Maine Independent Contractor Agreement Template

Introduction

Key Things to Know

1. 1

   Maine starts from employment and puts the burden on the hiring party. Under 26 M.R.S. 1043(11)(E), services performed for remuneration are considered employment unless it is shown to the satisfaction of the bureau that the individual is free from the essential direction and control of the employing unit, both under the individual's contract of service and in fact, and the employing unit proves that the individual meets all of the criteria in subparagraph (1) and criteria of at least three divisions of subparagraph (2). The workers' compensation version states the same rule as an express presumption of employee status.

2. 2

   Five criteria are mandatory and every one of them must be met: the individual has the essential right to control the means and progress of the work except as to final results; is customarily engaged in an independently established trade, occupation, profession, or business; has the opportunity for profit and loss as a result of the services; hires and pays the individual's assistants and supervises the details of their work to the extent they are employees; and makes the individual's services available to some client or customer community, even if that right is voluntarily not exercised or temporarily restricted.

3. 3

   Seven further criteria are optional and any three will do: a substantive investment in the facilities, tools, instruments, materials, and knowledge used to complete the work; not being required to work exclusively for the other party; responsibility for satisfactory completion of the work with possible contractual liability for failure to complete it; a contract that defines the relationship and gives contractual rights in the event the contract is terminated by the other party prior to completion of the work; payment based on factors directly related to the work performed rather than solely on time expended; work outside the usual course of business for which the service is performed; and a determination of independent contractor status by the federal Internal Revenue Service.

4. 4

   The prong that ends most classification arguments elsewhere is optional here. Work outside the usual course of the hiring party's business appears at 26 M.R.S. 1043(11)(E)(2)(f) and 39-A M.R.S. 102(13-A)(B)(6) as one of the seven, so an engagement can qualify without it by meeting three of the others. The prong that many states treat as optional, customary engagement in an independently established trade, is mandatory in Maine at subparagraph (1)(b). The usual ordering is reversed.

5. 5

   Maine does not require a written agreement, and it is worth being precise about that. The written contract appears only as one of the seven optional criteria, described as a contract that defines the relationship and gives contractual rights in the event the contract is terminated by the other individual or entity prior to completion of the work. An engagement could rely instead on, for example, substantive investment, non-exclusivity, and payment tied to the work rather than time, and never put anything in writing.

6. 6

   If you do elect that criterion, notice what it asks for. It is not a status recital and not an at will termination clause. It calls for a contract that both defines the relationship and gives the contractor contractual rights if the hiring party ends the engagement before the work is complete. That is the opposite of the termination for convenience language most templates carry, so electing this criterion means rewriting the termination section rather than adding a sentence.

7. 7

   Wage and hour is the one place the harmonized scheme comes apart. The minimum wage and overtime subchapter defines employee at 26 M.R.S. 663(3) as any individual employed or permitted to work by an employer, subject to listed exemptions, and it sets out no independent contractor test and no cross-reference to either of the two harmonized definitions. Separately, 26 M.R.S. 591-A makes it a civil violation for an employer to intentionally or knowingly misclassify an employee as an independent contractor, with a fine of not less than $2,000 and not more than $10,000 per violation.

Maine Requirements for Independent Contractor Agreement

• Maine Deemed Employment and Burden on the Employing Unit (26 M.R.S. 1043(11)(E))

  Services performed for remuneration are considered employment unless it is shown to the satisfaction of the bureau that the individual is free from the essential direction and control of the employing unit, both under the individual's contract of service and in fact, and the employing unit proves that the individual meets all of the criteria in subparagraph (1) and criteria of at least three divisions of subparagraph (2).

• Maine Five Mandatory Criteria (26 M.R.S. 1043(11)(E)(1))

  All five must be met: the essential right to control the means and progress of the work except as to final results; customary engagement in an independently established trade, occupation, profession, or business; opportunity for profit and loss as a result of the services performed; hiring and paying the individual's assistants and supervising the details of their work where they are employees; and making the individual's services available to some client or customer community even if that right is voluntarily not exercised or temporarily restricted.

• Maine Three of Seven Optional Criteria (26 M.R.S. 1043(11)(E)(2))

  At least three of the following must be met: substantive investment in facilities, tools, instruments, materials, and knowledge; no requirement to work exclusively for the other party; responsibility for satisfactory completion with possible contractual responsibility for failure to complete; a contract that defines the relationship and gives contractual rights if it is terminated before completion; payment based on factors directly related to the work rather than solely on time expended; work outside the usual course of business; and an Internal Revenue Service determination of independent contractor status.

• Maine Inverts the Usual ABC Ordering (26 M.R.S. 1043(11)(E)(1)(b) and (2)(f))

  Customary engagement in an independently established trade is mandatory, while work outside the usual course of the business appears only as one of the seven optional criteria. Drafting can therefore describe services that sit inside the hiring party's ordinary business, provided three other optional criteria are satisfied, but nothing can compensate for a contractor who does not genuinely operate an independent business.

• Maine Workers' Compensation Uses the Identical Definition (39-A M.R.S. 102(13-A))

  A person who performs services for remuneration is presumed to be an employee unless the employing unit proves that the person is free from the essential direction and control of the employing unit, both under the person's contract of service and in fact, and that the person meets the same five mandatory criteria and at least three of the same seven optional criteria used for unemployment insurance. Satisfying the test for one act satisfies it for the other.

• Maine Contract Criterion Requires Rights on Early Termination (26 M.R.S. 1043(11)(E)(2)(d); 39-A M.R.S. 102(13-A)(B)(4))

  Where the parties elect this optional criterion, the contract must define the relationship and give contractual rights in the event it is terminated by the other individual or entity prior to completion of the work. A termination for convenience clause that lets the hiring party end the engagement without consequence does not meet it, so the termination section has to be rewritten rather than supplemented.

• Maine Wage and Hour Subchapter Has No Contractor Test (26 M.R.S. 663(3))

  Employee for minimum wage and overtime purposes means any individual employed or permitted to work by an employer, subject to the listed exemptions, and the subchapter contains no independent contractor test and no cross-reference to the unemployment or workers' compensation definitions. Do not treat a favorable determination under those acts as resolving a minimum wage or overtime question.

• Maine Misclassification Civil Violation and Fine (26 M.R.S. 591-A)

  An employer that intentionally or knowingly misclassifies an employee as an independent contractor commits a civil violation for which a fine of not less than $2,000 and not more than $10,000 per violation may be adjudged. A determination of misclassification may also result in the assessment of penalties under 26 M.R.S. 1051, 1082, or 1225, or under 39-A M.R.S. 105-A or 324.

• Maine Taxicab Lessee Exclusion Does Not Cross Acts (26 M.R.S. 1043(11)(F))

  The exclusion of certain taxicab lessees from employment for unemployment purposes expressly provides that it may not be construed to affect a determination regarding a lessee's status as an independent contractor for workers' compensation purposes. It is the one place the Legislature declined to carry a result across the two otherwise identical definitions.