September 2012

By: Nancy E. Joerg, Esq.

If your independent contractor agreement contains a provision that allows the parties to terminate the relationship at any time, revise the agreement (AT ONCE!) to include a notice provision-with at least some kind of a notice period required for termination of the independent contractor agreement.

The independent contractor agreement should not state that the parties can walk away at any time (because this indicates an employment at will relationship). An employment at will relationship means that both the company and the employee have the right to terminate the relationship at any time, with or without cause or notice. An independent contractor relationship should never mirror an employment at will relationship.

When drafting a termination provision for an independent contractor agreement, make sure that it is not too complicated. A complicated termination provision may create unwanted legal difficulties in the future. Below is a sample termination provision that is simple yet effective (and includes a notice period):

This Agreement may be terminated:

A. Without cause, by three (3) days’ prior written notice by either party; or

B. With cause, immediately upon material breach of any term of this Agreement by either of the parties.

When a company has a legal challenge to its independent contractor relationships and the company has to prove the validity of one of those independent contractor relationships, one very strong fact in support of independent contractor status is that the independent contractor relationship is not “at will.”

So… review your independent contractor agreement . How does the termination procedure work in the independent contractor agreement? Is there, in fact, a termination provision? If the independent contractor agreement does not have a termination provision, this injures independent contractor status.

If you have any questions or if you wish a legal review of your independent contractor agreement or would like one drafted, call Attorney Nancy E. Joerg of Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.