Tips on making your Independent Contractors audit proof

I posted the other day about the government's increased efforts to crack down on misclassified independent contractors. "Misclassified independent contractors" are workers who should really be employees of the business,  In other words, these workers are entitled to workers compensation and disability insurance, unemployment benefits, tax withholding by the employer and so forth.. 

Here are some pointers on making your independent contractors or consultants audit proof:

  • Pay your independent contractors per assignment or per project, not by the hour, and don't pay them a fixed weekly or monthly salary; 
  • Keep them away from your “real” employees and don’t dress and equip them like employees, i.e. don't give them company business cards, don't let them use your company letterhead, don't let them perform the exact same tasks that your employees perform.
  • Keep the independent contractors on a long leash (give them their "independency"). They should be able to control when they can work and how they work; Avoid micro-managing their work.
  • Don’t forbid them from working for other employers on similar projects. But you could require them to at least inform you when they do, to give you the option to limit their engagement at that time.
  • Put

all of the above into an independent contractor agreement, a.k.a. consultant agreement. 

The Law Firm Orrick put a pretty good consultant agreement of this sort on its website in its startup library.  But beware, each agreement needs to be tailored to your particular situation. 

About Imke Ratschko

Imke Ratschko is a New York Attorney helping small businesses, business owners and entrepreneurs with all things "Small Business Law," such as litigation, contracts, business owner disputes, shareholder and operating agreements, sale or purchase of a business, investors, and starting a business. You can reach her at 212.253.1027.


  1. I guess sometimes truth is stranger than fiction!

  2. Great!thanks for sharing this “Tips on making your Independent Contractors audit proof”…really a great help to everyone.

  3. that’s really a fantastic post ! added to my favourite blogs list.. I have been reading your blog last couple of weeks and enjoy every bit. Thanks.

  4. will definitely post a link to this page on my site. I’m certain my followers will find this article really useful.

  5. It is well known that cash can make us free. But what to do when one doesn’t have money? The one way only is to get the personal loans or just sba loan.

  6. Keep them away from your “real” employees and don’t dress and equip them like employees, i.e. don’t give them company business cards, don’t let them use your company letterhead

  7. Hot topic just about this good topic. Students use the term paper writing service and buy essay and already written essay about this post.

  8. I opine, dissertation writers compose the superior issue or find a dissertation just about this post, thence, some people should get custom dissertation and, credibly, it’s assertable to get the online buy thesis or custom written essay.

  9. It’s very rare that you find the relevant information on the net but your article did provide me the relevant information. I am going to save your URL and will definitely visit the site again.

  10. I like the idea of business because it means opportunities. thanks for sharing.

  11. Looking at how business rise and fall it is important to learn from our past mistakes. impressive page indeed.

  12. Things could go wrong, you’ll only to make some good picture of your goals and objectives. thanks for the share. Impressive page indeed.

  13. truly an awesome page. thanks!

  14. The advise the attorney gave on how to avoid the scrutiny of the government would have also been useful for a client of ours that ran into an issue with the Korean National Tax Service and the Ministry of Labor a few years back.
    The client, who was working with a large ubiquitous Korean law firm, lost a costly battle with the Ministry of Labor and National Tax Service because of a naively drafted contractor agreement and poor advice given by a team that consideres itself the leading team in labor law. Never believe those publications that rate law firms. The blog post reawakened my memory of this incident.

  15. Skillful essays mostly includes productive arguments, obviouslywritten thoughts, and supportive evidence. You can be trustedyou are getting superb quality of work accessible from expert essay writing service.