A Hawaii independent contractor agreement outlines the expectations of a project, including pay and timeline. The terms and conditions established in the contract are legally binding.
The employer is required to uphold the rules of the signed agreement — which is one reason why it’s crucial to complete and sign one.
- Worker Classification: ABC Test
- Tax Structure: Graduated-Rate Income Tax
- Definition: § 383-6
- At-Will Employment: Yes
Independent Contractor Definition
An independent contractor is a self-employed individual hired on a temporary, contracted basis, typically through an agreement, to perform services for an employer. Examples include independent plumbers, carpenters, electricians, and accountants who maintain private practices.
In contrast, an employee is hired in a more permanent, continuous relationship. Parts of this worker’s job are directed by their employer, and it is typical for employees to carry out their work at the company’s usual place of business [1] .
Worker Classification Test
Under the ABC test that Hawaii uses to destablish whether a worker can be classified as an independent contractor, all three of the following conditions must be met:
- The individual is free from control/direction.
- The work performed is outside the employer’s usual course of business.
- The individual is typically operating in an independently established occupation or business that is of the same nature as the work performed.
Rights and Responsibilities
Since independent contractors are not classified as employees, they do not have the same rights to benefits such as unemployment insurance, overtime pay, and workers’ compensation [2] . However, independent contractors do have some protected rights, including:
- The right to intellectual property ownership over the work they create.
- The right to membership in a labor union or freelancer’s guild.
- The right to have their employment status reviewed by an agency if they believe they may have been misclassified as an independent contractor.
The misclassification of employees as independent contractors is illegal, and it blocks individuals from accessing benefits they otherwise would be entitled to as an employee [3] .
State Taxes
For traditional employees, their employer withholds income tax for them. However, independent contractors are personally responsible for paying all taxes on income earned from clients.
Filing for Unemployment
Independent contractors cannot file for unemployment since they are not classified as employees.
Sample
You can download a free Hawaii independent contractor agreement template below in PDF or Word format:
