Tips for Hiring an Independent Contractor

Employee or Independent Contractor

Do you have an independent contractor working for your company? The law establishes clear distinctions between employees and independent contractors, and it is important to ensure that your personnel are classified correctly.  In California, there isn’t a set definition of “independent contractor,” and the determination of whether a worker is an independent contractor or employee depends on the facts of the situation.  Historically, the primary factor to consider has been to what degree the hirer retains the right to control the worker’s means and methods of performance along with the outcome of the work.  Employers often try and use independent contractors for roles traditionally performed by employees, but misclassification of an employee as an independent contractor can be a costly mistake for a business. 

how to hire an independent contractor

The New “ABC” Test

A recent California Supreme Court case, Dynamex Operations West, Inc. v. Superior Court, established new guidelines for whether a worker can be considered an independent contractor with the “ABC” test.  Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes:

  1. that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
  2. that the worker performs work that is outside the usual course of the hiring entity’s business; and
  3. that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.”

If an employer is challenged, the presumption is that the worker is an employee unless the employer can meet all three parts of the test.

Independent Contractor Do’s and Don’ts

Along with the new 3-part ABC test, here are some tips for hiring an independent contractor.

Do execute a written independent contractor agreement clearly establishing the independent contractor relationshipDo not hire independent contractors without clearly identifying the independent contractor relationship and scope of engagement
Do ensure that independent contractors customarily engage in an independently established trade, occupation or business (ex. independent contractors are in the business of providing certain work on a contract by contract basis)///
Do have the independent contractors use their own tools, equipment, supplies, etc. to perform the workDo not require that independent contractors use your tools, equipment, supplies, etc. to perform the work
Do report your independent contractors to the EDD and timely file and issue 1099s.Do not hire independent contractors to do work that is within your usual course of business (ex. T-shirt design company hiring independent contractor to work as T-shirt designers)
Do ensure that independent contractors submit invoices for payments ///
Do hire independent contractors for a definite period of time (ex. per project or by set period of time)Do not require independent contractors to come to your “office” or set their work hours (ex. 9am-5pm)
///Do not control or direct the manner of work performance (ex. “how” the work should be done)
Do preferably work with independent contractors that are a corporate entity (ex. work with Jane Doe Corp or Jane Doe LLC instead of Jane Doe, an individual)Do not require exclusivity from independent contractors (ex. let them work for other clients)
Do ensure that independent contractors have liability insurance (especially if independent contractors are professionals)Do not provide independent contractors any employment benefits
Do ensure that independent contractors’ licenses, if any, are currentDo not pay or withhold any taxes for the independent contractors

Legal Disclaimer: The information in this article is provided for general informational and educational purposes only. It is not intended to be legal advice and does not create an attorney-client relationship.

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Jen Kim is Senior Counsel at Parsus LLP. Jen specializes in cross-border M&A, investment and financing transactions. She brings a wealth of cross-border legal experience and cultural knowledge to facilitate multinational clients doing business in Asia and the U.S.

Jen is an English-Korean bilingual corporate attorney who spent the first 8 years of her career at big law firms, initially in the Chicago office of Drinker Biddle & Reath then at Kim & Chang in Seoul, Korea. At Drinker Biddle & Reath, her practice focused on transactional work including M&A, private equity and partnership investments. At Kim & Chang, in addition to transactions, she worked on a broad range of matters for multinational clients in the life sciences, healthcare and chemical industries, serving as the outside general counsel for their operations in South Korea and the broader Asia Pacific region.

Most recently, Jen was in-house at Reckitt Benckiser, a global consumer health company with well-known consumer brands such as Lysol, Mucinex, Air Wick and Enfamil.  At Reckitt Benckiser, she was a member of the senior management team looking after all legal and compliance matters for its Korea and Japan businesses before transitioning to her role in Chicago where she managed the integration of the company’s newly acquired infant formula business and led the North America health business in data privacy matters.

Jen majored in business administration at Ewha Womans University and received her J.D. degree from Northwestern University Pritzker School of Law.

David Kim | PARTNER

David Kim is a Partner at Parsus LLP.  He specializes in corporate and technology transactions, with an emphasis on intellectual property.  David has represented a variety of clients from start-ups to Fortune 500 companies in mergers and acquisitions, cross-border investment, financing, and licensing.  His clients do business in a range of industries including entertainment, financial services, consumer products, gaming, software, and technology services. 


Prior to returning to Parsus LLP, David served as an in-house intellectual property counsel for NBCUniversal, advising on technology and mergers and acquisitions for the various business units of the company.  He assisted the company’s corporate development teams in assessing acquisition targets and negotiated NDAs, vendor service agreements, software and hardware licenses, and trial agreements for experimental and prototype technology.  David was also one of the company’s primary resources on open source software-related matters.    


Before joining NBCUniversal, David co-founded and served as a Partner of Parsus LLP, worked as in-house counsel for start-ups, and was an associate at Winston & Strawn, where he represented clients in intellectual property matters including patent assessment and analysis, IP licenses, and various phases of patent and copyright infringement litigation.  At Winston, David also represented clients in general business and securities litigation concerning commercial disputes and business torts.

Kristen Lee

Kristen Lee is an English-Korean bilingual corporate associate attorney at Parsus LLP.  With a background in defending corporate clients in high stakes litigation, Kristen’s current practice is focused on commercial transactions and the various day-to-day legal needs of businesses of all sizes, including business formation, corporate governance, commercial contracts, and mergers and acquisitions.  

In her role at Parsus, Kristen has represented numerous public companies operating in the US including NHN and CJ. Her recent transactions include representing a group of foreign investors in a minority investment of a US software start-up and representing a Korean company acquiring a US digital media company.

Ju Y. Park, Esq.
Ju Park

Ju Park is the Managing and Co-Founding Partner of the Firm, and practices in the areas of mergers and acquisitions, corporate finance, corporate governance and general corporate transactions. She also has considerable experience working with companies as their offsite general counsel in providing practical and cost-effective solutions to their general day-to-day business legal matters.

In the area of securities, Ju has represented issuers and investment banks in initial public offerings, private placements of debt and equity securities, 144A securities offerings, foreign public offerings and private equity transactions. Ju’s experience spans a wide array of clients and industries, including individuals, start-ups and Fortune 500 companies with a presence in the food, cosmetics, sports, entertainment and media, real estate and e-commerce industries. Ju also has experience assisting NYSE and NASDAQ-listed companies with public reporting obligations and general corporate compliance matters.

In the area of mergers and acquisitions, Ju has represented both public and private companies on sell-side and buy-side transactions. Ju’s experience in mergers and acquisitions include complex, cross-border deals involving collaboration with foreign counsel in multiple countries.

Before co-founding Parsus, Ju was an attorney in the Hong Kong and Los Angeles offices of Latham & Watkins.