Arizona Independent Contractor Agreement Template

An employing unit may prove the existence of an independent contractor relationship for purposes of Title 23 by having the independent contractor execute a declaration of independent business status and by acting in a manner substantially consistent with the declaration. Compliance creates a rebuttable presumption of an independent contractor relationship. The declaration must substantially comply with the statutory form, must be signed by the independent contractor, and must be dated.

The statutory declaration is built from six numbered acknowledgments. The fifth requires the independent contractor to acknowledge at least six of the ten conditions the section enumerates. Because the statute demands substantial compliance with the form it sets out, the declaration should reproduce the statutory wording rather than summarize it, and the conditions acknowledged should be ones the engagement actually satisfies in practice.

Execution of a declaration is expressly optional and a failure to execute one creates no adverse presumption. The section does not apply to an employing unit that is licensed or required to be licensed under Title 32, chapter 10, so businesses in that licensed category cannot use the declaration route and must rely on the ordinary statutory tests.

The agreement must be dated, signed by both parties, and contain a disclosure statement that the independent contractor is not entitled to workers compensation benefits from the business. It must also state that the business does not require exclusive work, does not provide required business registrations or licenses, does not pay a salary or hourly rate instead of a contract amount, will not terminate before the contract period expires absent breach or a violation of state law, does not provide tools, does not dictate the time of performance, pays in the name on the agreement, and will not combine business operations with the contractor.

Unless the rebuttable presumption is overcome, no premium may be collected by the carrier on payments by the business to the independent contractor where a fully completed written agreement satisfying the subsection is submitted to the carrier. The premium consequence depends on submission, so the executed agreement has to be delivered to the carrier rather than simply retained by the business.

A declaration of independent business status does not operate to the same effect as, or otherwise act as a substitute for, a written agreement executed pursuant to A.R.S. 23-902(D). A business seeking both the Title 23 presumption and the workers compensation premium relief must execute two separate instruments, each satisfying its own statutory requirements.

A written agreement executed in compliance with A.R.S. 23-902(D) is null and void and creates no presumption of an independent contractor relationship if the consent of either party was obtained through misrepresentation, false statements, fraud or intimidation, or through coercion or duress. The presumption therefore depends on how the document was presented and signed, not only on what it contains.

For minimum wage purposes, whether a person is an independent contractor or an employee is determined according to the standards of the federal Fair Labor Standards Act, but the burden of proof is on the party for whom the work is performed to show independent contractor status by clear and convincing evidence. This definition was adopted by voter initiative and is protected against ordinary legislative amendment, so it should not be treated as displaced by the later declaration statute.

An employee is an individual who performs services for an employing unit and who is subject to the direction, rule, or control of the employing unit as to both the method of performing the services and the result to be accomplished. Indications of control include controlling hours of work, location of work, the right to perform services for others, tools, equipment, materials, expenses, and the use of other workers. Individuals performing services as an independent contractor, business person, agent, or consultant are excluded.

Where an employer procures work to be done by a contractor over whose work the employer retains supervision or control, and the work is a part or process in the trade or business of the employer, the contractor and the contractor employees and any subcontractor and its employees are employees of the original employer. An independent contractor is a person independent of the business in the execution of the work, not subject to its rule or control, engaged only in a definite job or piece of work, and subordinate only in effecting a result in accordance with the business design.