Hiring independent contractors can save money and provide flexibility, but only if you do it properly. Get the legal help you need to make sure your business's core assets are protected.

Whether you are building a startup or growing an enterprise, it takes expertise to set your company apart from the competition. From developing a brand identity to writing proprietary software code, as you run your business, you will find that there are things you could do yourself (if you had the time to learn), but which are more-efficiently handled by someone who already has the necessary expertise. You do not need a full-time hire, but you do need a professional who you can trust to complete the job on time, on budget, and according to your specifications.

The solution? Hire an independent contractor. All types of companies use independent contractors for all types of projects. Some engage independent contractors on a project-by-project basis, some structure long-term “employment-like” relationships, and some do a little of both. Each of these options can work, but they can also create very real business risks when companies do not structure their relationships with independent contractors properly.

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7 Risks of Hiring an Independent Contractor the Wrong Way

Let's consider an all-too-common scenario: A startup founder finds a "form" independent contractor agreement online (or worse, relies on an outsourcing application's Terms of Service). They then have an independent contractor agree without actually reading the terms. What can go wrong?

The Independent Contractor Is Unqualified

The independent contractor's resume was impressive, but it was also fabricated. You didn’t do your due diligence, and now you don't have any legal representations or warranties that protect your company.

The Independent Contractor Does Not Complete the Project to Specification

Details are important. Especially when a professional who is not sitting next to you or working remotely during the work completion process.You thought you communicated your needs effectively, but the independent contractor missed the mark. Unfortunately, your contract does not include adequate specifications, so now you don't have anything to enforce.

The Independent Contractor Refuses to Make Revisions or Fix Bugs or Requests Additional Money to Complete the Job

You expected rounds of testing and revision. Work needs small or big changes that cannot be done by any other person until it's completed. Your independent contractor expected to deliver one final product. You need more, but your independent contractor says the fee has been earned and he or she won't "work for free."

The Independent Contractor Talks about the Project on Social Media, Breaks Confidentiality or Goes Public With Confidential Information

Your game-changing product has been under wraps for months. Now, it's making the rounds on social media. Why? You didn't include adequate confidentiality provisions in your independent contractor agreement.

The Independent Contractor Claims Ownership of the Intellectual Property

You paid for it, so you own it. Right? Not necessarily. Unless your contract includes the necessary assignment and "work-for-hire" provisions, your independent contractor may own the intellectual property.

The Independent Contractor Develops Similar Work Product for a Competitor

You expected exclusivity, but your agreement didn't do the job. Now, your independent contractor is using your company's information to build a similar platform for a competitor.

The IRS Says You Owe Employment Taxes

As it turns out, that agreement you found online wasn't actually legally sound. The IRS says you need to treat your independent contractor as an employee, and now your company is facing additional taxes, interest, and penalties.

Bonus Risk: You Have to Sue to Protect Your Rights in a Foreign Country

Finally, let's also assume that the independent contractor you hired lives overseas. In addition to owing additional obligations to the IRS, what happens when you need to sue to protect your company's interests? Probably nothing – unless you are willing to go overseas and file a lawsuit in a foreign country.

Customized Flat-Rate Legal Services for Companies that Hire Independent Contractors

While these are all risks that can easily arise when hiring a domestic or foreign independent contractor, they are also risks that can easily be avoided. The key is to be smart about the contracting process, and to invest the minimal time required to do things properly.

At Jiah Kim & Associates, we offer customized flat-rate service packages that allow companies to confidently work with domestic and foreign independent contractors. Each of these packages includes:

One-hour consultation to understand your business's needs and provide advice on best practices.

Development of a customized independent contractor agreement that provides the critical protections your company needs.

Flat-rate legal fee of $500 for domestic (US) independent contractors and $800+ for foreign independent contractors (additional fee based on jurisdiction).

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Get Started with a Complimentary
15-Minute Call with Attorney Jiah Kim

For more information about the risks associated with hiring independent contractors and additional details on our flat-rate service packages, you can schedule a complimentary 15-minute call with attorney Jiah Kim. Our online calendar lets you choose a day and time that work for you. Or, you can call us at (646) 389-5065, and we will help you schedule an appointment as soon as possible.

Have Questions?

Jiah Kim & Associates
1562 First Ave #205-2004
New York, NY 10028