Delaware Independent Contractor Agreement Template

Introduction

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.

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.