be shifted or waived.

14. DISPUTE RESOLUTION

14.1. Governing Law. Governed by South Dakota law.

14.2. Mediation. Parties shall first attempt mediation in [________________________________] County, South Dakota.

14.3. Arbitration / Litigation. Select one:

☐ No arbitration. An action must be filed in a state court in [________________________________] County, South Dakota, or a federal court with subject-matter jurisdiction and proper venue.

☐ Binding arbitration. A dispute arising from this Agreement shall be resolved under [PROVIDER / RULES] in [CITY], South Dakota, before [ONE / THREE] arbitrator(s). SDCL § 21-25A-1 generally recognizes written arbitration agreements subject to contract defenses. Counsel must separately confirm the clause's scope, any reclassification effect, and any governing federal law.

14.4. Attorneys' Fees and Costs. Each Party bears its own fees and costs unless a court or arbitrator awards them under an enforceable contract term or governing law. Optional negotiated fee term: [________________________________].

15. SOUTH DAKOTA-SPECIFIC NOTICES

15.1. Two-Prong Test. South Dakota applies both prongs of SDCL § 61-1-11 for reemployment-assistance purposes. After the Department shows services for wages, the putative employer must establish both freedom from control and an independently established business.

15.2. Current Supreme Court Guidance. Black Hills Adventure Lodging, 2025 S.D. 4, held that minimal result-oriented control can satisfy the first prong while the same worker still fails the second prong because no independent venture exists. A contract label, freedom to work for others, or a Form 1099 is not sufficient by itself.

15.3. Separate Legal Tests. The reemployment-assistance and workers' compensation authorities in this Agreement do not decide status for every wage, tax, benefit, licensing, tort, or federal law. The Parties shall obtain a separate review when another law applies a different test.

15.4. Workers' Compensation Affidavit. An eligible person may use only the current Division of Insurance affidavit and fact sheet under §§ 62-1-19 to 62-1-20. The affidavit must be notarized and creates only a rebuttable presumption. This Agreement is not the affidavit.

15.5. Status Changes. If selected classification facts become inaccurate, the Parties shall stop relying on this form, update their practices and records, and obtain South Dakota legal and insurance review before work continues.

15.6. Delivery Facilitation History. SDCL §§ 60-1-7 and 60-1-8—not § 61-1-11.1—address delivery-facilitation contractors. Section 60-1-7 expressly applies its classification rule to services performed before July 1, 2022, so it is not a prospective safe harbor for Services under a new agreement.

16. GENERAL PROVISIONS

16.1. Entire Agreement. Complete agreement.

16.2. Amendments. Written and signed by both Parties.

16.3. Severability. Invalid provisions severed.

16.4. Notices. Written to addresses above.

16.5. Assignment. Not assignable without consent.

16.6. Waiver. No waiver constitutes future waiver.

16.7. Counterparts. Executable in counterparts.

16.8. Electronic Transactions. The Parties agree to conduct this transaction by electronic means. Under SDCL § 53-12-8, the electronic-transactions chapter applies only when each Party has agreed to transact electronically; §§ 53-12-13 and 53-12-14 prevent denial of legal effect solely because a signature, record, or contract is electronic, subject to other applicable law.

17. SIGNATURES

IN WITNESS WHEREOF, the Parties execute this Agreement as of the Effective Date.

COMPANY/CLIENT:

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

INDEPENDENT CONTRACTOR:

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

EXHIBIT A — STATEMENT OF WORK

[________________________________]

Sources and References:

• SDCL § 61-1-11 — reemployment-assistance test
• South Dakota Supreme Court — Black Hills Adventure Lodging, LLC v. Department of Labor & Regulation, 2025 S.D. 4
• SDCL §§ 62-1-19 to 62-1-20 — affidavit of exempt status
• South Dakota Division of Insurance — Independent Contractor Affidavit and Fact Sheet
• SDCL § 62-3-10 — liability to subcontractor's employee
• SDCL § 53-9-8 — restraints of trade void unless an exception applies
• SDCL § 21-25A-1 — written arbitration agreements
• SDCL Chapter 53-12 — electronic transactions
• 17 U.S.C. § 101 — work-made-for-hire definition
• 17 U.S.C. § 106A — rights of certain visual artists
• 17 U.S.C. § 201 — ownership and works made for hire
• 17 U.S.C. § 204 — signed-writing requirement for copyright transfers

Worker classification depends on actual facts and the law governing the particular claim; this Agreement does not create independent-contractor status by label.