A Delaware independent contractor agreement is a legal contract between an independent contractor and a client that outlines the scope, deadlines, and payment schedule for freelance work.
Failing to follow Delaware’s employee classification laws can result in expensive fines. Here’s what you need to know to comply with Delaware employment rules.
- Worker Classification: ABC Test
- Tax Structure: Graduated-Rate Income Tax
- Definition: § 3501
- At-Will Employment: Yes (with exceptions)
Independent Contractor Definition
Per Deleware Code Title 19 Section 1101 (a)(4), an employee is a person suffered or permitted to work by an employer in this State. It does not apply to:
a. Employees of the United States government.
b. Employees of the State of Delaware or any political subdivision of this State.
c. Independent contractors.
A worker is only an independent contractor if they:
- Are not subject to the employer’s direction and control when performing services for the employer.
- Perform services outside of the employer’s business or office.
- Own and operate an independently established trade, occupation, profession, or business, such as a freelance copywriting business.
Worker Classification Test
Delaware uses a “right of control” test to determine whether a worker is an employee or an independent contractor, which is part of the ABC test. According to Delaware Code Title 19 Section 3302 (10)(K), courts will assume that a worker is an employee unless:
- The worker has been and will continue to be free from the employer’s direction and control when performing services for the employer.
- The worker performs services outside of the employer’s place(s) of business.
- The worker is engaged in an independently established occupation, trade, profession, or business of the same nature as the service they are performing.
Rights and Responsibilities
Delaware offers limited workplace protections for independent contractors. To safeguard your rights, it is crucial to have a comprehensive independent contractor agreement in place with the employer before commencing work.
State Taxes
Delaware follows the Internal Revenue Standard (IRS) standard [1] , which means that anyone who performs services is your employee if you can control what they do and how they will perform the service.
Independent contractors are not employees because they are not subject to client control. As such, you must use Form 1099-NEC to report payments for independent contractor services.
Filing for Unemployment
To determine whether independent contractors can file for unemployment in Delaware, courts will look at the right to control as well as the following factors from Restatement (Second) of Agency Section 220:
- How much control the employer has over the work.
- Whether the employee is engaged in a distinct business or occupation.
- The employee’s type of occupation.
- The required skill set.
- Who supplies the tools required to perform work.
- Whether wages are paid per job or at an hourly rate.
- The type of work regularly performed by the employer.
- Whether the parties believe they have a master/servant relationship.
- Whether the employer is in business.
Compensation for Work Injuries
According to Delaware Code Title 19 Sections 2301, 2306, and 2311, Delaware’s workers’ compensation test [2] depends on whether the alleged employer is one business or two or more businesses.
If there is only one alleged employer, the court will examine the factors established in the Restatement (Second) of Agency Section 220. If there are two or more employers, the court will look at the following factors:
- Who hired the employee.
- Who may discharge the employee.
- Who pays the employee’s wages.
- Who has the power to control the employee.
Sample
Below, you can download a Delaware independent contractor agreement in PDF and Word format:
