Indiana Independent Contractor Agreement Template

Introduction

Key Things to Know

1. 1

   Indiana's unemployment test presumes employment and requires all three conditions. Under Ind. Code 22-4-8-1(b), services performed by an individual for remuneration are deemed employment subject to the article irrespective of whether the common-law relationship of master and servant exists, unless the employing unit shows that the individual is and will continue to be free from control and direction in connection with the performance of the service, both under the contract of service and in fact; that the service is performed outside the usual course of the business for which it is performed; and that the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature, or is a sales agent paid solely on commission who is master of his or her own time and effort.

2. 2

   The middle condition is the strict single-clause version. Indiana asks only whether the service is performed outside the usual course of the business for which it is performed. There is no alternative branch about performing the work away from the hiring party's premises, so a remote or off-site contractor gets no help from location alone. Work that is central to what the hiring business sells will generally fail this condition however the engagement is papered.

3. 3

   Workers' compensation is decided on borrowed federal guidance. Ind. Code 22-3-6-1(b)(7) provides that a person is an independent contractor and not an employee under the workers' compensation article if the person is an independent contractor under the guidelines of the United States Internal Revenue Service. There is no presumption of employment in that act, which is the mirror image of the unemployment position, so the same worker can be an employee for unemployment tax and a contractor for workers' compensation on identical facts.

4. 4

   Indiana's general employee analysis is the ten Restatement factors. In Moberly v. Day, 757 N.E.2d 1007 (Ind. 2001), which arose over vicarious liability rather than a compensation claim, the Indiana Supreme Court applied the extent of control the master may exercise over the details of the work; whether the worker is engaged in a distinct occupation or business; whether the work is usually done under direction or by a specialist without supervision in that locality; the skill required; who supplies the tools, instrumentalities, and place of work; the length of the engagement; whether payment is by time or by the job; whether the work is part of the employer's regular business; whether the parties believe they are creating a master and servant relationship; and whether the principal is in business. The court added that all factors are considered and no single factor is dispositive.

5. 5

   In the construction trades the paperwork obligation runs both ways. An independent contractor in the construction trades who does not elect coverage must obtain a certificate of exemption under Ind. Code 22-3-2-14.5, which involves a statement filed with the Department of State Revenue, annual supporting documentation, revenue clearance, a fifteen dollar fee, and filing the certificate with the Worker's Compensation Board, which date stamps it. The certificate takes effect only as of midnight seven business days after the date it is file stamped, so it cannot be arranged the morning work starts.

6. 6

   The hiring party has its own duty, which is the part most often missed. A person who contracts for the services of another person not covered by the workers' compensation article must secure a copy of a stamped certificate of exemption from the person hired, and may not require a person who has provided a stamped certificate to carry workers' compensation coverage. In the construction trades, in other words, the independent contractor agreement is not complete until the date stamped certificate is attached to it.

7. 7

   The minimum wage act uses a two-part carve-out and reaches fewer employers than businesses expect. The Indiana Minimum Wage Law defines employee broadly as any person employed or permitted to work or perform any service for remuneration, then excludes persons engaged in an independently established trade, occupation, profession, or business who are free from control or direction both under a contract of service and in fact. There is no middle condition. The act's definition of employer also excludes any employer subject to the minimum wage provisions of the federal Fair Labor Standards Act, so most Indiana pay claims are resolved under the federal standard instead.

Indiana Requirements for Independent Contractor Agreement

• Indiana Three-Part Unemployment Test With Employment Presumed (Ind. Code 22-4-8-1(b))

  Services performed by an individual for remuneration are deemed employment subject to the article irrespective of whether the common-law relationship of master and servant exists, unless all of the conditions are shown to the satisfaction of the Department of Workforce Development: freedom from control and direction in connection with the performance of the service, both under the contract of service and in fact; performance of the service outside the usual course of the business for which it is performed; and the individual being customarily engaged in an independently established trade of the same nature, or being a sales agent paid solely on commission who is master of his or her own time and effort. Failing any one condition ends the inquiry.

• Indiana's Usual Course Condition Has No Location Alternative (Ind. Code 22-4-8-1(b)(2))

  The second condition asks only whether the service is performed outside the usual course of the business for which it is performed. Unlike the versions used in some states, it offers no alternative branch for services performed away from all of the hiring party's places of business. Remote or off-site performance therefore does not satisfy this condition on its own, and work central to the hiring party's line of business will generally fail it.

• Indiana Workers' Compensation Adopts the Federal Guidelines (Ind. Code 22-3-6-1(b)(7))

  A person is an independent contractor and not an employee under the workers' compensation article if the person is an independent contractor under the guidelines of the United States Internal Revenue Service. Because that is a common-law control inquiry carrying no statutory presumption of employment, the workers' compensation analysis can reach a different result than the unemployment analysis on the same facts.

• Indiana Ten-Factor Agency Analysis (Moberly v. Day, 757 N.E.2d 1007 (Ind. 2001))

  The Indiana Supreme Court weighs the extent of control the master may exercise over the details of the work, whether the worker is engaged in a distinct occupation or business, whether the work is usually done under direction or by a specialist without supervision in the locality, the skill required, who supplies the instrumentalities and place of work, the length of the engagement, whether payment is by time or by the job, whether the work is part of the employer's regular business, whether the parties believe they are creating a master and servant relationship, and whether the principal is in business. All factors are considered and no single factor is dispositive. The decision arose in a vicarious liability posture and states Indiana's general analysis.

• Indiana Construction Trades Certificate of Exemption (Ind. Code 22-3-2-14.5)

  An independent contractor in the construction trades who does not elect workers' compensation coverage must obtain a certificate of exemption. The route runs through the Department of State Revenue with a filed statement, annual supporting documentation, revenue clearance, and a fifteen dollar fee, followed by filing with the Worker's Compensation Board, which date stamps the certificate. It becomes effective as of midnight seven business days after the date it is file stamped, so the timing has to be built into the engagement schedule.

• Indiana Places a Duty on the Hiring Party to Secure the Stamped Certificate (Ind. Code 22-3-2-14.5)

  A person who contracts for the services of another person not covered by the workers' compensation article must secure a copy of a stamped certificate of exemption from the person hired, and may not require a person who has provided a stamped certificate to carry workers' compensation coverage. The obligation falls on the business as well as the worker, which makes the stamped certificate a natural exhibit to the signed agreement.

• Indiana Real Estate Professional Exclusion Requires Written Terms (Ind. Code 22-3-6-1(b)(6))

  Real estate professionals are outside workers' compensation employee status where they are licensed real estate agents, substantially all of their remuneration is directly related to sales volume rather than the number of hours worked, and they have written agreements with real estate brokers stating that they are not to be treated as employees for tax purposes. All three elements are required, and the third is a drafting instruction for the agreement itself.

• Indiana Owner-Operator Exclusion Depends on a Qualifying Written Contract (Ind. Code 22-3-6-1(b)(8))

  Motor carrier owner-operators are excluded from workers' compensation employee status only where the services are performed under a written contract meeting the leasing requirements that apply to them, drawn from Indiana motor carrier law, the Indiana Administrative Code, and the federal truth in leasing regulations at 49 C.F.R. Part 376. The engagement should be papered against those requirements rather than on a generic form.

• Indiana Minimum Wage Carve-Out and Federal Displacement (Ind. Code 22-2-2-3)

  The Indiana Minimum Wage Law defines employee as any person employed or permitted to work or perform any service for remuneration, then excludes persons engaged in an independently established trade, occupation, profession, or business who are free from control or direction both under a contract of service and in fact, with no usual-course condition. Its definition of employer reaches only businesses with two or more employees in a work week and excludes any employer subject to the minimum wage provisions of the federal Fair Labor Standards Act. A direct seller is excluded only where the services are performed under a written contract providing that the person will not be treated as an employee for tax purposes.