Montana Independent Contractor Agreement Template
Montana took classification out of the courtroom and put it on a card, and the one thing that can cancel that card is your own contract.
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Introduction
An Independent Contractor Agreement is a contract between a business and a self-employed worker covering scope, payment, ownership of the work product, and how the engagement ends. Montana answers the classification question differently from every other state. In 2005 the legislature repealed its free-standing statutory test, former Mont. Code Ann. 39-71-120, and replaced it with a credential the worker holds: the Independent Contractor Exemption Certificate under Mont. Code Ann. 39-71-417. The unemployment insurance chapter now defines the term by cross-reference and nothing else, because Mont. Code Ann. 39-51-201(15) provides that independent contractor means an individual working under a certificate provided for in 39-71-417. Applying is not optional for the people the statute reaches, and an approved certificate is conclusive rather than merely persuasive. That inverts the usual drafting problem. In most states the contract is trying to build a case for contractor status; in Montana the certificate has already made that case, and the contract's job is to avoid breaking it. Mont. Code Ann. 39-71-417(7)(c)(ii) withdraws the conclusive presumption where the hiring agent and the certificate holder have a written or an oral agreement that the holder's status is that of an employee, so one careless sentence, or one casual assurance, can undo a state-issued conclusive presumption.
Key Things to Know
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Montana repealed its statutory factor test and replaced it with a certificate. Former Mont. Code Ann. 39-71-120 was repealed in 2005 by 2005 Mont. Laws ch. 448, section 13, and the Independent Contractor Exemption Certificate scheme in Mont. Code Ann. 39-71-417 took its place. For unemployment insurance the substitution is complete: Mont. Code Ann. 39-51-201(15) defines independent contractor as an individual working under a certificate provided for in 39-71-417, and adds no factors of its own.
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Applying is mandatory for the people the statute reaches. Mont. Code Ann. 39-71-417(1)(a)(i) provides that a person who regularly and customarily performs services at a location other than the person's own fixed business location shall apply to the department for a certificate, unless the person has elected to be bound personally and individually by compensation plan No. 1, 2, or 3. Under 39-71-417(1)(c) the duty reaches sole proprietors, working members of partnerships, limited liability partnerships and member-managed limited liability companies, and managers of manager-managed limited liability companies engaged in construction.
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An approved certificate is conclusive, not merely persuasive. Mont. Code Ann. 39-71-417(7)(a) provides that when the department approves an application and the person is working under the certificate, the person's status is conclusively presumed to be that of an independent contractor. The trade-off is stated in 39-71-417(7)(b): the holder has waived all rights and benefits under the Workers' Compensation Act and is precluded from obtaining benefits unless the holder elected to be bound personally and individually by compensation plan No. 1, 2, or 3.
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The contract can cancel the certificate. Mont. Code Ann. 39-71-417(7)(c)(ii) provides that a person is working under a certificate only if the hiring agent and the certificate holder do not have a written or an oral agreement that the holder's status with respect to that hiring agent is that of an employee. That makes an employee-status line in a template, a handbook, a side letter, or even a spoken assurance capable of removing a conclusive statutory presumption that the state has already granted. It is the single most consequential drafting point in Montana.
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The certificate travels to unemployment insurance. Mont. Code Ann. 39-51-204(3)(a) provides that, except as stated in 39-51-204(3)(b), an individual found to be an independent contractor by the department under the terms of 39-71-417 is considered an independent contractor for purposes of the unemployment insurance chapter. The exception in 39-51-204(3)(b) addresses exempt corporate officers and managers who obtained a certificate under 39-71-417(1)(a)(ii). One credential therefore does two jobs that most states run through two separate tests.
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Not holding a certificate is not the same as being an employee. Mont. Code Ann. 39-51-203(4) states both halves of the rule: service performed by an individual for wages is considered employment until it is shown to the satisfaction of the department that the individual is an independent contractor, and an individual may not be determined to be an employee based solely on not having an independent contractor exemption certificate. The burden of showing contractor status still sits with the party asserting it.
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Wage claims are where the bright line runs out. The Wage Payment Act defines employ as to permit or suffer to work and excludes independent contractors from employee without defining the term, at Mont. Code Ann. 39-3-201(3) and (4), and the Minimum Wage and Overtime Act at 39-3-402 defines employee circularly and says nothing about contractors at all. So the certificate does not deliver the same clean answer to an unpaid wage or overtime claim that it delivers under the workers' compensation and unemployment insurance chapters, and how the work was actually controlled still matters there.
Key decisions before you file
Before you file a Independent Contractor Agreement in Montana, a few decisions shape the document: which option to choose and what each one means. The Independent Contractor Agreement guide walks through them.
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Montana Requirements for Independent Contractor Agreement
A person who regularly and customarily performs services at a location other than the person's own fixed business location shall apply to the Department of Labor and Industry for an independent contractor exemption certificate, unless that person has elected to be bound personally and individually by compensation plan No. 1, 2, or 3. Mont. Code Ann. 39-71-417(1)(c) limits the duty to sole proprietors, working members of partnerships, limited liability partnerships and member-managed limited liability companies, and managers of manager-managed limited liability companies engaged in construction. The agreement should record the certificate number and the trade listed on it.
When the department approves an application and the person is working under the certificate, the person's status is conclusively presumed to be that of an independent contractor. The holder has by the same provision waived all rights and benefits under the Workers' Compensation Act and is precluded from obtaining benefits unless the holder has elected to be bound personally and individually by compensation plan No. 1, 2, or 3. Record any such election in the agreement so both sides know which position they are in.
The conclusive presumption applies only if the hiring agent and the certificate holder do not have a written or an oral agreement that the holder's status with respect to that hiring agent is that of an employee. This is the highest-risk drafting point in Montana, because the statute reaches oral understandings as well as contract text. Remove employee-status language from the agreement, from any side letter, and from any handbook or policy issued to the contractor, and brief the people who talk to the worker.
A person is working under an independent contractor exemption certificate only if the person is performing work in the trade, business, occupation, or profession listed on the certificate. Scope creep into a different trade takes the engagement outside the certificate for that work. Draft the scope of services to match the listed trade, and require an amended certificate or an amended scope before the contractor takes on work of a different character.
A certificate is valid for two years. It may be suspended or revoked under Mont. Code Ann. 39-71-418, and a denial is appealable under Mont. Code Ann. 39-71-415(2). Because the conclusive presumption depends on the person actually working under an approved certificate, the agreement should require the contractor to keep it current for the term and to give prompt written notice of any expiry, lapse, suspension, or revocation.
The unemployment insurance chapter defines independent contractor as an individual working under an independent contractor exemption certificate provided for in 39-71-417, and 39-51-204(3)(a) treats an individual found to be an independent contractor by the department under 39-71-417 as an independent contractor for purposes of that chapter, subject to the exception in 39-51-204(3)(b) for exempt corporate officers and managers certificated under 39-71-417(1)(a)(ii). One credential therefore governs two acts.
Service performed by an individual for wages is considered employment subject to the unemployment insurance chapter until it is shown to the satisfaction of the department that the individual is an independent contractor, and an individual may not be determined to be an employee based solely on not having an independent contractor exemption certificate. The provision protects an uncertificated engagement from an automatic adverse finding while leaving the burden of proof on the party asserting contractor status.
Several unemployment insurance exclusions are conditioned on the paperwork. Floor covering installers must work under a written contract that gives rise to a breach of contract action, states that the installer is not covered by unemployment insurance, and requires a current workers' compensation policy or an exemption. Licensed cosmetologists and barbers need a written acknowledgment of non-coverage plus contract terms on freedom from control, payment from individual clientele, and self-furnished equipment. Petroleum land professionals must perform all services as an independent contractor under a written contract, and freelance correspondents and newspaper carriers must have acknowledged in writing that the person and the service are not covered.
The Wage Payment Act defines employ as to permit or suffer to work and excludes independent contractors from the definition of employee without defining that term, while the Minimum Wage and Overtime Act defines employee circularly and contains no independent contractor language. The certificate scheme does not supply a codified bright line for a wage or overtime claim, so freedom from control over performance and the existence of an independently established business remain live factual questions in that forum.
Frequently Asked Questions
In most states the agreement is the main place a business builds its case for contractor status. Montana moved that function onto a state-issued credential. The Independent Contractor Exemption Certificate under Mont. Code Ann. 39-71-417 is conclusive once approved, so a Montana agreement is written to confirm the certificate, keep the work inside the trade listed on it, and above all avoid the one clause that would cancel it.
Not for the people the statute reaches. Mont. Code Ann. 39-71-417(1)(a)(i) says a person who regularly and customarily performs services at a location other than the person's own fixed business location shall apply for a certificate, unless the person has elected to be bound personally and individually by compensation plan No. 1, 2, or 3. Under 39-71-417(1)(c) that duty covers sole proprietors, working members of partnerships, limited liability partnerships and member-managed limited liability companies, and managers of manager-managed limited liability companies in construction.
Mont. Code Ann. 39-71-417(7)(a) provides that when the department approves the application and the person is working under the certificate, the person's status is conclusively presumed to be that of an independent contractor. A conclusive presumption is not a burden-shifting device that the other side can argue around with better facts; it settles the status while the conditions in the statute hold. That is why the conditions in 39-71-417(7)(c) repay careful reading.
It can take the engagement outside it, which comes to the same thing. Mont. Code Ann. 39-71-417(7)(c)(ii) makes the conclusive presumption available only where the hiring agent and the certificate holder do not have a written or an oral agreement that the holder's status with respect to that hiring agent is that of an employee. Because the statute says written or oral, an inherited template clause, an onboarding email, a handbook issued to the worker, or a spoken assurance can each do the damage.
Yes, and that is unusual. Mont. Code Ann. 39-51-204(3)(a) provides that an individual found to be an independent contractor by the department under the terms of 39-71-417 is considered an independent contractor for purposes of the unemployment insurance chapter, except as provided in 39-51-204(3)(b), which deals with exempt corporate officers and managers certificated under 39-71-417(1)(a)(ii). Mont. Code Ann. 39-51-201(15) closes the loop by defining the term by reference to the certificate.
The engagement is not automatically an employment relationship. Mont. Code Ann. 39-51-203(4) states that an individual may not be determined to be an employee based solely on not having a certificate. The same subsection also says service performed for wages is considered employment until it is shown to the satisfaction of the department that the individual is an independent contractor, so the party asserting contractor status carries the burden, and the facts of the engagement decide it. Attorney review is an option where the exposure is significant.
It does not resolve it in the same clean way. The Wage Payment Act at Mont. Code Ann. 39-3-201(3) and (4) defines employ as to permit or suffer to work and carves independent contractors out of employee without defining the term, and the Minimum Wage and Overtime Act at 39-3-402 contains no contractor language at all. The freedom-from-control and independent-business ideas behind the certificate remain the reference points, but a wage claim is decided on the facts of the engagement rather than by producing the card.
A certificate is valid for two years under Mont. Code Ann. 39-71-417(8), and it can be suspended or revoked under Mont. Code Ann. 39-71-418. A denial can be appealed under Mont. Code Ann. 39-71-415(2). Because the conclusive presumption depends on the person actually working under an approved certificate, an expired or revoked certificate leaves the engagement back on the ordinary burden of proof, so the agreement should require prompt written notice of any lapse.
Yes. Several unemployment insurance exclusions in Mont. Code Ann. 39-51-204(1) prescribe contract content. Floor covering installers need a written contract that gives rise to a breach of contract action, states the installer is not covered by unemployment insurance, and requires a current workers' compensation policy or an exemption. Licensed cosmetologists and barbers need a written acknowledgment of non-coverage plus contract terms on control, client payment, and equipment. Petroleum land professionals must perform all services under a written contract, and freelance correspondents and newspaper carriers must have acknowledged in writing that the person and the service are not covered.
No. The certificate, not the signature, is what carries conclusive weight, and only while the statutory conditions hold. Where no certificate is in place, the agreement is evidence of the parties' intent and of how they said the work would run, but Montana still asks whether the worker was in fact free from control over performance and engaged in an independently established trade, occupation, profession, or business. Nothing drafted into a contract can guarantee the outcome.