Independent Contractor Compliance Blog

This may seem simple, but before you engage your contractor, be sure you know exactly what he/she will be doing for you and exactly what the job should look like when it’s completed.

Make the job specifications clear and understandable

The job specification should not be a rambling description full of techno-terms only two or three people on the planet understand. Instead, it should be a clear, concise description of the end result and the deliverables. Why? There are several reasons I can think of:

1. You will be able to track and evaluate progress as the project progresses.
2. Everyone will recognize when the project is completed.
3. It’s possible that a year, or three, from now there will be a misclassification conflict and your project manager will be long gone; the consultant will no longer be under your control; and memories will have faded. You will be standing (or sitting) alone with a tax auditor, or possibly a hostile attorney, who is asking what this project was about, and about the details of the day-to-day working relationship between your company and the contractor. That’s when you will need a clear, understandable project description that was constructed at the time the project was alive.
4. If the project is not clearly defined it is easy to allow the consultant to drift into other jobs that appear related, but are actually not part of the original project. This leads to “Project Drift” which leads to “Status Drift”, which I will be covering in a later article. Both of these Drifts are costly and dangerous. They must be avoided.

It’s not how the contractor does the work

Remember, when you are designing the project’s specifications, it’s the end result you are paying for, not the day-to-day tasks of the contractor. Many project leaders think they must watch over the contractor’s shoulder and provide specific and detailed instructions about how to do the job. They want daily, or weekly, activity reports and accounting for every hour spent on the project. This is a fatal mistake. It is a major step towards morphing your independent contractor into an employee.

Keep in mind:

• IC’s contract to provide you with a specific finished product or service. How they get there is their problem—it is not your concern.
• Employees are hired to perform various tasks at your direction. You can change an employee’s duties and way he/she works at will. The details of how an employee works is your concern.

Don’t be ambiguous:

• There should be an agreed upon, clearly defined end result spelled out in the contract.
• Milestones must also be spelled out in easy to understand language.
• Both the milestones and the end results must be measurable.
• The measurements must tell you if the project is on course, its progress, and tell you when the job is completed.

What’s Next?

In Part 2 we’ll cover what to do while the project is running to protect your project and your consultant’s status as a true independent contractor.