An independent contractor agreement—also known as a 1099 agreement or freelance contract—is a contract between a client willing to pay for the performance of services by a contractor (person, sole-proprietor, or single-member LLC) who is willing to perform the services. Under the Internal Revenue Code (26 U.S.C. §3509), an independent contractor is not an employee, and the client hiring an independent contractor is not responsible for tax withholdings and payment of FICA taxes. An independent contractor agreement should be in writing, and will usually address issues such as the (1) scope of the work (description of the services); (2) terms and length of the project or service; (3) payment details, including fee deposits and billing procedure; and (4) confidentiality, non-solicitation, and dispute resolution clauses.

In Alabama, as in other states, an independent contractor agreement is a legal document that outlines the terms of a working relationship between a client and a contractor who is not considered an employee. Under federal law, specifically the Internal Revenue Code (26 U.S.C. §3509), independent contractors are distinguished from employees, and therefore the client is not responsible for withholding income taxes or paying FICA taxes (Social Security and Medicare) on behalf of the contractor. In Alabama, it is advisable to have a written independent contractor agreement to clearly define the scope of work, duration of the project, payment terms, and other important provisions such as confidentiality and non-solicitation clauses. This helps to ensure clarity and protect both parties in the event of a dispute. While Alabama state statutes do not specifically govern the content of independent contractor agreements, they must comply with applicable federal laws and state laws governing contracts, employment, and taxation.