10 Legal Rights of Independent Contractors

Understanding your legal rights as an independent contractor can help protect your business and build positive client relationships. This article explains 10 key legal rights and provides additional details to keep you informed. 

How Are Independent Contractor Rights Determined?

When a company hires someone as an independent contractor, they must ensure the person is properly classified. The IRS, Department of Labor (DOL), and state laws each have different factors for determining if a worker is an employee or an independent contractor. 

These guidelines can often contradict each other. For example, an employer might consider a worker an independent contractor under one set of rules, but the government may classify the same worker as an employee based on a different set. 

Millions of workers have been misclassified, according to the IRS. Whether employers misclassify workers intentionally or by mistake, it’s important to know your rights as a 1099 independent contractor. 

What Are My Rights As an Independent Contractor?

Although laws vary by state, independent contractors have these 10 general legal rights: 

1. Right to Work How You Want

Your client cannot control how you do your work. You decide how you do the job, unless your contract says otherwise. You might work from a coworking space, a beach in Mexico, or your home office. Your working hours can vary too—whether during the day, night, or weekends. This freedom in how you work is a core benefit of being an independent contractor. 

2. Right to a Written Contract

An independent contractor agreement is essential for establishing a consultant-client relationship. Always ensure a signed contract is in place before starting any work. A contract should define your relationship, specify that you are an independent contractor, and include details such as the project description, time frame, payment terms, and termination conditions. 

Learn More: Do I Need an Independent Contractor Agreement for Consulting?  

3. Right to Manage Your Business and Employee Benefits

As an independent contractor, managing your benefits is part of running your business. Clients don’t provide typical employee benefits like insurance, pension plans, paid vacation, sick days, or disability insurance. Instead, you’ll need to arrange for your own health insurance, retirement savings, and other benefits, which means setting aside funds and planning ahead to cover these expenses. This responsibility is crucial to maintaining financial stability and ensuring you have access to the coverage and support you need. 

4. Right to Work Where You Want

Being able to work anywhere is a major advantage of being an independent contractor. Many people work from home, while others travel the world as digital nomads. However, if a project requires you to be on-site with a client, you may need to work from their location. Generally, you’re responsible for providing your own tools or equipment. 

Discover: Create a Home Office With These 10 Tips  

5. Right to Provide Your Expertise

As an independent contractor, you’re the expert. Your clients should avoid providing guidance or training. You are responsible for updating your skills and completing any required education or certifications. This independence allows you to stay ahead in your field, ensuring that your expertise remains relevant and competitive while giving you the freedom to choose the areas you wish to specialize in or improve upon. 

6. Right to Market Your Services

You can market your services to other businesses and work with multiple clients at once. Even if you have a long-term contract with one client, you can choose to work on additional projects. This flexibility helps diversify your income and expand your network. 

Try This: Effective Marketing Strategies for Consultants   

7. Right to Work When You Want

As an independent contractor, you decide when to work, unless your contract specifies otherwise. Be clear with your client from the beginning about boundaries and expectations for your work schedule and communication. 

8. Right to Work With Other Independent Contractors

You can work with other independent contractors or subcontractors to complete specific tasks or projects. It’s best to inform your client early if you plan to work with others and include this in your contract. 

Learn More: Consultant Partnership: When Partnership Consulting Is Best  

9. Right to Get Paid for Your Work

You will likely submit invoices for completed work. Pay and payment terms should be discussed in the contract. Set your billing rate and specify how and when you want to invoice your client. 

10. Right to Your Own Tax Responsibilities

Clients should not withhold taxes from your payments. As an independent contractor, you’re responsible for paying self-employment (SE) tax, which covers both the employer and employee parts of Social Security and Medicare. Your client is required to provide you with a Form 1099-MISC at the end of the year to report the payments they made to you. The IRS Self-Employed Individuals Tax Center is a helpful resource for information on how to pay and file taxes. 

Understanding your rights as an independent contractor helps you manage your business, secure fair treatment, and stay legally protected. If your classification status is in question, you can file an SS-8 form with the IRS to request a worker status determination. 

Dig Deeper: Worker Classification Tests: DOL, IRS, State Tests for Classifying Workers  

If you’re looking for more resources to help you become an independent contractor or small business owner, visit MBO’s blog for expert insights. Our content covers key topics like business structure, financial planning, and taxes, providing you with the knowledge to build a strong foundation. With the right tools and guidance, you’ll be equipped to achieve long-term success in your independent career. 

The information provided in the MBO Blog does not constitute legal, tax, or financial advice. It does not take into account your particular circumstances, objectives, legal and financial situation, or needs. Before acting on any information in the MBO Blog, you should consider the appropriateness of the information for your situation in consultation with a professional advisor of your choosing.