Iowa Independent Contractor Agreement Template
Iowa runs an unemployment test built from the control prong alone, and its supreme court has said in terms that a written contractor designation carries real weight in one act and is misapplied in another.
Find out where you stand in Iowa
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 of work, payment, ownership of the work product, and how the engagement ends. Iowa does not require one for ordinary engagements, but it is worth understanding what Iowa asks of the document before assuming a national template does the job. Iowa's unemployment insurance statute looks at first glance like an ABC test and is not one. Iowa Code 96.1A(16)(f)(1) deems service for wages to be employment unless the employing unit shows freedom from control, and that is the whole of the statutory test. The second and third prongs that appear in a true ABC statute, work outside the usual course of business and customary engagement in an independent trade, were never enacted here. The gap is filled by common law factors written into 871 Iowa Admin. Code r. 23.19. Two further features make Iowa unusual. The Iowa Wage Payment Collection Law writes no classification test of its own at all: Iowa Code 91A.2(3)(c) says who is not an employee by pointing at a single definition borrowed from the workers' compensation chapter, one that is satisfied only where the parties signed a contract reciting independent contractor status. And in Gaffney v. Department of Employment Services, 540 N.W.2d 430 (Iowa 1995), the Iowa Supreme Court described the weight given to a written designation as an overriding element in the workers' compensation cases while calling exclusive reliance on it definitely misapplied in the unemployment context. That is a divergence the court itself named, and it is the reason a single clause cannot settle the question across all three acts.
Key Things to Know
- 1
Iowa starts from employment. Iowa Code 96.1A(16)(f)(1) provides that services performed by an individual for wages shall be deemed to be employment unless and until it is shown to the satisfaction of the department that such individual has been and will continue to be free from control or direction over the performance of such services, both under the individual's contract of service and in fact. The burden sits on the employing unit, and the standard is satisfaction of Iowa Workforce Development.
- 2
That is a one-prong test, not an ABC test. Iowa's statute contains only the control prong. There is no requirement that the work fall outside the usual course of the hiring party's business and no requirement that the worker be customarily engaged in an independently established trade. A contractor in Iowa may work at the core of the client's business and still qualify, which is a materially easier standard than a true ABC state applies.
- 3
The rest of the analysis comes from the rules rather than the statute. 871 Iowa Admin. Code r. 23.19(1) to (5) supplies the familiar common law indicia: the right to control the details and means of the work, the right to discharge, who furnishes the tools and the place to work, whether pay is a fixed wage or a lump sum for the job, and the right to hire assistants. Rule 23.19(6) restates the presumption, that services performed for remuneration are presumed to be employment unless and until it is shown to the satisfaction of the department that the individual is in fact an independent contractor.
- 4
For unemployment insurance the label in the contract is expressly worth nothing on its own. 871 Iowa Admin. Code r. 23.19(7) provides that if the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than that of employer and employee is immaterial. A well drafted agreement still matters, because it records the facts about control that the department weighs, but the status recital is not one of those facts.
- 5
Workers' compensation runs the other way on the same clause. Iowa Code 85.61(12)(c)(2) excludes an independent contractor from the definition of worker or employee without defining the term, so the test is judicial: the five Henderson factors covering the right to select or employ, responsibility for wages, the right to discharge, the right to control the work, and who is the responsible authority in charge, together with what Henderson called the overriding element of the intention of the parties.
- 6
The Iowa Supreme Court has named the divergence rather than smoothing it over. In Gaffney v. Department of Employment Services, 540 N.W.2d 430, 435 (Iowa 1995), the court described a line of workers' compensation cases holding the intent of the parties conclusive, then said that exclusive reliance on such a standard appears questionable in the workers' compensation context but is definitely misapplied in the unemployment benefits context. It did not overrule the compensation line, so the two acts genuinely weigh the written designation differently.
- 7
Wage claims turn on a borrowed definition, and the two occupational safe harbors are conditioned directly on what the paper says. Iowa Code 91A.2(3)(c) provides that for purposes of the chapter, employee does not include an independent contractor as described in section 85.61, subsection 12, paragraph c, subparagraph 3. That is the trucking owner-operator provision, and one of its conditions at 85.61(12)(c)(3)(b)(vi) is that the owner-operator enters into a contract which specifies the relationship to be that of an independent contractor and not that of an employee. A licensed real estate salesperson has a parallel route at 85.61(12)(a)(3)(b), requiring a written contract providing that the individual will not be treated as an employee for state tax purposes. Outside those carve-outs and the professional services provision at 91A.2(4), chapter 91A supplies no independent contractor test of its own.
Key decisions before you file
Before you file a Independent Contractor Agreement in Iowa, 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 guideCustomize your Independent Contractor Agreement Template with DocDraft
Iowa Requirements for Independent Contractor Agreement
Services performed for wages are deemed employment unless and until it is shown to the satisfaction of the department 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. The agreement should therefore state affirmatively that the hiring party specifies results and deadlines only and does not direct the details, means, methods, sequence, or hours of the work.
The statutory test is the control prong alone. Nothing in the Iowa provision requires the service to be outside the usual course of the hiring party's business or requires the worker to be customarily engaged in an independently established trade. Drafting can safely describe work that sits inside the client's ordinary business, which would defeat the classification in a true ABC state, so long as the control facts hold.
The administrative rules carry the factors the statute omits: the right to control the details and means of the work, the right to discharge, furnishing of tools and a place to work, payment by fixed wage rather than lump sum, and the right to hire assistants. Rule 23.19(6) restates the presumption that services performed for remuneration are employment unless and until it is shown to the satisfaction of the department that the individual is in fact an independent contractor.
If the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than employer and employee is immaterial. An independent contractor recital is worth keeping for the other acts and for the parties' own record, but it should never be the load-bearing element of an unemployment insurance position.
The Iowa Wage Payment Collection Law writes no classification test. It defines employee as a natural person employed in this state for wages by an employer and then excludes only an independent contractor as described in Iowa Code 85.61(12)(c)(3), the trucking owner-operator definition, which itself depends on a contract specifying independent contractor status. Section 91A.2(4) adds that an employer does not include a client obtaining professional services from a licensed person on a fee service basis or as an independent contractor.
An owner-operator of a licensed truck, road tractor, or truck tractor is an independent contractor while operating that vehicle if the listed conditions are substantially present, one of which is that the owner-operator enters into a contract which specifies the relationship to be that of an independent contractor and not that of an employee. Because this definition is imported into the wage payment chapter by 91A.2(3)(c) and into the unemployment chapter by 96.1A(15), the recital reaches beyond workers' compensation.
The exclusion for a licensed real estate salesperson requires that the services be performed pursuant to a written contract between the individual and the person for whom the services are performed, and that the contract provide that the individual will not be treated as an employee with respect to the services for state tax purposes. Both the writing and the specific tax recital are conditions of the exclusion.
The chapter provides that an independent contractor shall not be deemed a worker or employee but never defines the term. The controlling standard is the five-factor Henderson analysis covering the right of selection, responsibility for wages, the right to discharge, the right to control the work, and who is the responsible authority in charge, with the intention of the parties treated as an overriding element.
The Iowa Supreme Court described the workers' compensation line of cases as holding the intent of the parties conclusive, then said that exclusive reliance on such a standard appears questionable in the workers' compensation context but is definitely misapplied in the unemployment benefits context. Neither line was overruled, so the same written designation is weighed differently depending on which act is in play, and a single clause cannot be assumed to work across all three.
Frequently Asked Questions
No, although the statute is easy to mistake for one. Iowa Code 96.1A(16)(f)(1) uses the deemed employment framing that ABC statutes use, but it contains only the control prong. There is no prong requiring the work to fall outside the usual course of the hiring party's business and no prong requiring the worker to be customarily engaged in an independently established trade. Freedom from control, shown both under the contract of service and in fact, is the whole statutory test for unemployment insurance.
Not for ordinary engagements. Two occupational safe harbors do turn on the paperwork. A trucking owner-operator is an independent contractor under Iowa Code 85.61(12)(c)(3)(b) only if a list of conditions is substantially present, one of which is that the owner-operator enters into a contract specifying the relationship to be that of an independent contractor and not that of an employee. A licensed real estate salesperson needs a written contract providing that the individual will not be treated as an employee with respect to the services for state tax purposes, under 85.61(12)(a)(3)(b).
It depends entirely on which law is being applied, and Iowa is unusually explicit about the split. For unemployment insurance, 871 Iowa Admin. Code r. 23.19(7) provides that where an employer and employee relationship exists, the parties' designation of it as anything else is immaterial. For workers' compensation, the case law has treated the intention of the parties as an overriding element in the multi-factor analysis. The same sentence in the same document is therefore weighed very differently by the two agencies.
Gaffney v. Department of Employment Services, 540 N.W.2d 430 (Iowa 1995), addressed the weight of the parties' intent. At 434 the court described a line of workers' compensation cases holding that the intent of the parties is conclusive in determining whether an employment relationship exists. At 435 it added that exclusive reliance on such a standard appears questionable in the workers' compensation context but is definitely misapplied in the unemployment benefits context. It did not overrule the compensation cases, so both lines remain in place.
The Iowa Wage Payment Collection Law does not set out its own classification test. Iowa Code 91A.2(3)(a) defines employee as a natural person employed in this state for wages by an employer, and 91A.2(3)(c) excludes only an independent contractor as described in Iowa Code 85.61(12)(c)(3), the trucking owner-operator definition. Section 91A.2(4) separately provides that an employer does not include a client, patient, customer, or other person who obtains professional services from a licensed person providing them on a fee service basis or as an independent contractor. Outside those provisions, ordinary agency principles apply.
Iowa Code 85.61(12)(c)(2) excludes an independent contractor from the terms worker and employee but never defines the term, so the courts supply the test. The Henderson factors look at the right of selection or to employ at will, responsibility for payment of wages, the right to discharge or terminate, the right to control the work, and whether the party sought to be held is the responsible authority in charge of the work or for whose benefit it is performed, with the intention of the parties treated as an overriding element.
Yes, and the statutes are built that way. Unemployment insurance applies a deemed employment rule with a control prong under Iowa Code 96.1A(16)(f)(1) and treats the parties' label as immaterial. Workers' compensation applies judge-made factors that give the parties' intention real weight. Wage payment borrows a single narrow definition from the compensation chapter. Because a favorable outcome under one act does not decide the others, treat each engagement as three separate questions rather than one.
The facts the department weighs. Under 871 Iowa Admin. Code r. 23.19 those are the right to control the details and means of the work, the right to discharge, who furnishes tools and the place to work, whether payment is a fixed wage or a lump sum for the job, and the right to hire assistants. Drafting each of those to match how the engagement will actually run is worth more than a status recital, and a term the parties will not follow in practice does harm rather than good.
Iowa Code 85.61(12)(c)(3)(b) treats an owner-operator who owns a vehicle licensed and registered as a truck, road tractor, or truck tractor as an independent contractor while performing services in the operation of that vehicle if a list of conditions is substantially present, including at subparagraph (vi) that the owner-operator enters into a contract which specifies the relationship to be that of an independent contractor and not that of an employee. The contract is one condition among several, not a shortcut past the rest.