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Saturday, December 3, 2016

Drafting Consulting Agreements

It is common for businesses, especially those just starting out, to hire consultants on  a part-time basis, to provide a range of needed services.  If properly done, these consultants will be treated as independent contractors, and not employees, thus saving the employer from a host of legal obligations that would otherwise arise if one were to hire and/or treat someone as an employee.

It is usually advisable for the business owner to set forth in writing the nature of the consultant's duties, so that there can be no misunderstandings down the road, along with details regarding the compensation to be paid to the consultant.  Such an agreement should specifically state that the consultant is not an employee, but an independent contractor, and therefore shall not be entitled to any benefits afforded to the company's employees. It is important to specify what benefits the consultant is foregoing.  Additionally, the agreement should give the company total discretion in terminating the consultant and/or in modifying the consultant's duties.  Lastly, it is imperative the agreement contain a non-disclosure and confidentiality clause, stating in strong terms the prohibition against distributing information the consultant acquires from his or her work.  Additionally, any and all work product of the consultant shall be deemed to be the company's property and the consultant should have no rights thereto. Putting a consultant's duties, obligations, compensation, and independent contractor status in writing should help to avoid conflict and litigation.

 


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