Georgia Independent Contractor Agreement Template

Introduction

Key Things to Know

1. 1

   Georgia unemployment law starts from employment and works backwards. Services performed by an individual for wages are considered employment subject to unemployment insurance taxes unless and until it is shown that a statutory exemption applies, which puts the burden on the employing unit. The Department of Labor states the rule plainly: a worker not meeting the statutory tests required for independent contractor exemption as found in O.C.G.A. 34-8-35(f) is considered to be an employee.

2. 2

   There are two independent ways to satisfy O.C.G.A. 34-8-35(f), and only one has to be met. The first is a two-part showing that the individual has been and will continue to be free from control or direction over the performance of the services, both under the contract of service and in fact, and that the individual is customarily engaged in an independently established trade, occupation, profession, or business. The second is entirely different: an IRS determination on Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, deciding against employee status.

3. 3

   Freedom from control is not left to argument. The statute demonstrates it through seven indicia: the individual is not prohibited from working for other companies or holding other employment at the same time; is free to accept or reject work assignments without consequence; is not prescribed minimum hours or, in sales, a minimum number of orders; has discretion to set his or her own work schedule; receives only minimal instructions and no direct oversight or supervision beyond the location of the work and requested deadlines; has no territorial or geographic restrictions where applicable; and is not required to perform or behave in a manner the Commissioner determines to demonstrate employment.

4. 4

   Georgia's unemployment test has no middle prong. There is no requirement that the service fall outside the usual course of the hiring business, which is the prong that defeats most classifications in states running a full three-part test. A Georgia business can engage a genuinely independent worker to do work that sits squarely inside its own line of business and still clear the statutory test, provided control and independent-trade status hold up.

5. 5

   The Department of Labor's warning about the document is worth reading before relying on one. Independent contractors are not independent just because that is what their employer calls them, because that is what they call themselves, or because they sign an independent contractor agreement. For unemployment purposes the agreement is evidence of what the parties intended, not a substitute for the statutory showing.

6. 6

   Workers' compensation moves in the opposite direction on the same document. Under O.C.G.A. 34-9-1(2), employee reaches every person in the service of another under any contract of hire or apprenticeship, written or implied, and the independent contractor carve-out in that same paragraph begins with the person having a written contract as an independent contractor. The paragraph also treats an owner-operator as defined in O.C.G.A. 40-2-87 as an independent contractor, and provides that individuals who are parties to a franchise agreement under the Federal Trade Commission franchise disclosure rule are not deemed employees.

7. 7

   A corporate officer who wants out of workers' compensation coverage does it by filing, not by contract. O.C.G.A. 34-9-1(2) allows any officer of a corporation to elect exemption by filing written certification of the election with the insurer or, where there is no insurer, with the State Board of Workers' Compensation as provided in O.C.G.A. 34-9-2.1. That is a separate step from signing an independent contractor agreement and neither one accomplishes the other.

Georgia Requirements for Independent Contractor Agreement

• Georgia Workers' Compensation Conditions Contractor Status on a Written Contract (O.C.G.A. 34-9-1(2))

  The workers' compensation definition of employee reaches every person in the service of another under any contract of hire or apprenticeship, written or implied. The independent contractor carve-out within the same paragraph is available to a person who has a written contract as an independent contractor and who buys and resells a product for no other compensation, provides an agricultural service, or otherwise qualifies as an independent contractor. The absence of the written contract removes the starting point for the carve-out.

• Georgia Presumes Employment for Unemployment Insurance (O.C.G.A. 34-8-35(f))

  Services performed by an individual for wages are deemed employment subject to the chapter unless and until the statutory exemption is shown, so the employing unit carries the burden. The Department of Labor states the rule in its Employer Handbook: a worker not meeting the statutory tests required for independent contractor exemption as found in O.C.G.A. 34-8-35(f) is considered to be an employee.

• Georgia Two-Part Control and Independent Trade Showing (O.C.G.A. 34-8-35(f)(1))

  The first route to the exemption requires both that the individual has been and will continue to be free from control or direction over the performance of the services, both under the contract of service and in fact, and that the individual is customarily engaged in an independently established trade, occupation, profession, or business. Both parts must hold, and the control part is measured by conduct as well as by the contract.

• Georgia Seven Statutory Indicia of Freedom From Control (O.C.G.A. 34-8-35(f)(1)(A))

  Freedom from control is demonstrated by whether the individual is not prohibited from working for other companies or holding other employment at the same time, is free to accept or reject work assignments without consequence, is not prescribed minimum hours or a minimum number of sales orders, has discretion to set his or her own work schedule, receives only minimal instructions and no direct oversight or supervision beyond location and requested deadlines, has no territorial or geographic restrictions where applicable, and is not required to act in a manner the Commissioner determines to demonstrate employment.

• Georgia IRS Form SS-8 Determination as a Standalone Alternative (O.C.G.A. 34-8-35(f)(2))

  The exemption is also available where the individual and the services performed for wages are the subject of an SS-8 determination by the Internal Revenue Service that decided against employee status. The Department of Labor's Employer Handbook confirms that only one of the alternative tests must be satisfied to establish the exemption from unemployment taxes, so an SS-8 determination stands on its own without a separate showing on control.

• Georgia Has No Usual Course of Business Prong (O.C.G.A. 34-8-35(f))

  The Georgia unemployment test contains no requirement that the service be performed outside the usual course of the hiring business or away from its premises. Businesses used to the three-part formulation should note the omission, because work that would fail elsewhere for being central to the hiring party's operations can still qualify in Georgia if control and independent-trade status are established.

• Georgia Corporate Officer Workers' Compensation Exemption Requires a Filing (O.C.G.A. 34-9-2.1)

  An officer of a corporation may elect to be exempt from workers' compensation coverage by filing written certification of the election with the insurer or, where there is no insurer, with the State Board of Workers' Compensation. This is a filing obligation separate from any independent contractor agreement, and executing a contract does not make the election.

• Georgia Owner-Operators and Franchisees Are Treated Separately (O.C.G.A. 34-9-1(2) and 40-2-87)

  For workers' compensation, an owner-operator as defined in O.C.G.A. 40-2-87 is deemed to be an independent contractor, and individuals who are parties to a franchise agreement as set out by the Federal Trade Commission franchise disclosure rule at 16 C.F.R. 436.1 through 436.11 are not deemed employees for that chapter. These are narrow statutory categories rather than a general route to contractor status.

• Georgia Minimum Wage Law Supplies No Classification Test (O.C.G.A. 34-4-1 through 34-4-3)

  The Georgia Minimum Wage Law names itself, assigns administration to the Commissioner of Labor, sets a state rate of $5.15 per hour, and lists exempt employers and workers. It defines no classification test and does not apply to an employer subject to a federal act providing a higher minimum wage. Because the federal rate is higher, pay claims in Georgia are decided under the federal standard rather than under a state contractor test.