DocDraft Logo

Delaware Independent Contractor Agreement Template

Delaware treats the classification itself as a disclosure event, and in 2022 it pushed a construction industry definition into the wage act for every industry.

Find out where you stand in Delaware

What do you need the contractor agreement for?

DocDraft provides document preparation, not legal advice.

Introduction

An Independent Contractor Agreement is a contract between a business and a self-employed worker covering scope, payment, ownership of the work product, and how the engagement ends. Delaware prescribes no wording for that document, but it does two things that reshape how it should be drafted. The first is a cross-reference added in 2022. Delaware defines independent contractor in its Workplace Fraud Act, a statute whose own chapter reaches construction only, and 19 Del. C. 1101(a)(6) now pulls that definition into the Wage Payment and Collection Act, which is not industry limited. The result is that an ABC-style three part test governs wage payment classification across every industry in the state. It is a softer test than some, because 19 Del. C. 3501(a)(12) defines outside of the usual course of business disjunctively, so work at a location that is not the employer place of business can satisfy that element on its own. The second is a disclosure duty. In construction, 19 Del. C. 3511 requires the employer to hand every worker it classifies as an independent contractor or exempt person a written notice of that classification at the time of hire, in English and in Spanish, signed by both parties. Deliver it and the employer earns a presumption of good faith. Skip it and the employer faces a penalty of $500 for each individual not notified, and evidence pointing toward a knowing violation.

Key Things to Know

  1. 1

    The definition that decides Delaware wage claims lives in a construction statute but is no longer limited to construction. 19 Del. C. 1101(a)(6) provides that independent contractor means as defined in 19 Del. C. 3501, and the Wage Payment and Collection Act at 1101(a)(4) excludes independent contractors from the definition of employee. Because chapter 11 applies across industries, an ABC-style test now governs wage payment classification statewide.

  2. 2

    The three part definition at 19 Del. C. 3501(a)(9) asks whether the individual or entity performs the work free from the control and direction of the employer over the performance of the services, is customarily engaged in an independently established trade, occupation, profession, or business, and performs work that is either outside the usual course of the business of the employer or, where the person is a registered contractor under Chapter 36, performed outside any place of business of the employer.

  3. 3

    The third element is easier to meet in Delaware than in states with a conjunctive formulation. 19 Del. C. 3501(a)(12) defines outside of the usual course of business as work at a location that is not the employer place of business, or work not integrated into the operation of the employer, or work unrelated to the employer business. Any one of the three satisfies the element, which is a materially lower bar than requiring both a different line of business and a different location.

  4. 4

    Unemployment insurance uses its own ABC test with the burden on the employing unit. Under 19 Del. C. 3302(14)(K), services for wages are employment irrespective of whether the common law relationship exists, unless and until it is shown to the satisfaction of the Department that all three prongs are met. Prong A asks whether the individual is free from control and direction both under the contract for the performance of services and in fact, so the agreement alone cannot carry it.

  5. 5

    Construction employers owe a written notice at hire, and it is bilingual. Under 19 Del. C. 3511 the employer must give each individual classified as an independent contractor or exempt person a notice explaining the implications of that classification rather than employee status, including Department of Labor contact information, provided in English and in Spanish, and signed by both the employer and the individual. The notice must be kept with classification records for at least three years.

  6. 6

    The notice cuts both ways. Failing to provide it is itself evidence of a knowing violation of the misclassification prohibition and carries an administrative penalty of $500 for each individual not notified. Providing it earns the employer a presumption that it acted in good faith in making the classification. The obligation is tied to Department regulations specifying the content and form of the notice under 19 Del. C. 3511(f), and the chapter reaches the construction services industry under 19 Del. C. 3502.

  7. 7

    Workers compensation diverges from both of the above. 19 Del. C. 2301(10) defines employee to reach every person in service under any contract of hire, express or implied, oral or written, and the Delaware Supreme Court decides status by a multifactor agency analysis in which the right to control is given predominant consideration. One listed factor is whether the parties believe they are creating the relation of master and servant, which is where the recitals in an agreement genuinely count, though only as one factor.

Key decisions before you file

Before you file a Independent Contractor Agreement in Delaware, a few decisions shape the document: which option to choose and what each one means. The Independent Contractor Agreement guide walks through them.

Open the Independent Contractor Agreement guide

Customize your Independent Contractor Agreement Template with DocDraft

Delaware Independent Contractor Agreement (Compact State Terms)

Delaware prescribes no wording for the agreement itself, but it requires a separate signed notice in construction and applies an ABC-style definition to wage payment claims in every industry. Use the national Independent Contractor Agreement for the commercial terms and add the clauses below.

1. Wage payment classification (19 Del. C. 1101(a)(6), incorporating 19 Del. C. 3501(a)(9)). The parties record that the Contractor performs the work free from the control and direction of the Company over the performance of the services, is customarily engaged in an independently established trade, occupation, profession, or business, and performs work that is either outside the usual course of the business of the Company or, if the Contractor is a registered contractor under Chapter 36 of Title 19, performed outside any place of business of the Company.

2. Outside the usual course of business (19 Del. C. 3501(a)(12)). The third element is met where the work is at a location that is not the place of business of the Company, or is not integrated into its operation, or is unrelated to its business. Any one of the three suffices, which makes the Delaware formulation softer than versions requiring all elements to point the same way.

3. Unemployment insurance (19 Del. C. 3302(14)(K)). Services for wages are employment, irrespective of whether the common law relationship of employer and employee exists, unless the Company shows to the satisfaction of the Department that the Contractor is free from control and direction both under the contract and in fact, that the service is performed outside the usual course of the business or outside all of its places of business, and that the Contractor is customarily engaged in an independently established trade of the same nature. Prong A reaches practice as well as paper, so this Agreement cannot satisfy it alone.

4. Construction classification notice (19 Del. C. 3511). Where the Services are construction services within 19 Del. C. 3502, the Company will provide the Contractor, at the time of hire, a written notice of the classification that explains the implications of being classified as an independent contractor or exempt person rather than an employee, includes Department of Labor contact information, is provided in English and in Spanish, and is signed by both the Company and the Contractor. The Company will retain the signed notice for at least three years with its classification records.

5. Misclassification (19 Del. C. 1102A(a)(5)). The Company does not misclassify a worker as an independent contractor for the purpose of avoiding wage, tax, or workers compensation obligations under Title 19.

6. Workers compensation is decided differently. Delaware applies a multifactor agency analysis in which the right to control is given predominant weight, on top of a definition of employee reaching any contract of hire, express or implied, oral or written. One factor is whether the parties believe they are creating a relation of master and servant, so the recitals here carry weight in that act, but they are one factor and not the answer.

7. Optional limitations period (10 Del. C. 8106(c)). Where this Agreement involves at least $100,000, the parties may specify a limitations period of up to twenty years. The default for a contract action is three years under 10 Del. C. 8106(a).

This Delaware clause set is general information, not legal advice; attorney review is available.

Delaware Requirements for Independent Contractor Agreement

Delaware Wage Act Imports the ABC-Style Definition Statewide (19 Del. C. 1101(a)(6))

The Wage Payment and Collection Act excludes independent contractors from the definition of employee and defines the term by reference to 19 Del. C. 3501. Because chapter 11 is not industry limited, the three part definition written for the Workplace Fraud Act governs wage payment classification across every Delaware industry. The provision was added by 83 Del. Laws, chapter 443, in 2022.

Delaware Three Part Independent Contractor Definition (19 Del. C. 3501(a)(9))

An independent contractor is an individual or entity who performs the work free from the control and direction of the employer over the performance of the services, is customarily engaged in an independently established trade, occupation, profession, or business, and performs work that is either outside the usual course of the business of the employer or, where performed by a registered contractor under Chapter 36 of Title 19, performed outside any place of business of the employer. All three parts must be satisfied.

Delaware Disjunctive Definition of Outside the Usual Course of Business (19 Del. C. 3501(a)(12))

Outside of the usual course of business means work an individual performs for an employer that is at a location that is not the employer place of business, or not integrated into the employer operation, or unrelated to the employer business. Because the three branches are alternatives, this element is easier to satisfy than the conjunctive formulations used in some other states, and off-site performance alone can meet it.

Delaware Construction Classification Notice at Hire (19 Del. C. 3511(a) to (e))

An employer classifying an individual as an independent contractor or exempt person must provide a written notice of that classification at the time the individual is hired. The notice must explain the implications of the classification rather than employee status, include Department of Labor contact information, be provided in English and in Spanish, and be signed by both the employer and the individual. The employer must retain it for at least three years with its classification records.

Delaware $500 Penalty and Good Faith Presumption for the Notice (19 Del. C. 3511)

Failure to provide the required classification notice is evidence of a knowing violation of the misclassification prohibition and carries an administrative penalty of $500 for each individual who was not notified. An employer that provides the notice as required earns a presumption that it acted in good faith in making the classification. The obligation is tied to Department regulations specifying the content and form of the notice under 19 Del. C. 3511(f).

Delaware Unemployment Insurance ABC Test (19 Del. C. 3302(14)(K))

Notwithstanding any other provision of the chapter and irrespective of whether the common-law relationship of employer and employee exists, services performed for wages are employment unless and until it is shown to the satisfaction of the Department that the individual is and will continue to be free from control and direction both under the contract for the performance of services and in fact, that the service is performed outside the usual course of the business or outside all of its places of business, and that the individual is customarily engaged in an independently established trade of the same nature.

Delaware Workers Compensation Right of Control Analysis (19 Del. C. 2301(10); Falconi v. Coombs and Coombs, Inc., 902 A.2d 1094 (Del. 2006))

Employee means every person in service of a corporation, association, firm, or person under any contract of hire, express or implied, oral or written, or performing services for valuable consideration, excluding casual employment outside the regular course of the trade or business. Status is decided by a multifactor agency analysis in which the right to control is given predominant consideration, and the factors include whether the parties believe they are creating the relation of master and servant.

Delaware Misclassification Prohibition (19 Del. C. 1102A(a)(5))

An employer may not misclassify a worker as an independent contractor for purposes of avoiding wage, tax, or workers compensation obligations under Title 19. The prohibition sits inside the Wage Payment and Collection Act and therefore reaches employers in every industry, not only those covered by the construction chapter.

Delaware Per Se Contractor Categories (19 Del. C. 1101(a)(6))

Alongside the three part definition, the Wage Payment and Collection Act treats certain persons as independent contractors, including individuals licensed under the insurance laws, broker-dealers, agents and investment advisers under Title 6, chapter 73, and any person the Department designates by regulation. Where a category applies, the three part analysis is not the operative question for wage payment purposes.

Delaware Extended Limitations Period Option (10 Del. C. 8106(c) and 8106(a))

The default limitations period for an action on a contract is three years. Where the parties to a written contract involving at least $100,000 so provide, they may specify a period of limitations of up to twenty years for actions based on the contract. On larger engagements this is a deliberate drafting choice to make rather than a default to inherit, and it governs the contract claim rather than any classification question.

Frequently Asked Questions

A cross-reference added in 2022. Delaware defines independent contractor in the Workplace Fraud Act, whose own chapter covers construction, and 19 Del. C. 1101(a)(6) imports that definition into the Wage Payment and Collection Act, which is not industry limited. So an ABC-style three part test governs wage payment classification across every industry, not just construction. In construction there is also a separate signed notice due at the time of hire.

Under 19 Del. C. 3501(a)(9) an independent contractor is an individual or entity who performs the work free from the control and direction of the employer over the performance of the services, is customarily engaged in an independently established trade, occupation, profession, or business, and performs work that is either outside the usual course of the business of the employer or, if the person is a registered contractor under Chapter 36 of Title 19, performed outside any place of business of the employer.

No, and the difference is in the definitions. 19 Del. C. 3501(a)(12) provides that outside of the usual course of business means work at a location that is not the employer place of business, or work not integrated into the operation of the employer, or work unrelated to the employer business. Any one of those satisfies the element, so a consultant working from their own premises can meet it even where the service relates to the core business.

Employers in the construction services industry, which is the scope of the chapter under 19 Del. C. 3502. Under 19 Del. C. 3511 the employer must provide each individual it classifies as an independent contractor or exempt person a written notice of the classification at the time the individual is hired, explaining the implications of that classification rather than employee status, including Department of Labor contact information, provided in English and in Spanish, and signed by both parties.

Two things. Failing to comply is itself evidence of a knowing violation of the misclassification prohibition, and it carries an administrative penalty of $500 for each individual who was not notified. The reverse is also true and is the reason to bother: an employer that provides the notice as required gets a presumption that it acted in good faith in making the classification, which is a meaningful advantage if the classification is later questioned.

No. They do different jobs. The agreement sets the scope of work, the fee, ownership of the work product, confidentiality, and termination. The notice is a one-way disclosure to the worker about what being classified as an independent contractor means, with contact details for the state labor department, and it has to be in both English and Spanish and signed by both sides. A construction employer needs both documents, and should keep the signed notice with its classification records for at least three years.

No. 19 Del. C. 2301(10) defines employee broadly to include every person in service under any contract of hire, express or implied, oral or written, and the Delaware Supreme Court applies a multifactor agency analysis giving the right to control predominant consideration. That analysis includes the extent of control the agreement permits over the details of the work, whether the worker is engaged in a distinct occupation or business, whether the work is part of the regular business of the employer, and whether the parties believe they are creating a master and servant relationship.

They matter differently under each act. For unemployment insurance the statute asks whether the worker is free from control both under the contract and in fact, so the recital is necessary but not sufficient. For the wage payment test the recitals describe elements that still have to be true in practice. For workers compensation, whether the parties believe they are creating a master and servant relationship is an enumerated factor, so the recitals do independent work there, but the right to control still dominates.

Sometimes. The default limitations period for a contract action in Delaware is three years. Where a written contract involves at least $100,000, 10 Del. C. 8106(c) allows the parties to specify a period of limitations of up to twenty years for actions based on the contract. That is a drafting option worth considering on larger engagements, and it applies to the contract claim rather than to any classification question.