A Louisiana independent contractor agreement is a legally binding document signed by two parties, a contractor and a client. The contract outlines the professional services rendered in exchange for financial compensation.
The client-contractor relationship is different from that between an employee and their employer. Louisiana has strict laws and guidelines that govern who is classified as an independent contractor.
- Worker Classification: ABC Test
- Tax Structure: Graduated-Rate Income Tax
- Definition: § 23:1021
- At-Will Employment: Yes
Independent Contractor Definition
Louisiana law defines an employee as someone who performs services for an employer when the latter has a high degree of control and responsibility for the job and related tasks. In the case of employees, employers typically also provide the tools needed to do the job.
Independent contractors, on the other hand, may use their own tools, procedures, and methods and determine for themselves how they intend to complete certain job responsibilities. According to Louisiana Employment Security Law RS 23:1722, Louisiana has heavy penalties for employers who misclassify their employees as contractors.
Worker Classification Test
Louisiana uses an ABC-style test [1] to determine whether workers are classified as employees or contractors. It asks if:
- The business has the right to supervise the worker while services are performed.
- The worker has to comply with specific procedures or instructions.
- The worker has to personally complete certain services rather than having someone else fulfill them.
- The business can determine how the worker actually performs the work.
- The worker is self-employed.
If the business has significant oversight of the worker, including requiring them to use specific procedures to complete the work or insisting that the worker complete the work themselves rather than outsourcing, the worker may be classified as an employee, not a contractor. The business may, however, dictate an independent contractor’s responsibilities as part of an independent contractor agreement or freelance contract.
Rights and Responsibilities
Understanding the rights of independent contractors under Louisiana law enables workers and businesses to determine how to handle disputes that may arise. Independent contractors have the right to:
- Determine where they want to perform the services they have been hired to perform. For example, independent contractors may choose to work remotely, if the work permits, without oversight from the employer.
- Determine how they will perform the work. Independent contractors do not have to follow specific procedures laid out by the employer except those pertaining to HIPAA or cybersecurity measures.
- Decide how they will perform the work and, in some cases, who will do it. Independent contractors do not have specific job duties under the employer.
As a result, independent contractors often have much more freedom than employees.
State Taxes
Louisiana follows the IRS system of taxation [2] for independent contractors, who must pay a regular income tax and a self-employment tax that covers Medicare and Social Security taxes.
Filing for Unemployment
Typically, Louisiana does not allow independent contractors or self-employed individuals to file for unemployment.
Sample
Download a free Louisiana independent contractor agreement template below and start creating your contract.
