An Iowa independent contractor agreement is a legally binding document signed by the contractor and their client, establishing the guidelines for their relationship.
Before you create an independent contractor agreement in Iowa, you should become familiar with what it means to work as an independent contractor. The designation differs from being an employee, as the state has specific rules for non-employees.
- Worker Classification: Common Law Test
- Tax Structure: Graduated-Rate Income Tax
- Definition: § 871—23.19
- At-Will Employment: Yes (with exceptions)
Independent Contractor Definition
Iowa defines an employee as someone whose work the employer directly controls and who is subject to the direction of the employer.
Independent contractors typically work under a contract and have the freedom to determine when and how they will complete their job duties without interference from the employer.
Worker Classification Test
Iowa uses common law to define what makes a worker an independent contractor or an employee. The two general rules the state follows are how much control the employer has over the work done by the worker and the ability of the employer to fire the worker at will.
The state also leans heavily on the IRS’s definitions and guidelines for classifying workers as independent contractors. Under common law rules the IRS uses, if a company controls how, what, and when the worker performs their job duties, manages the payment of wages, offers working tools and equipment, and provides benefits, then the worker is likely an employee. In addition, if the work done is a key component of the employer’s business, then the worker is typically not an independent contractor [1] .
Rights and Responsibilities
An independent contractor agreement Iowa template should ensure it covers the worker’s rights under state law. General rights will include setting their own schedules and controlling their work.
State Taxes
Iowa follows the IRS’s 20-factor test when determining state taxation liability. The 20-factor test includes:
- Control the employer has over work
- Requirement of company training
- How work relates to business operations
- Control over who does the work
- Control over employing helpers
- Continuing work relationship
- Schedule flexibility
- Control over the worker’s time
- Requirement to work on-site
- Requirement for order of work
- Reporting requirements
- Payment method
- Payment of expenses
- Supplying tools and equipment
- Investment in work facilities
- Profit and loss involved for worker
- Ability to work for others
- Ability to seek other work
- Control over the end of employment
- Liability for termination
Filing for Unemployment
Iowa law states independent contractors have no claim to unemployment [2] . It is a benefit reserved for employees only as employers pay for this coverage for their workers.
Compensation for Work Injuries
Agreements for independent contractors should note the worker is not eligible for workers’ compensation. The coverage is under the insurance the employer carries. Individuals can purchase their own insurance to provide them with the right to make a claim.
Contractors have no rights to the Second Injury Compensation program, which provides supplemental benefits for workers who suffer more than one injury on the job [3] .
Sample
Below, you can download our free Iowa independent contractor agreement template in PDF or Word format:
