An Indiana independent contractor agreement defines the professional relationship between a contractor and their client.
Indiana recently expanded its independent contractor definitions to include individuals who are engaged in “gig work,” work-for-hire, and other contract services. Previously, Indiana law considered “contractors” as construction contractors only.
- Worker Classification: ABC Test
- Tax Structure: Flat Income Tax
- Definition: § 22-3-6-1
- At-Will Employment: Yes
Independent Contractor Definition
Indiana explicitly defines an employee as “every person, including a minor, in the service of another, under any contract of hire or apprenticeship, written or implied, except one whose employment is both casual and not in the usual course of the trade, business, occupation, or profession of the employer.” [1]
Worker Classification Test
Indiana law defers to the IRS guidelines for establishing if a worker is an independent contractor or employee. The IRS uses a “common law” rule which includes:
- Behavioral factors, also called “control”: The greater the control the worker has over the job, the location, and the aspects of the work, the more likely they are an independent contractor.
- Financial factors: If the worker must pay their taxes, provide their tools and supplies, and cover their costs for rent and expenses, they are probably an independent contractor.
- Relationship factors: If the employer provides additional benefits, such as insurance, vacation time, or pension plans, and if the worker will continue working once the project is completed, the worker is most likely an employee, not a contractor.
Rights and Responsibilities
Independent contractors are not protected by most worker’s rights laws in Indiana. However, they are protected against deliberate employer misclassification [2] .
Misclassification may occur when an independent contractor is subjected to:
- Excessive employer control over their work.
- Refusal to pay under the terms of the agreement.
- Requirement to work certain hours or in specific locations.
Contractors who believe they may be misclassified should report the employer to the Indiana Department of Labor and consult an attorney.
State Taxes
Independent contractors will not have any state or federal taxes withheld by their employers. They are responsible for filing with the IRS annually.
In addition, the Indiana Department of Revenue requires a certificate of exemption and quarterly estimated income payments from all independent contractors [3] .
Filing for Unemployment
Just because you filed a 10-99 form does not mean you are an “independent contractor” for the purpose of unemployment benefits. If you believe you are entitled to unemployment payments, contact the Indiana Department of Workforce Development.
Sample
Below, you can download our free Indiana independent contractor agreement template in PDF or Word format:
