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 California, an independent contractor agreement is a legal document that outlines the terms of the working relationship between a client and a contractor who is not considered an employee. This distinction is important for tax purposes, as outlined in the Internal Revenue Code (26 U.S.C. §3509), which specifies that clients are not responsible for withholding taxes or paying FICA taxes for independent contractors. California has specific criteria for determining whether a worker is an independent contractor or an employee, largely influenced by the California Supreme Court's decision in Dynamex Operations West, Inc. v. Superior Court and the subsequent Assembly Bill 5 (AB 5) and its amendments. These laws establish the 'ABC test' for determining worker status, which requires that the worker (A) is free from the control and direction of the hiring entity in connection with the performance of the work, (B) performs work that is outside the usual course of the hiring entity’s business, and (C) is customarily engaged in an independently established trade, occupation, or business. The written agreement should clearly define the scope of work, project duration, payment terms, and include clauses on confidentiality, non-solicitation, and dispute resolution to ensure both parties understand their rights and obligations.