Independent Contractor Agreement - Tennessee

INDEPENDENT CONTRACTOR AGREEMENT

(Tennessee – Comprehensive Template)

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Engagement & Scope of Services
4. Term; Renewal; Transition Assistance
5. Compensation; Taxes; Expenses
6. Intellectual Property
7. Confidential Information & Data Security
8. Representations & Warranties
9. Covenants & Restrictions
10. Insurance Requirements
11. Independent Contractor Classification & Compliance
12. Default; Notice; Remedies
13. Risk Allocation
14. Dispute Resolution
15. General Provisions
16. Execution Block
17. Exhibits & Schedules

1. DOCUMENT HEADER

Independent Contractor Agreement (this “Agreement”) is entered into and effective as of [EFFECTIVE DATE] (the “Effective Date”) by and between [CLIENT LEGAL NAME], a [STATE] [corporation/limited liability company/other] having its principal place of business at [ADDRESS] (“Company”), and [CONTRACTOR LEGAL NAME], a [STATE] [individual/sole proprietor/LLC/other] having its principal place of business at [ADDRESS] (“Contractor”).
Company and Contractor are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

Recitals
A. Company wishes to engage Contractor to perform certain services described herein.
B. Contractor represents that it is qualified and willing to provide such services.
C. The Parties desire to memorialize the terms and conditions of their relationship in this Agreement.

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

NOW, THEREFORE, in consideration of the mutual promises herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

2. DEFINITIONS

For purposes of this Agreement, the following terms have the meanings set forth below; other capitalized terms are defined contextually.

“Affiliate” – Any entity that directly or indirectly controls, is controlled by, or is under common control with a Party.
“Confidential Information” – All non-public information disclosed in any form that is designated confidential or that a reasonable person would understand to be confidential given the nature of the information and circumstances of disclosure.
“Deliverables” – All tangible or intangible work product that Contractor is required to deliver under this Agreement.
“Services” – The tasks, functions, and responsibilities described in Exhibit A.
“Term” – The period defined in Section 4.

3. ENGAGEMENT & SCOPE OF SERVICES

3.1 Engagement. Company hereby engages Contractor, and Contractor accepts such engagement, to perform the Services in accordance with this Agreement and Exhibit A.
3.2 Standard of Performance. Contractor shall (a) perform the Services in a diligent, timely, professional, and workmanlike manner consistent with industry standards; (b) comply with all applicable federal, state, and local laws, regulations, and ordinances; and (c) use personnel with the requisite skill and experience.
3.3 Subcontracting. Contractor may use qualified personnel selected and directed by Contractor, subject to written approval only when a person will access Company systems, protected information, or a restricted worksite. Contractor remains responsible for approved subcontractors and shall document their classification, insurance, and compensation.

4. TERM; RENEWAL; TRANSITION ASSISTANCE

4.1 Initial Term. The Term commences on the Effective Date and continues until [DATE or MILESTONE], unless terminated earlier as provided herein.
4.2 Renewal. Select one: ☐ no automatic renewal; ☐ renewal for successive [____] periods unless either Party gives [____] days’ written notice of non-renewal.
4.3 Transition Assistance. Upon termination or expiration, Contractor shall provide reasonable cooperation for a smooth transition of Services, at pro-rated compensation.

5. COMPENSATION; TAXES; EXPENSES

5.1 Fees. Company shall pay Contractor [fixed / milestone / per-project / per-unit / hourly] fees as detailed in Exhibit B. If hourly payment is selected, the Parties shall record why that method accurately reflects an independent engagement after considering Tenn. Code Ann. § 50-2-111.
5.2 Invoicing & Payment. Contractor shall invoice monthly in arrears; Company shall pay undisputed amounts within [30] days of receipt.
5.3 Expenses. [Option A] Fees are inclusive of all expenses. [Option B] Pre-approved out-of-pocket expenses will be reimbursed at cost.
5.4 Taxes and Reporting. Contractor is responsible for taxes and filings legally imposed on Contractor's business and personnel. Company may report payments and withhold amounts when required by then-current law. Contractor shall provide a properly completed Form W-9 or other required tax documentation. Issuance of Form 1099-NEC or another information return does not by itself determine worker status.

6. INTELLECTUAL PROPERTY

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

6.2 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).

6.3 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.

6.4 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.

7. CONFIDENTIAL INFORMATION & DATA SECURITY

7.1 Non-Disclosure. Contractor shall not disclose or use Confidential Information except as necessary to perform the Services.
7.2 Safeguards. Contractor shall employ commercially reasonable technical, administrative, and physical safeguards to protect Confidential Information.
7.3 Compelled Disclosure. If Contractor is required by law to disclose Confidential Information, it shall provide prior written notice to Company (unless legally prohibited) and cooperate with Company’s efforts to seek protective treatment.
7.4 Return or Destruction. Upon termination or upon Company’s request, Contractor shall promptly return or permanently destroy all Confidential Information and certify destruction in writing.

8. REPRESENTATIONS & WARRANTIES

8.1 Mutual Representations. Each Party represents that:
(a) it is duly organized, validly existing, and in good standing under the laws of its jurisdiction;
(b) it has full power and authority to enter into and perform this Agreement; and
(c) its execution and performance do not violate any other agreement.

8.2 Contractor Representations. Contractor further represents and warrants that:
(a) Services and Deliverables will conform to the requirements of this Agreement;
(b) it will comply with all applicable laws, including Tennessee labor, tax, and unemployment statutes;
(c) it is and shall remain properly licensed and insured; and
(d) no Deliverable will infringe any third-party intellectual property right.

8.3 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED, NEITHER PARTY MAKES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

8.4 Survival. The warranties in this Section survive for [12] months after acceptance of the applicable Deliverable.

9. COVENANTS & RESTRICTIONS

9.1 No General Post-Termination Restraint. This template contains no post-termination noncompetition, customer nonsolicitation, worker nonsolicitation, or no-hire covenant. Any requested restraint must be separately reviewed and drafted by Tennessee counsel for the actual relationship and profession.
9.2 Compliance. Contractor shall maintain accurate books and records evidencing compliance with this Agreement and shall allow reasonable audit upon [10] business days’ written notice.
9.3 Publicity. Contractor may not use Company’s name or marks in advertising without Company’s prior written consent.

10. INSURANCE REQUIREMENTS

Contractor shall, at its own expense, maintain throughout the Term:
(a) Commercial General Liability insurance with limits of not less than $1,000,000 per occurrence and $2,000,000 aggregate;
(b) Professional/Errors & Omissions Liability insurance with limits of not less than $1,000,000 per claim, if Services are professional in nature;
(c) Automobile Liability insurance (if vehicles are used) with a combined single limit of $1,000,000; and
(d) Workers’ Compensation insurance or other coverage evidence required after a Tennessee-specific review of Company, Contractor, and all personnel.
Certificates of insurance naming Company as additional insured where available and appropriate shall be delivered before Services begin and upon renewal. Insurance documents do not decide worker status.

11. INDEPENDENT CONTRACTOR CLASSIFICATION & COMPLIANCE

11.1 Intent; Actual Facts Control. The Parties intend an independent business-to-business relationship. No agency, partnership, or joint venture is created. This recital, a tax form, insurance document, or benefit contribution does not decide status under a law that applies its own test.

11.2 Twenty-Factor Tennessee Test. For services performed on or after January 1, 2020, Tenn. Code Ann. § 50-2-111 and § 50-7-207(b)(2)(B) use the twenty factors enacted by 2019 Public Chapter 337 for Tennessee wage regulation and unemployment insurance. The Parties shall document the actual facts for:

1. instructions; 2. training; 3. integration; 4. personal performance; 5. hiring, supervising, and paying assistants; 6. continuing relationship; 7. set hours; 8. full-time requirement; 9. work on Company premises; 10. order or sequence; 11. oral or written reports; 12. hourly, weekly, or monthly payment; 13. business or travel expenses; 14. tools and materials; 15. significant investment; 16. profit or loss; 17. work for multiple firms; 18. regular public offering of services; 19. right to discharge; and 20. right to terminate without liability.

11.3 Operational Record. Select only statements that are accurate in practice:

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

☐ Contractor selects, directs, and pays qualified personnel and subcontractors.

☐ Contractor supplies the significant tools, materials, facilities, and investment identified in Exhibit A.

☐ Contractor bears ordinary expenses and a genuine opportunity for profit or risk of loss.

☐ Contractor regularly offers similar services to the public and may perform more than de minimis services for unrelated clients.

☐ An accepted project is not terminable at will without the payment or liability stated in this Agreement and Exhibit A.

11.4 Separate Workers' Compensation Test. The Tennessee Bureau of Workers' Compensation applies the seven factors in Tenn. Code Ann. § 50-6-102(10)(D): right to control the work, right of termination, method of payment, freedom to select and hire helpers, furnishing tools and equipment, self-scheduling, and freedom to offer services to others. A Form 1099 does not decide status. Non-construction employers with five or more employees generally must secure coverage; construction coverage rules are different and require a separate review.

11.5 Construction-Owner Registry Is Narrow. The Workers' Compensation Exemption Registry under Tenn. Code Ann. §§ 50-6-901 et seq. is for eligible construction business owners seeking to exempt themselves. Employees are not eligible, and an exempt owner must still cover all employees, even one employee. Company and Contractor shall verify an active registry entry and ownership eligibility rather than treating this Agreement as an exemption.

11.6 Portable Benefits. Under Tenn. Code Ann. §§ 50-1-1101 to 50-1-1103, a hiring party may voluntarily contribute to an independent contractor's portable benefit account. A contribution may not be used as a classification criterion. Any withholding from Contractor compensation must be in a clear, unambiguous, prominently displayed writing, must require Contractor to opt in, and must permit Contractor to opt out at any time.

☐ No portable-benefit contribution.

☐ Voluntary contribution terms are stated in Exhibit C and separately accepted by Contractor.

11.7 Benefits and Reclassification. Company does not promise Contractor participation in an employee benefit plan unless a governing plan document, signed writing, or applicable law provides otherwise. If an agency or court determines that Contractor or any person performing Services is an employee for a particular law, the Parties shall comply. Nothing in this Agreement waives compensation, taxes, insurance, benefits, remedies, or duties that cannot lawfully be waived or shifted.

12. DEFAULT; NOTICE; REMEDIES

12.1 Events of Default. A Party is in default if it:
(a) fails to perform any material obligation and such failure remains uncured for [10] days after written notice;
(b) becomes insolvent, files for bankruptcy, or makes an assignment for the benefit of creditors; or
(c) materially breaches Section 7 (Confidentiality) or provides materially false information in the Section 11 classification record.

12.2 Company Remedies. Upon Contractor default, Company may, in addition to all remedies at law or in equity:
(a) suspend payment;
(b) require re-performance or correction of non-conforming Services at Contractor’s expense;
(c) seek provisional or equitable relief subject to applicable proof, bond, and procedural requirements; and
(d) terminate this Agreement under Section 12.3.

12.3 Termination.
(a) For Cause. Either Party may terminate immediately upon written notice if the other Party defaults and fails to cure within the applicable cure period.
(b) For Convenience. Company may terminate for convenience upon [15] days’ written notice; in such event, Company shall pay Contractor for Services satisfactorily performed through the termination date.

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

13. RISK ALLOCATION

13.1 Indemnification by Contractor. Contractor shall indemnify, defend, and hold harmless Company, its Affiliates, and their respective officers, directors, employees, and agents from and against all claims, damages, liabilities, penalties, fines, and expenses (including reasonable attorneys’ fees) arising out of or relating to:
(a) Contractor’s breach of this Agreement;
(b) acts or omissions of Contractor or its personnel;
(c) infringement or misappropriation of third-party intellectual property by Deliverables; or
(d) a third-party claim caused by Contractor's knowing material misrepresentation of facts in the Section 11 classification record, but not taxes, premiums, benefits, penalties, or duties imposed directly on Company by law.

13.2 Limitation of Liability. EXCEPT FOR (i) INDEMNIFICATION OBLIGATIONS, (ii) BREACHES OF CONFIDENTIALITY, OR (iii) GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, NEITHER PARTY SHALL BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, OR PUNITIVE DAMAGES. THE TOTAL AGGREGATE LIABILITY OF COMPANY ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL NOT EXCEED THE FEES PAID OR PAYABLE TO CONTRACTOR IN THE TWELVE (12) MONTHS PRECEDING THE EVENT GIVING RISE TO LIABILITY, SUBJECT TO ANY NON-WAIVABLE STATUTORY CAPS UNDER TENNESSEE LAW.

13.3 Force Majeure. A Party is excused from performance for any period during which, and to the extent that, performance is prevented by causes beyond its reasonable control, provided the affected Party gives prompt written notice.

14. DISPUTE RESOLUTION

14.1 Governing Law. This Agreement and any dispute hereunder are governed by and construed in accordance with the laws of the State of Tennessee, without regard to its conflict-of-laws principles.
14.2 Forum Selection. Subject to Section 14.3, the courts of competent jurisdiction located in [COUNTY], Tennessee, and the United States District Court for the [Middle/Eastern/Western] District of Tennessee shall have exclusive jurisdiction; the Parties hereby irrevocably submit to and waive objections to such courts.
14.3 Arbitration (Optional). Select one:

☐ No arbitration. Disputes proceed under Section 14.2.

☐ Binding arbitration. A dispute not resolved informally within [____] days shall be resolved by [PROVIDER] under [RULES] in [CITY], Tennessee, before [ONE / THREE] arbitrator(s). Counsel must confirm the clause's scope, any reclassification effect, and any governing federal or state arbitration law.

14.4 No Jury Waiver. This template does not include a pre-dispute jury-trial waiver. Any requested waiver must be separately reviewed and drafted by Tennessee counsel.

14.5 Equitable Relief. A Party may request provisional or equitable relief, but must satisfy applicable proof, bond, and procedural requirements. This Agreement does not establish irreparable harm.

15. GENERAL PROVISIONS

15.1 Amendment & Waiver. No amendment or waiver is effective unless in a writing signed by both Parties. A waiver of any breach is not a waiver of any other breach.
15.2 Assignment. Contractor may not assign or delegate this Agreement without Company’s prior written consent; any attempted assignment in violation is void. This Agreement is binding upon and inures to the benefit of the Parties and their permitted successors and assigns.
15.3 Severability. If a provision is unenforceable, the remaining provisions continue to the extent they can operate independently. A court or arbitrator may modify a provision only when governing law authorizes modification.
15.4 Entire Agreement. This Agreement, together with its Exhibits and Schedules, constitutes the entire agreement of the Parties and supersedes all prior discussions and writings.
15.5 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, including by an electronic signature method accepted by both Parties and permitted by governing law. Each counterpart is deemed an original, and all counterparts form one instrument.
15.6 Notices. All notices shall be in writing and deemed given when delivered personally or by nationally recognized overnight courier with proof of delivery, or three (3) business days after mailing by certified mail, return receipt requested, to the addresses set forth above (or such other address as a Party may designate by notice).

16. EXECUTION BLOCK

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

17. EXHIBITS & SCHEDULES

Exhibit A – Scope of Services & Performance Milestones
Exhibit B – Fee Schedule & Payment Terms
Schedule 1 – Insurance Certificates
Schedule 2 – Form W-9
Exhibit C – Optional Portable Benefit Contribution and Opt-In

SOURCES AND REFERENCES

• Tennessee Department of Labor — Employee or Independent Contractor?
• 2019 Public Chapter 337 — twenty-factor legislation
• Tennessee Bureau of Workers' Compensation — non-construction coverage and seven-factor test
• Tennessee Bureau of Workers' Compensation — construction coverage
• Tennessee Workers' Compensation Exemption Registry
• Tennessee Workers' Compensation Exemption Registry — forms and FAQs
• 2025 Public Chapter 131 — Voluntary Portable Benefit Act
• 17 U.S.C. § 101 — work-made-for-hire definition (current preliminary edition)
• 17 U.S.C. § 106A — rights of certain visual artists (current preliminary edition)
• 17 U.S.C. § 201 — ownership and works made for hire (current preliminary edition)
• 17 U.S.C. § 204 — signed-writing requirement for copyright transfers (current preliminary edition)

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