A Missouri independent contractor agreement clearly outlines the terms of the worker-employer relationship and typically offers different wages, taxes, and benefits than a standard employment contract.
Missouri defines independent contractors or employees based on the worker’s relationship with the employer. Understanding state laws for independent contractors can help you understand your legal rights and obligations as an employee or worker.
- Worker Classification: Common Law Test
- Tax Structure: Graduated-Rate Income Tax
- Definition: MO Rev Stat § 285.525
- At-Will Employment: Yes
Independent Contractor Definition
A contractor is defined as a worker or business that performs work or services for hire in exchange for compensation. On the other hand, an employee is a person who performs any work or service for an employer in Missouri. The definition is broad, which may leave room for misinterpretation.
Independent contractor laws in Missouri enable workers and employers to determine who is a contractor and who is an employee. Since taxes and benefits differ for direct-hire employees and contractors, the distinction is essential for workers.
Worker Classification Test
Sometimes, employers misclassify employees as independent workers by accident or to try and save money on taxes, wages, and benefits. For workers, this can mean fewer protections and higher out-of-pocket costs.
For employers, misclassification can result in significant financial penalties and even jail time [1] .
To prevent misclassification, Missouri adheres to the Internal Revenue Service (IRS) 20-factor test [2] and Missouri DOL guidelines to determine whether a worker is an employee or independent contractor.
The DOL guidelines are based on common law and address the following factors [3] :
- Behavioral control for training, instruction, and time management.
- Financial control, such as reimbursement of business expenses, method of payment, and whether the worker is free to provide the same services to other entities.
- Relationship perception, including intent, benefits, termination terms, and control over the workers’ hours or business.
Whether you are a worker or employer, an independent contractor agreement in Missouri can delineate the work relationship to avoid misclassification.
Rights and Responsibilities
Employers must cover unemployment tax and workers’ compensation insurance for direct-hire employees. They must also meet minimum wage and overtime requirements for employees but not contractors.
Independent contractors have fewer rights than employees in Missouri, so it is critical to have a Missouri independent contractor agreement outlining the scope of work.
State Taxes
Employers must pay unemployment taxes for all qualifying employees [4] . If the employer classifies a worker as an independent contractor, they must notify the worker of their exempt status per MO Rev Stat § 288.041.
Missouri’s independent contractors must pay their own federal and state income tax rather than having them withheld by the employer. An independent contractor may also owe federal self-employment tax [5] .
Filing for Unemployment
Since independent contractors do not pay unemployment taxes, they are not eligible for unemployment benefits in case of job loss.
Sample
Below, you can download our free Missouri independent contractor agreement template in PDF or Word format:
