Utah Independent Contractor Agreement Template

Introduction

Key Things to Know

1. 1

   The waiver is the centerpiece. Under Utah Code 34A-2-103(7)(e) a contractor or subcontractor is not an employee of the employer who procures the work where that employer obtains and relies on either a valid certification of the contractor's compliance with Utah Code 34A-2-201 or a Part 10 coverage waiver stating that the entity is customarily engaged in an independently established trade, occupation, profession, or business and that the owner personally waives entitlement to the chapter's benefits. Utah Code 34A-2-103(7)(c) does the same for partners and sole proprietors.

2. 2

   Obtains and relies on are both operative words. The safe harbor belongs to the hiring party who actually collects the document and keeps it, so filing it before work starts and refreshing it on renewal is the practical difference between having the protection and merely being entitled to it.

3. 3

   The waiver has a short shelf life and a hard kill switch. Utah Code 34A-2-1003 provides that it is issued only to a business entity with no other employees, costs up to fifty dollars, expires one year from issuance unless renewed, and goes invalid the day the entity hires anyone else. Utah Code 34A-2-1005 lets the Labor Commission investigate and prohibit a business entity from using a waiver.

4. 4

   Getting one requires documentary proof of an independent business, not a signature. Utah Code 34A-2-1004 asks for two or more of an income tax return showing business income, a valid business license, an occupational or professional license, and an active liability insurance policy, or one of those together with two or more of a business bank account, a telephone number and physical location, and advertising of services in a newspaper, telephone directory, website or social media, or trade magazine.

5. 5

   Three occupations are excluded from employee status only if the written contract says specific things. Utah Code 34A-2-104(5)(a) covers real estate sales agents and associate brokers, whose contract must state that the agent is an independent contractor and is not to be treated as an employee for federal income tax purposes. Subsection (5)(c) covers insurance producers' solicitors and adds that the individual can derive income from more than one insurance company. Subsection (5)(d) covers motor carrier owner-operators, whose written agreement must state that the individual operates the motor vehicle as an independent contractor, and who must deliver at execution both a Part 10 waiver and proof of occupational accident insurance with at least a $1,000,000 aggregate limit covering disability, death, and medical benefits.

6. 6

   Unemployment insurance runs on its own two-prong test at Utah Code 35A-4-204(3). Services for wages are employment unless it is shown to the satisfaction of the division that the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of hire, and is free from control or direction over the means of performance, both under the contract of hire and in fact. Utah Admin. Code R994-204-303(1)(c) adds a helpful twist: proving the independently established prong raises a rebuttable presumption that the employer did not have or exercise direction or control.

7. 7

   Wage and hour law is federal by incorporation, with one state overlay for construction. Utah Code 34-28-2(1)(c)(i) defines employer the same as 29 U.S.C. 203, and Utah Code 34-40-102(1) directs that the Minimum Wage Act be interpreted consistently with the Fair Labor Standards Act. The overlay is Utah Code 34-28-2(2): an unincorporated entity required to be licensed under the Construction Trades Licensing Act is presumed to be the employer of each individual holding an ownership interest in it, rebuttable only by clear and convincing evidence that the individual is an active manager, holds at least an eight percent ownership interest, or is not subject to supervision or control. The same presumption is mirrored in the workers' compensation act at Utah Code 34A-2-103(8).

Utah Requirements for Independent Contractor Agreement

• Utah Coverage Waiver Safe Harbor for the Hiring Party (Utah Code 34A-2-103(7)(e))

  A contractor or subcontractor is not an employee of the employer who procures the work if that employer obtains and relies on either a valid certification of the contractor's compliance with Utah Code 34A-2-201, or a workers' compensation coverage waiver issued under Part 10 stating that the partnership, corporation, or sole proprietorship is customarily engaged in an independently established trade, occupation, profession, or business and that the owner personally waives entitlement to the chapter's benefits. Utah Code 34A-2-103(7)(c) provides the equivalent for partners and sole proprietors.

• Utah Waiver Cost, One-Year Term, and Automatic Invalidity (Utah Code 34A-2-1003)

  The waiver is issued only to a business entity with no other employees, costs no more than fifty dollars, and expires one year from the date of issuance unless renewed. It becomes invalid on the day the entity hires an employee. A hiring business relying on a waiver should diary the expiry date and require written notice of any hiring by the waiver holder.

• Utah Documentary Proof of Independent Business (Utah Code 34A-2-1004)

  To obtain a waiver the business entity must file two or more of an income tax return showing business income, a valid business license, an occupational or professional license, and an active liability insurance policy. In the alternative it may file one of those together with two or more of a business bank account, a telephone number and physical location, and advertisement of services in a newspaper, telephone directory, website or social media, or trade magazine.

• Utah Labor Commission May Prohibit Use of a Waiver (Utah Code 34A-2-1005)

  The Commission may investigate a waiver and may prohibit a business entity from using one. The waiver is therefore not a permanent status, and a hiring party relying on it should confirm it remains valid at renewal rather than treating the original certificate as good indefinitely.

• Utah Prescribed Contract Language for Real Estate Agents (Utah Code 34A-2-104(5)(a))

  A real estate sales agent or associate broker is outside the definition of employee only where the services are performed under a written contract providing that the real estate agent is an independent contractor and that the sales agent or associate broker is not to be treated as an employee for federal income tax purposes. Both statements must appear in the written contract.

• Utah Prescribed Contract Language for Insurance Solicitors (Utah Code 34A-2-104(5)(c))

  An individual soliciting insurance for an insurance producer is excluded only where the services are performed under a written contract stating that the individual is an independent contractor, is not to be treated as an employee for federal income tax purposes, and can derive income from more than one insurance company. The third statement has no counterpart in the real estate provision and is easy to omit.

• Utah Motor Carrier Owner-Operator Contract and Insurance (Utah Code 34A-2-104(5)(d))

  The owner-operator must operate under a written agreement with the motor carrier stating that the individual operates the motor vehicle as an independent contractor, and must deliver to the carrier at execution both a Part 10 workers' compensation coverage waiver and proof of occupational accident insurance carrying an aggregate limit of at least $1,000,000 with disability, death, and medical benefits, the medical benefits covering hospital, surgical, prescription drug, and dental care.

• Utah Two-Prong Unemployment Test (Utah Code 35A-4-204(3))

  Services performed for wages or under any contract of hire are employment unless it is shown to the satisfaction of the division that the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of hire, and has been and will continue to be free from control or direction over the means of performance, both under the contract of hire and in fact. The burden is on the putative employer and there is no usual-course prong.

• Utah Administrative Rules on Demonstrating Independence (Utah Admin. Code R994-204-301 and R994-204-303)

  A worker must clearly establish independent contractor status by taking steps that demonstrate independence. The rules list factors including a separate place of business, tools and equipment, other clients, exposure to profit or loss, advertising, licenses, and separate business records and tax forms. Once the independently established prong is proven, R994-204-303(1)(c) raises a rebuttable presumption that the employer did not have or exercise direction or control over the service.

• Utah Wage Law Incorporates Federal Definitions, With a Construction Presumption (Utah Code 34-28-2 and 34-40-102(1))

  The Payment of Wages Act defines employer the same as 29 U.S.C. 203 and the Minimum Wage Act is to be interpreted consistently with the Fair Labor Standards Act, so wage classification is a federal economic realities question. The state overlay is Utah Code 34-28-2(2): an unincorporated entity required to be licensed under the Construction Trades Licensing Act is presumed to be the employer of each individual holding an ownership interest, rebuttable only by clear and convincing evidence of active management, at least an eight percent ownership interest, or absence of supervision or control. The workers' compensation act mirrors it at 34A-2-103(8).