What a California independent contractor agreement is for
Hiring an independent contractor in California has been carefully regulated since AB5 brought the ABC test into the Labor Code, and since January 1, 2025 the Freelance Worker Protection Act has added specific requirements for contracts with freelancers. A business that hires a one-person freelancer for professional services worth $250 or more must have a written contract with set contents, give the freelancer a signed copy, keep it for four years and pay on time. The agreement also has to avoid clauses that California law voids or penalizes, such as non-competes and "work made for hire" language.
This template is written for California businesses hiring designers, writers, marketers, developers, consultants and other contractors. It contains every item the Freelance Worker Protection Act requires, a classification checklist that walks through the ABC test and the two exemptions most small businesses rely on, and California-safe terms for intellectual property, confidentiality and restrictive covenants. Freelancers can use it too, as a contract to offer clients who do not have one.
When to use it
Use it whenever a California business engages an independent contractor or freelancer, especially an individual or one-person business providing professional services. Use a new Schedule A for each new project or rate change, and review Schedule B whenever the working relationship changes.
It is not a way to convert an employee into a contractor. If the person works under your direction on your core business, on your schedule, with your tools, the agreement will not change their legal status. It is also not designed for construction work requiring a Contractors State License Board license, or for hiring through a staffing agency.
What's inside
The full list of sections and fields in this template, in the order they appear.
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Parties
- Company name and mailing address
- Contractor name
- business form and mailing address
- Business license
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Services and payment
- Itemized services in Schedule A
- Independent judgment
- Written changes
- Invoice deadline
- Payment date
- No conditions on payment
- Expenses
- Taxes
- W-9 and 1099-NEC
- EDD reporting
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Independent contractor relationship
- Status
- Independent business
- Tools and location
- Hours
- Personnel
- Licenses and insurance
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Term and termination
- Term
- Termination notice
- Payment on termination
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Intellectual property and confidentiality
- Assignment on payment
- Licence to contractor materials
- No work-made-for-hire designation
- Portfolio
- Confidentiality
- Whistleblower carve-out
- DTSA immunity notice
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Restrictive covenants, liability and protections
- No non-compete or non-solicitation
- Warranty
- Indemnity
- Limitation of liability
- Signed copy and 4-year retention
- No retaliation
- No waiver
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General terms and signatures
- Governing law and venue or arbitration
- Entire agreement
- Assignment
- Notices
- Electronic signatures
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Schedule A. Services and Compensation
- Service
- Description
- Value
- Rate and method
- Due date
- Total
- Invoice deadline
- Payment date
- Payment method
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Schedule B. Classification Checklist
- ABC test
- Twelve business-to-business criteria
- Six professional services criteria
- Basis relied on
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Onboarding Checklist
- Signed copy
- W-9
- EDD DE 542
- Insurance
- Business license
- Schedule B
- 1099-NEC
Preview pages
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Page 1 -
Page 2 -
Page 3
How to complete the agreement
- Complete Schedule B first. Work through the ABC test, then the business-to-business or professional services criteria if needed, and record the basis you rely on.
- Identify both parties. Enter full names and mailing addresses, the contractor's business form and any business license.
- Itemize the services in Schedule A. List every service or deliverable with its value, the rate and method of compensation, and its due date.
- Set invoicing and payment dates. State when the contractor submits invoices and when you will pay; both are required.
- Choose expense and insurance terms. List any reimbursable expenses and the insurance the contractor must carry.
- Keep the intellectual property assignment. Do not add "work made for hire" language; list any contractor materials the business will only license.
- Leave out non-competes. Rely on the confidentiality clause and the trade secret notice already included.
- Choose courts or arbitration. Pick a county or an arbitration provider, and keep the fee clause if you choose arbitration.
- Sign, deliver a copy and onboard. Give the contractor a signed copy, collect a W-9, and file EDD Form DE 542 within 20 days once payments reach $600.
Example: a completed Schedule A excerpt
A fictional San Diego brewery, Harbor Light Brewing Co., hires a freelance graphic designer, Lena Ruiz, for a label redesign:
Service: Label redesign for 4 core beers. Value: $3,200. Rate and method: fixed fee, paid in two parts. Due date: 2026-04-30. Service: Social media launch graphics (12 images). Value: $900. Rate and method: $75 per image. Due date: 2026-05-15. Total contract value: $4,100. Invoice submission deadline: within 5 days after each deliverable is approved. Payment date: within 15 days after the brewery receives each invoice.
Because Lena is a one-person business providing graphic design, a listed professional service, for more than $250, the Freelance Worker Protection Act applies, and Schedule A contains each item it requires. The brewery relies on the professional services exemption in Schedule B: Lena works from her own studio, sets her own hours and rates, and designs for other clients. Once the brewery pays her more than $600 in the year, it files Form DE 542 with the EDD within 20 days.
California rules to know
These are the California and federal rules this agreement is built around.
- Freelance Worker Protection Act (Business and Professions Code sections 18100 to 18108). Written contract with required contents for freelance professional services of $250 or more; signed copy to the freelancer; four-year retention; payment on the contract date or within 30 days of completion; no conditions on timely payment; no retaliation; no waivers.
- ABC test (Labor Code section 2775). A worker is an employee unless the hiring entity proves all three conditions.
- Business-to-business exemption (section 2776). Twelve criteria, after which the Borello test applies.
- Professional services exemption (section 2778). Listed services and six criteria, after which Borello applies.
- Work made for hire (Labor Code section 3351.5(c) and Unemployment Insurance Code section 686). Commissioning a work made for hire from an individual creates employer status for those purposes.
- Restrictive covenants (Business and Professions Code sections 16600 and 16600.5). Non-competes are void and unenforceable.
- EDD reporting. Form DE 542 within 20 days of paying, or contracting to pay, $600 or more.
- Defend Trade Secrets Act (18 U.S.C. section 1833(b)). The immunity notice preserves the right to exemplary damages and fees.
Mistakes that turn contractors into employees
Most misclassification problems start with how the work is actually done, not the contract: a "contractor" who works fixed hours, reports to a manager, uses company equipment and does the same work as employees. On paper, the usual mistakes are a contract with no payment date or itemized services, which now breaches the Freelance Worker Protection Act, a "work made for hire" clause that makes the business an employer for unemployment insurance, a non-compete that California will not enforce, and no DE 542 filing. Completing Schedule B honestly and filling in every column of Schedule A avoids the paperwork mistakes; the checklist helps you spot the relationship ones.
Frequently asked questions
What must a freelance contract include in California?
Under the Freelance Worker Protection Act (Business and Professions Code section 18103), a written contract with a freelancer must include each party's name and mailing address, an itemized list of all services with their value and the rate and method of compensation, the date payment is due or how it will be set, and the date by which the freelancer must submit a list of services for payment. The hiring party must give the freelancer a signed copy and keep it for four years.
Who counts as a freelance worker under SB 988?
A person or one-person organization hired as a bona fide independent contractor to provide professional services (as defined in Labor Code section 2778) for $250 or more, alone or combined with other contracts with the same hiring party in the previous 120 days. Government agencies and individuals hiring for personal or household purposes are not hiring parties under the Act.
When must a California business pay a freelancer?
On or before the date the contract sets, or, if the contract is silent, no later than 30 days after the freelancer completes the services. Once work has started, the business cannot make timely payment conditional on the freelancer accepting less or providing more than agreed.
Can I make a California contractor sign a non-compete?
No. Business and Professions Code section 16600 voids contracts that restrain anyone from a lawful profession, trade or business, which covers non-competes and most customer non-solicitation clauses, and section 16600.5 makes them unenforceable wherever they were signed. Use confidentiality terms and trade secret law instead.
Why shouldn't a California contractor agreement say "work made for hire"?
Because California law treats a person who commissions a work made for hire from an individual as that individual's employer for unemployment insurance and workers' compensation. Assigning the intellectual property on payment gives the business ownership without that risk.
