Indiana Independent Contractor Agreement Template

Indiana borrows its workers' compensation test from federal tax law while keeping a strict state test for unemployment insurance. Ind. Code 22-3-6-1(b)(7) treats a person as an independent contractor for workers' compensation if the person is an independent contractor under the guidelines of the Internal Revenue Service, and Ind. Code 22-4-8-1(b) applies a three-part test that presumes employment for unemployment purposes. The same engagement can therefore come out differently depending on which agency is asking.

Services performed for remuneration are deemed employment irrespective of whether the common-law relationship of master and servant exists, unless all three conditions are shown to the satisfaction of the Department of Workforce Development. The individual must be free from control and direction in connection with the performance of the service, both under the contract of service and in fact. The service must be performed outside the usual course of the business for which it is performed. And the individual must be customarily engaged in an independently established trade of the same nature, or be a sales agent paid solely on commission who is master of his or her own time and effort.

Because it has only one branch. Indiana asks whether the service is performed outside the usual course of the business for which it is performed, with no alternative asking whether the work is done away from the hiring party's premises. Several states offer that second branch, which lets an off-site contractor qualify even when doing work central to the business. In Indiana the nature of the work relative to the hiring party's own line of business is what counts.

Yes, and it is a predictable outcome rather than an anomaly. A worker performing services inside the hiring business's usual course will generally be an employee for unemployment tax under Ind. Code 22-4-8-1(b), because that condition cannot be met. The same worker may be an independent contractor for workers' compensation, because Ind. Code 22-3-6-1(b)(7) asks only whether the person is an independent contractor under the federal tax guidelines, which do not include a usual-course condition.

In Moberly v. Day, 757 N.E.2d 1007 (Ind. 2001), the Indiana Supreme Court applied the ten familiar agency factors: the extent of control over the details of the work; whether the worker is engaged in a distinct occupation or business; whether the work is usually done under supervision or by a specialist in the locality; the skill required; who supplies the tools 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 none is dispositive. The case arose over vicarious liability, so it states Indiana's general analysis rather than a rule confined to one act.

An independent contractor in the construction trades who does not elect workers' compensation coverage must obtain a certificate of exemption under Ind. Code 22-3-2-14.5. The process runs through the Department of State Revenue, with a statement, annual supporting documentation, revenue clearance, and a fifteen dollar fee, and the certificate is then filed with the Worker's Compensation Board, which date stamps it. It becomes effective at midnight seven business days after the file stamp date, so the timing has to be planned before work is scheduled.

Yes, and this is the obligation most often overlooked. A person who contracts for the services of another person not covered by the workers' compensation article must secure a copy of the stamped certificate of exemption from the person hired. The reverse is also true: a person may not require someone who has provided a stamped certificate to carry workers' compensation coverage. Keeping the stamped certificate attached to the signed agreement is the simplest way to satisfy both points.

Three categories. Licensed real estate professionals are outside workers' compensation employee status only where substantially all remuneration is related to sales volume rather than hours and there is a written agreement with the broker stating they are not to be treated as employees for tax purposes. Motor carrier owner-operators must work under a written contract that meets the federal and Indiana leasing requirements. Under the minimum wage 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.

Often it does not. The act defines employer to exclude any employer subject to the minimum wage provisions of the federal Fair Labor Standards Act, and it reaches only employers with two or more employees in a work week, so most Indiana pay claims are decided under the federal standard. Where the state act does apply, its carve-out asks whether the person is engaged in an independently established trade and is free from control or direction both under a contract of service and in fact, with no condition about the usual course of business.