A North Carolina independent contractor agreement is a document stating that a contractor will perform a specific service for a client under certain conditions. It explains the agreement’s commencement date, termination protocols, work ownership guidelines, and other details.
- Worker Classification: Common Law
- Tax Structure: Flat Income Tax
- Definition: NC Gen Stat § 96-1
- At-Will Employment: Yes
Independent Contractor Definition
North Carolina law defines an independent contractor as an individual who contracts to complete work for a client. An independent contractor isn’t under the client’s direction or control regarding how they perform the work or what they have to do as the work progresses.
Worker Classification Test
North Carolina uses the common law classification test for independent contractors. This test classifies employees based on three essential elements:
- Behavioral Control: the employer’s ability to control how and where the employee does the work
- Financial Control: the responsibility of purchasing supplies and covering business expenses
- Type of Relationship: the benefits involved for the employee, as well as the longevity of the job and relevance to the employer
In cases when behavioral control and financial control are under the purview of the employer, the employee is a payroll employee rather than a contractor. Under this arrangement, an employee may receive benefits such as paid time off or insurance.
In a contractor relationship, the contractor retains behavioral control and the responsibility of financial control but doesn’t have the same benefits as a payroll employee.
Rights and Responsibilities
An independent contractor will not have the same rights as a full-time or part-time employee of a business. The difference in rights is because an independent contractor is self-employed while doing work for the business. However, independent contractors do have some rights, including:
- The right to a contract detailing the agreement with the business
- The right to control when and where they work
- The right to be paid
- The right to hire subcontractors
- The right to challenge their employment status if it’s incorrect
You can also explore some other aspects of working as a contractor, including:
State Taxes
Much like classification and definition, North Carolina does not have unique laws when it comes to taxes. Instead, North Carolina refers to the IRS criteria for independent contractors. Taxes are handled accordingly.
Filing for Unemployment
Independent contractors can’t apply for unemployment under most circumstances in North Carolina. During the 2020 COVID-19 pandemic, independent contractors were eligible for Pandemic Unemployment Assistance (PUA), which ended on September 4, 2021. [1] No other provision exists to allow independent contractors to earn unemployment benefits.
Compensation for Work Injuries
Contractors in North Carolina can’t seek compensation for work injuries. If they get injured while completing work for a client, they must seek coverage from a personal workers’ compensation insurance plan they’ve purchased in advance.
Sample
View a sample of our North Carolina independent contractor agreement. When you’re ready to start creating your own, you can download the template as a PDF or Word file:
