Professional Services Agreement - California

PROFESSIONAL SERVICES AGREEMENT

CALIFORNIA — COMPREHENSIVE TEMPLATE

TABLE OF CONTENTS

1. Parties and Recitals
2. Definitions
3. Services and Deliverables
4. Compensation and Payment
5. Independent Contractor Status (AB 5 / ABC Test)
6. Intellectual Property and Inventions
7. Confidentiality and Trade Secrets
8. Restrictive Covenants (California-Specific)
9. Data Privacy (CCPA/CPRA)
10. Representations, Warranties, and Licensing
11. Indemnification
12. Limitation of Liability
13. Term and Termination
14. General Release (Cal. Civ. Code § 1542)
15. Dispute Resolution
16. General Provisions
17. Execution Block
18. Exhibit A — Statement of Work
19. Exhibit B — CCPA/CPRA Service Provider Addendum

1. PARTIES AND RECITALS

1.1 Parties

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

(a) Provider:
[SERVICE PROVIDER LEGAL NAME]
Entity Type: [________________________________] (e.g., California corporation, LLC, sole proprietor)
Principal Place of Business: [________________________________]
California Secretary of State Entity No. (if applicable): [________________________________]
("Provider"); and

(b) Client:
[CLIENT LEGAL NAME]
Entity Type: [________________________________]
Principal Place of Business: [________________________________]
California Secretary of State Entity No. (if applicable): [________________________________]
("Client")

Provider and Client are each a "Party" and collectively the "Parties."

1.2 Recitals

A. Provider is engaged in the business of providing [________________________________] professional services and represents that it possesses the requisite skill, experience, qualifications, and (where required) California licenses to perform the Services.

B. Client desires to retain Provider to perform certain Services as described in one or more Statements of Work (each an "SOW"), and Provider desires to perform such Services, on the terms and conditions set forth in this Agreement.

C. This Agreement is intended to govern a relationship between independent contracting parties. The Parties have considered and intend to comply with the California ABC test for independent contractor status under California Labor Code § 2775 et seq. (AB 5), as described in Section 5.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

2. DEFINITIONS

"AB 5" means Assembly Bill 5 (Stats. 2019, ch. 296), codified at California Labor Code § 2775 et seq., which establishes the ABC test for determining independent contractor status in California.

"ABC Test" means the three-part test under Cal. Labor Code § 2775(b) used to determine whether a worker is an employee or independent contractor for purposes of the California Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission wage orders.

"Applicable Law" means all applicable federal, California, and local laws, regulations, and orders, including without limitation AB 5 (Labor Code § 2775 et seq.), the California Labor Code, the California Unfair Competition Law (Bus. & Prof. Code § 17200 et seq.), the California Consumer Privacy Act/California Privacy Rights Act (Cal. Civ. Code § 1798.100 et seq.), and all applicable California professional licensing requirements.

"Confidential Information" has the meaning set forth in Section 7.1.

"CPRA/CCPA" means the California Consumer Privacy Act (Cal. Civ. Code § 1798.100 et seq.) as amended by the California Privacy Rights Act (Prop. 24, 2020), and all regulations adopted thereunder by the California Privacy Protection Agency (CPPA).

"Deliverables" means all work product, reports, data, analyses, software, designs, documentation, and other materials that Provider is required to deliver to Client under an applicable SOW.

"Intellectual Property Rights" means all patent, copyright, trademark, trade dress, trade secret, moral rights, and other proprietary rights recognized under California and U.S. federal law.

"Personal Information" has the meaning set forth in Cal. Civ. Code § 1798.140(v), as amended by the CPRA.

"Pre-Existing IP" means all Intellectual Property Rights owned or licensed by a Party prior to the Effective Date or developed by a Party independently of this Agreement.

"Professional Services Exemption" means the potential exemption from AB 5 available to certain licensed professionals under Cal. Labor Code § 2778 (e.g., licensed physicians, attorneys, architects, engineers, securities broker-dealers), if applicable.

"Services" means the professional services described in each SOW executed under this Agreement.

"SOW" means a Statement of Work executed by both Parties substantially in the form of Exhibit A.

"Trade Secrets" means information qualifying as a trade secret under the California Uniform Trade Secrets Act (Cal. Civ. Code § 3426 et seq.), including customer lists, pricing information, proprietary processes, source code, and business strategies.

[GUIDANCE: Add or remove definitions as required. Maintain alphabetical order.]

3. SERVICES AND DELIVERABLES

3.1 Scope of Services

Provider shall perform the Services described in each SOW in accordance with the timelines, milestones, and specifications set forth therein. In the event of conflict between this Agreement and any SOW, the SOW controls with respect to matters specific to that engagement.

3.2 Performance Standards

Provider shall:
(a) Perform the Services in a professional, diligent, and workmanlike manner consistent with applicable industry standards and best practices in California;
(b) Assign personnel with appropriate skill, qualifications, and experience for the Services;
(c) Comply with all Applicable Law, including any California professional licensing requirements applicable to the Services (see Section 10.3); and
(d) Maintain and produce to Client, upon request, documentation evidencing Provider's compliance with AB 5 and all applicable California wage and hour laws with respect to Provider's own workforce.

3.3 Change Orders

Any change to the scope, schedule, fees, or deliverables requires a written change order signed by authorized representatives of both Parties. Oral change requests are not binding. Provider shall continue performing under the original SOW pending execution of a change order.

3.4 Client Cooperation

Client shall provide Provider with timely access to Client's personnel, systems, data, facilities, and materials reasonably required for Provider to perform the Services. Provider's failure to meet milestones directly attributable to Client's failure to cooperate shall not constitute a breach by Provider.

4. COMPENSATION AND PAYMENT

4.1 Fees

Client shall pay Provider the fees set forth in each SOW. Unless otherwise specified in the SOW:

• Invoices are due and payable Net [________________________________] ([___]) calendar days from the date of Provider's invoice
• Provider shall submit invoices to: [________________________________] (billing contact)

4.2 Expenses

Client shall reimburse Provider for pre-approved, reasonable out-of-pocket expenses directly incurred in performing the Services, supported by appropriate receipts. Travel and entertainment expenses exceeding $[________________________________] individually require prior written approval from Client.

4.3 Late Payment Interest

Past-due amounts shall accrue interest at the lesser of: (a) [________________________________]% per month; or (b) the maximum rate permitted under California law (currently 10% per year for non-consumer commercial obligations — Cal. Civ. Code § 3289). Interest shall accrue from the due date until paid in full.

4.4 Taxes

Fees are exclusive of applicable sales, use, or excise taxes. Client shall pay all applicable taxes imposed on the Services (except taxes based on Provider's net income or that are Provider's employer-side payroll taxes). [CA REQUIRED: Because Provider is an independent contractor, Client will NOT withhold California income tax, Social Security, or Medicare from payments to Provider. Provider is solely responsible for all self-employment taxes.]

4.5 Disputed Invoices

If Client disputes any invoice in good faith, Client shall: (a) pay the undisputed portion by the due date; (b) provide written notice of the dispute with detail sufficient to identify the disputed amounts; and (c) cooperate in good faith to resolve the dispute within [________________________________] ([___]) business days.

4.6 California Automatic Renewal Law

[CA REQUIRED if subscription/recurring engagement:] If this Agreement or any SOW contains an automatic renewal or continuous service provision, it must comply with the California Automatic Renewal Law (Cal. Bus. & Prof. Code § 17600 et seq.). Automatic renewal terms must be presented clearly and conspicuously before acceptance. Client has the right to cancel an automatically renewing contract in accordance with § 17602. [GUIDANCE: Include explicit renewal terms and cancellation mechanism if this agreement auto-renews.]

5. INDEPENDENT CONTRACTOR STATUS — AB 5 / ABC TEST

[CA REQUIRED — DO NOT DELETE THIS SECTION]

5.1 Independent Contractor Relationship

The Parties intend that Provider is and shall remain an independent contractor and not an employee, agent, joint venture partner, or partner of Client for any purpose. Nothing in this Agreement shall be construed to create an employment, agency, franchise, or partnership relationship.

5.2 California ABC Test — Labor Code § 2775

[CA REQUIRED] Under AB 5 (Cal. Labor Code § 2775 et seq.), as interpreted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, a worker is presumed to be an employee unless the hiring party satisfies all three prongs of the ABC test:

Failure to satisfy all three prongs means Provider's workers may be classified as employees of Client under California law, with corresponding liability for wages, benefits, taxes, workers' compensation, and unemployment insurance.

5.3 Prong A — Freedom from Control

Provider shall determine the means, methods, tools, schedule, and sequence of performing the Services, subject only to the requirements and specifications in each SOW. Client shall not:
(a) Direct or supervise Provider's day-to-day work methods;
(b) Require Provider's personnel to work specified hours except as necessary for client-facing meetings or deadlines;
(c) Require Provider to perform services exclusively for Client; or
(d) Control Provider's equipment, personnel, or subcontractor choices.

5.4 Prong B — Outside Usual Course of Business

[GUIDANCE: Counsel must verify that Prong B is satisfied. If Client's core business is the same as the Services being provided (e.g., a software company hiring a software developer), Prong B may not be satisfied, and Provider may be classified as an employee. Document the distinction between Provider's Services and Client's core business in each SOW.]

The Services performed under this Agreement are: [DESCRIBE SERVICES], which are outside the usual course of Client's business because: [EXPLAIN WHY — e.g., "Client is a [INDUSTRY] company; the Services constitute specialized [TYPE] services that Client does not ordinarily provide"].

5.5 Prong C — Independently Established Business

Provider represents and warrants that:
(a) Provider operates an independently established trade, occupation, or business of the same nature as the Services;
(b) Provider has or will obtain all required California business licenses and permits for its operations;
(c) Provider maintains separate business infrastructure (office, website, marketing, business bank account);
(d) Provider is free to and does provide similar services to other clients; and
(e) Provider is not economically dependent on Client as Provider's sole source of income.

5.6 Applicable Exemptions

[CA REQUIRED: Check if any exemption applies]

Certain categories of workers may be exempt from the ABC test under Cal. Labor Code § 2778 and remain subject to the older Borello multi-factor test instead. Check applicable exemptions:

☐ Licensed professional (physician, dentist, podiatrist, psychologist, veterinarian, attorney, architect, engineer, private investigator, accountant) — § 2778(b)(1)
☐ Licensed insurance agent — § 2778(b)(2)
☐ Licensed securities broker-dealer or investment adviser — § 2778(b)(3)
☐ Direct sales salesperson — § 2778(b)(4)
☐ Newspaper carrier — § 2778(b)(5)
☐ Freelance writer, photographer, translator, or editor — § 2778(b)(6) [NOTE: Limited to 35 submissions per year to same client]
☐ Grant writer — § 2778(b)(7)
☐ Fine artist — § 2778(b)(8)
☐ Performing artist — § 2778(b)(9)
☐ None — ABC test fully applies

[GUIDANCE: If an exemption applies, document it in the SOW and apply the Borello multi-factor test instead of the ABC test. Consult California-licensed counsel for current exemption status, as the AB 5 exemption landscape has evolved through legislation (AB 2257, 2020) and litigation.]

5.7 Provider's Workforce

Provider is solely responsible for:
(a) Paying all wages, salaries, benefits, and compensation owed to Provider's employees and subcontractors;
(b) Withholding and remitting all federal and California income taxes, Social Security, Medicare, State Disability Insurance (SDI), and Unemployment Insurance (UI) for Provider's employees;
(c) Carrying required workers' compensation insurance for Provider's California-based employees under Cal. Lab. Code § 3700; and
(d) Complying with all California wage-and-hour requirements (meal periods, rest periods, overtime, minimum wage) for Provider's own employees.

Client shall have no liability for Provider's obligations to its own workforce.

6. INTELLECTUAL PROPERTY AND INVENTIONS

6.1 Pre-Existing IP

Each Party retains all right, title, and interest in and to its Pre-Existing IP. No license or assignment of Pre-Existing IP is granted except as expressly stated herein. Provider's Pre-Existing IP used in the Deliverables is licensed to Client on a non-exclusive, royalty-free, perpetual, worldwide basis solely for Client's internal business use in connection with the Deliverables.

6.2 Assignment of Deliverables

Subject to Provider's receipt of full payment of all fees owed, and subject to Section 6.4, Provider hereby irrevocably assigns to Client all right, title, and interest worldwide in and to all Deliverables created specifically for Client under each SOW, including all copyrights, patents, and other Intellectual Property Rights therein.

6.3 Work Made for Hire

To the extent any Deliverables qualify as "works made for hire" under 17 U.S.C. § 101 and Exhibit A designates them as such, the Parties agree that such Deliverables shall be works made for hire with Client as the author. To the extent any Deliverables do not qualify as works made for hire, Provider assigns all rights therein to Client pursuant to Section 6.2.

6.4 California Labor Code § 2870 — Limitation on Assignment of Inventions

[CA REQUIRED — DO NOT DELETE]

NOTICE PURSUANT TO CALIFORNIA LABOR CODE § 2872:

The assignment of inventions in Section 6.2 does not apply to any invention that qualifies for protection under California Labor Code § 2870, which provides:

"Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either: (1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for the employer."

While § 2870 applies specifically to employment agreements, its public policy protections are relevant to independent contractor agreements as well. Provider need not assign to Client any invention that Provider developed entirely on Provider's own time without using Client's equipment, supplies, facilities, or Confidential Information, unless such invention: (a) relates to Client's business or its actual or demonstrably anticipated research/development; or (b) results directly from Services performed for Client under this Agreement.

Provider shall promptly disclose in writing to Client any invention made during the term of this Agreement that Provider believes is subject to assignment under Section 6.2.

6.5 Moral Rights Waiver

To the extent any moral rights (including rights of attribution and integrity) attach to the Deliverables under applicable law, Provider hereby irrevocably waives and agrees not to assert such rights against Client or its licensees.

6.6 Power of Attorney

Provider hereby irrevocably appoints Client as Provider's attorney-in-fact, with full power of substitution, to execute, acknowledge, and deliver all documents and instruments reasonably necessary to vest in Client all rights assigned under this Section 6. This appointment is coupled with an interest and is irrevocable.

7. CONFIDENTIALITY AND TRADE SECRETS

7.1 Definition of Confidential Information

"Confidential Information" means any non-public information disclosed by one Party ("Disclosing Party") to the other Party ("Receiving Party") in connection with this Agreement that is: (a) designated in writing as "Confidential" or "Proprietary" at the time of disclosure; or (b) of a nature that a reasonable person in the industry would understand to be confidential given the context of disclosure. Client's Confidential Information includes, without limitation, customer data, business strategies, financial data, product roadmaps, and Personal Information. Provider's Confidential Information includes proprietary methodologies, tools, and pricing information.

7.2 Confidentiality Obligations

The Receiving Party shall:
(a) Hold the Disclosing Party's Confidential Information in strict confidence using at least the same degree of care it uses to protect its own confidential information, but in no event less than reasonable care;
(b) Use Confidential Information solely for purposes of performing or receiving the Services under this Agreement;
(c) Disclose Confidential Information only to employees, agents, or subcontractors who have a need to know for purposes of this Agreement and are bound by confidentiality obligations no less restrictive than those in this Section 7; and
(d) Promptly notify the Disclosing Party of any unauthorized disclosure or suspected breach of this Section 7.

7.3 Exceptions

The obligations in Section 7.2 do not apply to information that:
(a) Is or becomes publicly available through no breach by the Receiving Party;
(b) Was lawfully known to the Receiving Party prior to disclosure without restriction;
(c) Is independently developed by the Receiving Party without reference to Confidential Information; or
(d) Is rightfully obtained from a third party without confidentiality obligation.

7.4 Compelled Disclosure

The Receiving Party may disclose Confidential Information to the extent required by a California or federal court order or by Applicable Law, provided it: (a) gives the Disclosing Party prompt written notice prior to disclosure (to the extent legally permissible); (b) reasonably cooperates with the Disclosing Party in seeking a protective order or other relief; and (c) discloses only the minimum amount required.

7.5 California Uniform Trade Secrets Act (CUTSA)

The Parties acknowledge that Client's Trade Secrets are protected under the California Uniform Trade Secrets Act, Cal. Civ. Code § 3426 et seq. (CUTSA). CUTSA provides the exclusive remedy for trade secret misappropriation in California and supersedes conflicting tort and other state law claims. Cal. Civ. Code § 3426.7. Provider shall not use, disclose, or misappropriate Client's Trade Secrets during or after the term of this Agreement.

7.6 Survival

The obligations of this Section 7 shall survive termination or expiration of this Agreement for a period of [________________________________] ([___]) years, except with respect to Trade Secrets, which shall be protected for so long as the information qualifies as a trade secret under CUTSA.

8. RESTRICTIVE COVENANTS — CALIFORNIA SPECIFIC

8.1 Non-Compete Clause — VOID UNDER CALIFORNIA LAW

[CA REQUIRED — DO NOT INCLUDE NON-COMPETE]

CALIFORNIA NON-COMPETE PROHIBITION: Under California Business and Professions Code § 16600, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is void as against public policy. The California Supreme Court confirmed in Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937 that § 16600 voids any non-competition covenant, regardless of how reasonable or narrow, unless it falls within a narrow statutory exception (sale of a business under § 16601; dissolution of a partnership under § 16602; dissolution of an LLC under § 16602.5).

SB 699 (effective January 1, 2024) further provides: Employers (and by extension, contracting parties) may not seek to enforce a non-compete agreement against a California resident, regardless of where the contract was signed or where the employee/contractor performed work. Violation of § 16600 is itself a violation of the UCL and exposes the enforcing party to statutory penalties.

This Agreement contains NO non-compete covenant. Any attempt to add a non-compete clause to this Agreement would be void and unenforceable under § 16600.

8.2 Non-Solicitation of Employees

During the Term and for [________________________________] ([___]) months following the termination or expiration of this Agreement, neither Party shall directly solicit for hire any employee of the other Party who was materially involved in performing or receiving the Services, without the prior written consent of the other Party.

[CA REQUIRED — CALIFORNIA LIMITATION] This non-solicitation provision applies only to direct solicitation — not to general job postings, advertisements, or employment through independent recruiting firms without targeting. California courts have applied § 16600 to non-solicitation clauses that effectively restrain competition. Dowell v. Biosense Webster, Inc. (2009) 179 Cal.App.4th 564; The Retirement Group v. Galante (2009) 176 Cal.App.4th 1226. This clause is intended solely to protect the Parties' legitimate investment in their workforces and is expressly limited to direct solicitation only.

8.3 Non-Solicitation of Clients — Trade Secrets Protection Only

[CA REQUIRED — NARROWLY DRAFTED]

To protect Client's Trade Secrets (as defined in Section 7.5), Provider agrees that during the Term of this Agreement, Provider shall not use Client's Confidential Information or Trade Secrets to solicit, divert, or appropriate Client's customers for Provider's own benefit or for the benefit of any competitor of Client.

This provision does not restrict Provider from: (a) competing with Client using information independently known to Provider; (b) working for or with any of Client's customers on matters not involving Client's Trade Secrets; or (c) engaging in any lawful competitive business activity. This clause is narrowly intended to prevent the misuse of Client's specific Trade Secrets and Confidential Information in a competitive context, consistent with The Retirement Group v. Galante (2009) and Cal. Civ. Code § 3426 et seq.

9. DATA PRIVACY — CCPA/CPRA SERVICE PROVIDER OBLIGATIONS

[CA REQUIRED if Provider processes Personal Information of California consumers on behalf of Client]

9.1 Applicability

This Section 9 applies if Provider, in the course of providing Services, processes Personal Information (as defined by Cal. Civ. Code § 1798.140(v)) of California consumers on behalf of Client. If Provider does not process any Personal Information, the Parties shall confirm this in the applicable SOW and this Section 9 shall not apply to that SOW.

9.2 Service Provider Designation

To the extent Provider processes Personal Information on behalf of Client, Provider is designated as a "service provider" or "contractor" under Cal. Civ. Code § 1798.140(ag)/(j) of the CPRA. As a service provider/contractor, Provider:
(a) Shall process Personal Information only for the business purpose described in each SOW and as instructed by Client;
(b) Shall not sell or share Personal Information as defined by the CPRA;
(c) Shall not retain, use, or disclose Personal Information for any commercial purpose other than the business purpose specified in the applicable SOW;
(d) Shall not combine Personal Information received from Client with Personal Information received from other sources, except as permitted under Cal. Civ. Code § 1798.140(ag)(3);
(e) Shall certify that it understands and will comply with these restrictions.

9.3 Provider's CCPA/CPRA Obligations

Provider shall:
(a) Implement and maintain commercially reasonable security measures protecting Personal Information against unauthorized access, destruction, use, modification, or disclosure — Cal. Civ. Code § 1798.81.5;
(b) Notify Client within [________________________________] hours (not to exceed 72 hours) of discovering any security breach or unauthorized access to Personal Information, and cooperate with Client's response obligations under Cal. Civ. Code § 1798.82;
(c) Delete or return all Personal Information upon termination of the applicable SOW or Client's written request, except to the extent retention is required by Applicable Law;
(d) Cooperate with Client's responses to consumer rights requests (access, deletion, correction, opt-out of sale/sharing) within timeframes that allow Client to meet its statutory response deadlines;
(e) Permit Client (or Client's designated auditor) to audit Provider's Personal Information processing upon reasonable prior notice;
(f) Not engage subcontractors to process Personal Information without Client's prior written consent and a written contract imposing equivalent CPRA obligations on the subcontractor.

9.4 CPRA Service Provider Agreement

If the volume or sensitivity of Personal Information processed warrants, the Parties shall execute the CCPA/CPRA Service Provider Addendum attached as Exhibit B.

10. REPRESENTATIONS, WARRANTIES, AND LICENSING

10.1 Mutual Representations

Each Party represents and warrants that:
(a) It is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation and, if doing business in California, is duly qualified to do business in California;
(b) It has full power and authority to enter into and perform this Agreement;
(c) The execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate/entity action and do not violate any applicable law or any other agreement to which it is a party; and
(d) There is no pending or threatened lawsuit, regulatory action, or governmental investigation that would materially impair its ability to perform under this Agreement.

10.2 Provider Warranties

Provider further represents and warrants that:
(a) Conformance: The Services and Deliverables will conform in all material respects to the specifications in the applicable SOW for [________________________________] ([___]) days after delivery;
(b) No IP Infringement: The Deliverables, when used as intended, will not infringe, misappropriate, or otherwise violate any third-party Intellectual Property Rights;
(c) Originality: The Deliverables are and will be original to Provider or Provider has the right to use and assign all third-party materials incorporated therein;
(d) No Malware: No Deliverable contains any virus, malware, backdoor, spyware, or disabling code;
(e) Workforce Compliance: Provider is in compliance with AB 5 (Cal. Labor Code § 2775 et seq.) with respect to Provider's own workforce; and
(f) No Debarment: Provider is not debarred, suspended, or proposed for debarment by any federal or California state agency.

10.3 California Contractor Licensing — Cal. Bus. & Prof. Code § 7031

[CA REQUIRED if applicable to Services]

CRITICAL CALIFORNIA LICENSING WARNING: Under California Business and Professions Code § 7031, a contractor who is required to hold a California Contractors State License Board (CSLB) license and who performs work without a valid license cannot collect compensation for that work — even if the work was performed satisfactorily. Further, § 7031(b) permits the client to recover all compensation paid to an unlicensed contractor, regardless of the quality of work performed.

☐ [CHECK IF APPLICABLE] If any Services under this Agreement involve construction, alteration, repair, improvement, moving, demolition, or renovation of any building, structure, road, or utility, Provider must hold a valid California CSLB license of the appropriate classification. Provider represents and warrants that it holds: CSLB License No. [________________________________], Classification: [________________________________], Expiration: [__/__/____].

☐ [CHECK IF APPLICABLE] Provider's Services are professional services not subject to CSLB licensing requirements (e.g., consulting, marketing, software development, accounting). Provider nonetheless holds the following California professional licenses or certifications required for the Services: [________________________________]

10.4 Disclaimer

EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 10, NEITHER PARTY MAKES ANY WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, OR NON-INFRINGEMENT.

11. INDEMNIFICATION

11.1 Provider Indemnification

Provider shall indemnify, defend, and hold harmless Client and its affiliates, officers, directors, employees, and agents (collectively, "Client Indemnitees") from and against any third-party claims, damages, losses, liabilities, costs, and expenses (including reasonable attorney's fees) arising out of or relating to:
(a) Provider's breach of any representation, warranty, or obligation under this Agreement;
(b) Provider's gross negligence or willful misconduct;
(c) Any claim that the Deliverables (excluding Client-provided materials) infringe any third-party Intellectual Property Rights;
(d) Provider's violation of any Applicable Law, including AB 5 with respect to Provider's own workforce; or
(e) Any claim by Provider's employees, subcontractors, or workers alleging employment status, misclassification, or entitlement to benefits under California law arising from Provider's relationship with its own workforce.

11.2 Client Indemnification

Client shall indemnify, defend, and hold harmless Provider and its affiliates, officers, directors, employees, and agents from and against any third-party claims arising out of or relating to:
(a) Client's breach of any representation, warranty, or obligation under this Agreement;
(b) Client's gross negligence or willful misconduct;
(c) Any claim that Client-provided materials infringe any third-party Intellectual Property Rights; or
(d) Client's violation of any Applicable Law.

11.3 Indemnification Procedure

The indemnified Party shall: (a) promptly notify the indemnifying Party in writing of any Claim; (b) permit the indemnifying Party to control the defense and settlement (except that the indemnifying Party may not settle any Claim imposing obligations on the indemnified Party without its prior written consent); and (c) reasonably cooperate at the indemnifying Party's expense.

12. LIMITATION OF LIABILITY

12.1 Liability Cap

EXCEPT FOR EXCLUDED CLAIMS (DEFINED BELOW), EACH PARTY'S TOTAL AGGREGATE LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL NOT EXCEED [THE TOTAL FEES PAID OR PAYABLE TO PROVIDER UNDER THE APPLICABLE SOW IN THE TWELVE (12) MONTHS PRECEDING THE CLAIM / $[________________________________]].

12.2 Excluded Claims

The liability cap in Section 12.1 does not apply to:
(a) Either Party's indemnification obligations under Section 11;
(b) Breaches of Section 7 (Confidentiality) or misappropriation of Trade Secrets;
(c) Infringement of the other Party's Intellectual Property Rights;
(d) A Party's gross negligence or willful misconduct; or
(e) Amounts owed for Services actually performed and unpaid.

12.3 Consequential Damages Waiver

NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, LOSS OF DATA, LOSS OF GOODWILL, OR BUSINESS INTERRUPTION, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION APPLIES REGARDLESS OF THE THEORY OF LIABILITY.

[GUIDANCE: Under California law, consequential damages waivers are generally enforceable between commercial parties. However, they may not bar statutory damages available under the CLRA or UCL in consumer-facing contexts.]

12.4 Insurance Requirements

Provider shall maintain, at its own expense throughout the Term:
(a) Commercial General Liability: Minimum $[________________________________] per occurrence and $[________________________________] aggregate;
(b) Professional Liability / Errors & Omissions: Minimum $[________________________________] per claim;
(c) Workers' Compensation: As required by California law (Cal. Lab. Code § 3700) for all of Provider's California-based employees; and
(d) Cyber Liability (if Services involve data processing): Minimum $[________________________________] per claim.

Provider shall furnish certificates of insurance naming Client as an additional insured upon request. Workers' compensation coverage is mandatory in California for any entity with employees — failure to carry workers' compensation is a misdemeanor (Cal. Lab. Code § 3700.5).

13. TERM AND TERMINATION

13.1 Term

This Agreement commences on the Effective Date and continues until terminated pursuant to this Section 13. Each SOW shall specify its own performance period.

13.2 Termination for Cause

Either Party may terminate this Agreement or any SOW immediately upon written notice if:
(a) The other Party materially breaches this Agreement and fails to cure within [________________________________] ([___]) calendar days after receipt of written notice specifying the breach; or
(b) The other Party becomes insolvent, makes an assignment for the benefit of creditors, or is the subject of a voluntary or involuntary bankruptcy petition not dismissed within 60 days.

13.3 Termination for Convenience

Client may terminate this Agreement or any SOW for any reason or no reason upon [________________________________] ([___]) calendar days' prior written notice to Provider. Upon such termination, Client shall pay Provider for all Services satisfactorily performed through the effective termination date, plus all pre-approved expenses incurred and non-cancellable commitments made prior to notice.

13.4 Effect of Termination

Upon termination or expiration:
(a) Provider shall promptly deliver to Client all Deliverables and work-in-progress;
(b) Each Party shall promptly return or certifiably destroy the other Party's Confidential Information (except as required to be retained by Applicable Law);
(c) All amounts owed to Provider for work performed prior to termination become immediately due and payable;
(d) Sections 5.7, 6, 7, 8, 9, 10.4, 11, 12, 13.4, 14, 15, and 16 shall survive termination or expiration.

14. GENERAL RELEASE OF CLAIMS (CAL. CIV. CODE § 1542)

[CA REQUIRED if this Agreement includes a settlement or release of claims]

[GUIDANCE: Include this section only if the Agreement is settling a prior dispute or releasing known or unknown claims. If this is a routine new engagement with no prior dispute, this section is not needed and should be deleted.]

In consideration of the mutual covenants herein, each Party, for itself and its successors and assigns, hereby releases and forever discharges the other Party from any and all claims, actions, causes of action, demands, obligations, costs, expenses, and liabilities of every kind and nature, whether known or unknown, suspected or unsuspected, that arose or exist as of the Effective Date relating to [DESCRIBE SUBJECT MATTER OF RELEASE — e.g., "the Services performed under the Prior Agreement dated [DATE]"].

[CA REQUIRED — CALIFORNIA CIVIL CODE § 1542 WAIVER]

SECTION 1542 WAIVER: Each Party expressly waives and relinquishes all rights and benefits under California Civil Code Section 1542, which provides:

"A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party."

Each Party acknowledges that it may later discover facts different from or in addition to those currently known or believed to be true with respect to the claims released in this Section 14, and expressly agrees that the release shall remain in full force and effect in all respects notwithstanding any such different or additional facts.

15. DISPUTE RESOLUTION

15.1 Governing Law

This Agreement and all disputes arising out of or relating to it shall be governed by and construed in accordance with the laws of the State of California, without regard to California's conflict-of-laws rules.

15.2 Good Faith Negotiation

Before initiating formal dispute resolution, the Parties shall attempt to resolve any dispute through good-faith negotiation by their respective senior representatives for a period of [________________________________] ([___]) calendar days after the disputing Party provides written notice of the dispute.

15.3 Dispute Resolution Method

[Select ONE option and delete the other before execution]

OPTION A — COURT LITIGATION

Any dispute, controversy, or claim arising out of or relating to this Agreement that is not resolved by negotiation under Section 15.2 shall be resolved exclusively in the Superior Court of the State of California, County of [________________________________], or, if federal jurisdiction exists, the United States District Court for the [________________________________] District of California. Each Party irrevocably submits to the personal jurisdiction of such courts and waives any objection to venue.

OPTION B — BINDING ARBITRATION

[CA REQUIRED — READ CAREFULLY BEFORE SELECTING ARBITRATION]

[GUIDANCE: California has enacted multiple statutes protecting parties in arbitration, including Cal. Code Civ. Proc. § 1281.97 (employer must pay arbitration fees or waives right to arbitrate; neutral arbiter selection required), § 1281.98 (breach of arbitration fees = material breach allowing plaintiff to withdraw), and § 1281.99 (court may impose sanctions for fee non-payment). Post-Viking River Cruises (2022), individual PAGA claims may be compelled to arbitration, but representative PAGA claims on behalf of other aggrieved employees cannot be compelled and may proceed in court even if individual claims go to arbitration.]

Any dispute, controversy, or claim arising out of or relating to this Agreement, including any question of arbitrability, that is not resolved through negotiation under Section 15.2 shall be submitted to binding arbitration administered by [JAMS / AAA / other] in accordance with its [Comprehensive Arbitration Rules / Commercial Arbitration Rules] then in effect. The arbitration shall be conducted by [one (1) / three (3)] arbitrator(s), seated in [________________________________], California. The arbitrator(s) shall apply California substantive law. Judgment on the award may be entered in any court of competent jurisdiction.

California Arbitration Fee Requirement (Cal. Code Civ. Proc. § 1281.97): If Client is the "drafting party" of this arbitration clause and Provider brings an employment, wage, or contractor-classification claim, Client must pay all arbitration fees (including JAMS/AAA filing and arbitrator fees) within 30 days of invoice. Failure to timely pay is a material breach, entitling Provider to withdraw from arbitration and proceed in court. [GUIDANCE: Ensure the designated arbitration provider is on the approved list required by Cal. Code Civ. Proc. § 1281.85.]

Exceptions to Arbitration: Notwithstanding this Section 15.3, either Party may seek interim injunctive relief in any court of competent jurisdiction to protect Confidential Information, Trade Secrets, or Intellectual Property Rights pending arbitration. Additionally, any representative PAGA claims (Cal. Lab. Code § 2698 et seq.) cannot be compelled to arbitration and shall be severed and litigated in California Superior Court, even if individual claims are arbitrated.

15.4 Cal. Code Civ. Proc. § 998 Offers

[CA REQUIRED — PRACTICAL NOTE] Either Party may, in its discretion, serve a formal offer to compromise under Cal. Code Civ. Proc. § 998 at any time during litigation or arbitration. A rejecting Party who fails to obtain a more favorable judgment or award may be subject to the other Party's expert witness fees and certain costs from the date of the offer.

15.5 Attorney's Fees

In any action or proceeding to enforce or interpret this Agreement, the prevailing Party shall be entitled to recover its reasonable attorney's fees, costs, and expenses from the non-prevailing Party.

[CA REQUIRED — Cal. Civ. Code § 1717 Notice]: Under California Civil Code Section 1717, if this Agreement provides for attorney's fees in an action on the contract, the right to fees is mutual — both Parties may recover fees as a prevailing party, regardless of whether the fee provision is written as one-directional. Section 1717 voids any provision making fees available only to one Party in a contract action.

16. GENERAL PROVISIONS

16.1 Entire Agreement; Precedence

This Agreement, together with all executed SOWs, Exhibits, and Change Orders, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, representations, warranties, and agreements, whether oral or written. In the event of a conflict between this Agreement and any SOW, the SOW controls for matters specific to that engagement.

16.2 Amendments; Waivers

No amendment to this Agreement is effective unless in writing and signed by authorized representatives of both Parties. No waiver of any right is effective unless in writing and signed. A waiver on one occasion does not constitute a waiver on any other occasion.

16.3 Assignment

Neither Party may assign or delegate any right or obligation under this Agreement without the prior written consent of the other Party (not to be unreasonably withheld), except that either Party may assign this Agreement to a successor entity in connection with a merger, consolidation, or sale of substantially all of its assets, upon written notice. Any purported assignment in violation of this Section 16.3 is void.

16.4 Severability

If any provision of this Agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it enforceable, and the remaining provisions shall continue in full force and effect.

16.5 Independent Contractors

The Parties are independent contractors. This Agreement does not create an employment, agency, partnership, franchise, or joint venture relationship. Provider has no authority to bind Client in any contract, agreement, or obligation.

16.6 Notices

All notices required or permitted under this Agreement must be in writing and delivered by:
(a) Personal delivery (effective upon delivery);
(b) Nationally recognized overnight courier (effective next business day);
(c) Certified mail, return receipt requested (effective three business days after mailing); or
(d) Email with confirmed read receipt or affirmative reply (effective upon confirmed receipt).

Notices shall be addressed to the Parties at the addresses in Section 1.1, or such other address as a Party may designate by 10 days' advance written notice.

16.7 Counterparts; Electronic Signatures

This Agreement may be executed in counterparts, each of which is an original and all of which together constitute one instrument. Electronic signatures complying with the California Uniform Electronic Transactions Act (Cal. Civ. Code § 1633.1 et seq.) are valid and binding. PDF and DocuSign/Adobe Sign signatures are accepted.

16.8 No Third-Party Beneficiaries

This Agreement is for the sole benefit of the Parties and their respective permitted successors and assigns. Nothing herein creates any right in any third party.

16.9 California-Specific Statutory Notices

(a) Workers' Compensation: Provider shall maintain workers' compensation insurance as required by Cal. Lab. Code § 3700 for all of its California-based employees. Client is not liable for workers' compensation claims by Provider's employees.

(b) Automatic Renewal: If this Agreement auto-renews, it complies with the California Automatic Renewal Law, Cal. Bus. & Prof. Code § 17600 et seq. The auto-renewal terms are stated in Section 4.6 and the applicable SOW.

(c) Headings: Section headings are for convenience only and shall not affect the interpretation of this Agreement.

17. EXECUTION BLOCK

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

EXHIBIT A — STATEMENT OF WORK (SOW)

SOW No.: [________________________________]
SOW Effective Date: [__/__/____]
Agreement Effective Date: [__/__/____]

Authorized Signatures:

EXHIBIT B — CCPA/CPRA SERVICE PROVIDER ADDENDUM

[Include this Addendum if Provider processes Personal Information of California consumers on Client's behalf.]

This CCPA/CPRA Service Provider Addendum ("Addendum") is entered into as of [__/__/____] and is incorporated into the Agreement.

B.1 Scope

This Addendum governs Provider's processing of Personal Information received from or on behalf of Client in connection with the Services.

B.2 Service Provider Certification

Provider certifies that it understands and will comply with the restrictions set forth in Cal. Civ. Code § 1798.140(ag), including:

☐ Processing Personal Information only for the specified business purpose(s): [________________________________]
☐ Not selling or sharing Personal Information as defined by the CPRA
☐ Not retaining, using, or disclosing Personal Information outside the specified business purpose
☐ Not combining Client's Personal Information with data from other sources except as permitted by § 1798.140(ag)(3)
☐ Granting Client the right to audit Provider's processing upon reasonable notice
☐ Notifying Client of any security breach within [________________________________] hours

B.3 Data Security

Provider shall implement and maintain the following security measures to protect Personal Information:

☐ Encryption of Personal Information at rest and in transit
☐ Access controls limiting Personal Information access to authorized personnel only
☐ Regular security risk assessments
☐ Employee training on data privacy and security
☐ Incident response plan addressing California data breach notification requirements (Cal. Civ. Code § 1798.82)

B.4 Consumer Rights Assistance

Provider shall assist Client in fulfilling consumer rights requests under the CCPA/CPRA within [________________________________] ([___]) business days of Client's written request:

☐ Right to know / access Personal Information (§ 1798.110)
☐ Right to deletion of Personal Information (§ 1798.105)
☐ Right to correction of inaccurate Personal Information (§ 1798.106)
☐ Right to opt out of sale or sharing (§ 1798.120)
☐ Right to limit use of sensitive Personal Information (§ 1798.121)

B.5 Subprocessors

Provider shall obtain Client's prior written approval before engaging any subprocessor that will process Personal Information. Provider shall enter into written agreements with all approved subprocessors imposing equivalent CPRA obligations.

Approved Subprocessors (as of Effective Date): [________________________________]

SOURCES AND REFERENCES

• AB 5 (Cal. Labor Code § 2775 et seq.): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=2775.&lawCode=LAB
• Cal. Labor Code § 2870 (invention assignment limitation): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=2870.&lawCode=LAB
• Cal. Bus. & Prof. Code § 16600 (non-compete void): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=16600.&lawCode=BPC
• Cal. Bus. & Prof. Code § 7031 (contractor licensing): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=7031.&lawCode=BPC
• Cal. Civ. Code § 1542 (general release): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=1542.&lawCode=CIV
• Cal. Civ. Code § 1717 (attorney's fees mutuality): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=1717.&lawCode=CIV
• CCPA/CPRA (Cal. Civ. Code § 1798.100 et seq.): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=1798.100.&lawCode=CIV
• California Privacy Protection Agency (CPPA): https://cppa.ca.gov/
• Cal. Civ. Code § 3426 et seq. (CUTSA): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=3426.&lawCode=CIV
• Cal. Code Civ. Proc. § 1281.97 (arbitration fee requirement): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=1281.97.&lawCode=CCP
• SB 699 (2023 — non-compete enforcement ban): https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB699
• Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903: https://law.justia.com/cases/california/supreme-court/2018/s222732.html
• Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937: https://law.justia.com/cases/california/supreme-court/2008/s147190.html
• Viking River Cruises, Inc. v. Moriana, 142 S.Ct. 1906 (2022): https://www.supremecourt.gov/opinions/21pdf/20-1573_o7kq.pdf
• McGill v. Citibank, N.A. (2017) 2 Cal.5th 945
• California DIR — Independent Contractor vs. Employee Guide: https://www.dir.ca.gov/dlse/faq_independentcontractor.htm
• CSLB License Lookup: https://www.cslb.ca.gov/OnlineServices/CheckLicense/ContractorLicense.aspx
• California Automatic Renewal Law (Cal. Bus. & Prof. Code § 17600): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=17600.&lawCode=BPC

This template is for informational purposes only and does not constitute legal advice. California professional services law — including AB 5, non-compete prohibitions, CCPA/CPRA, and the CUTSA — is complex and changes frequently through legislation and litigation. This agreement must be reviewed and customized by a qualified attorney licensed in California before use.