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If you’ve ever chased a late invoice or wondered whether a client can tell you to work 9-to-5, you’re not alone. Freelancers, also known as 1099 contractors, enjoy freedom and flexibility, but they also risk misclassification, unfair treatment, or missed payments if they don’t know their legal protections.
This guide explains independent contractor rights, how to tell if you’re truly self-employed, and the essential contract clauses that keep your business safe.
Whether you’re new to freelancing or a seasoned pro, understanding independent contractor payment rights and other legal protections will help you work confidently with clients. Using contract management software is one of the best ways to stay on top of all freelancer and self-employment contracts you have, in case you need to reference these later, if your rights are violated.
Independent contractor rights include control over work methods, the ability to set schedules, and the right to negotiate contracts. They retain ownership of their business tools, can work for multiple clients, and are protected from wrongful classification. They also have the right to timely payment under agreed terms.
For tax purposes, the most important of these is that the contractor has the right to control when and how they complete their work.
This level of autonomy and control is what makes someone an independent contractor, regardless of what their actual job title is.
In the U.S., an independent contractor:
The IRS focuses on the right-to-control test: if the client heavily dictates how, when, and where you work, you might legally be an employee, even if your contract says otherwise.
Pro Tip: Always have a signed contract that spells out your independent contractor status. If there’s ever confusion with tax agencies, that contract is your best defense.
You have to figure out how to protect your entitlements before you begin working as a contractor or freelancer with any company. Along with the particulars of the work you’re hired to do, most of your rights concern your finances because how you’re paid and taxed flags you as an independent contractor rather than an employee. You’ll be better off in the long run if you understand these rights ahead of time, so let’s begin.
Ask any freelancer, and they’ll tell you the same thing: always have a contract! They protect you and the clients you work with.
Contracts should always detail payment specifications and the scope of the work. Make sure yours clearly outlines your status as an independent contractor instead of an employee so federal or state agencies understand the nature of your relationship with the business for tax purposes.
Your contract should clearly state:
No contract? You’re risking late payments and potential misclassification.
One of the main perks of being self-employed is freedom with regard to how you want to work. Even though clients pay for projects, they should trust in your expertise and let you perform your duties as you see fit.
Be aware that many businesses list freelancer jobs that still require contractors to work certain hours. But if you’re not getting the benefits of being an employee at the company, you shouldn’t be subject to their work schedule.
As part of your right to control, you should always have the freedom to decide when and where you want to complete your work. The type of work you do most likely determines the “where”.
There may be some instances where you need to be available to speak to a client at a particular time, meet a certain deadline, or work from a set location. But the point here is that, as an independent contractor, you only need to adhere to what is written in your contract after you negotiate with the client on a solution that works for both of you.
Your work location should suit you unless the nature of the job requires otherwise.
Any exceptions should be clearly written into the contract.
Most employees receive their pay on a set schedule. As a contractor, it’s up to you to decide how you want to be paid. Make sure to detail your terms of payment in each contract.
Remember that as an IC, you are responsible for paying taxes. Your clients don’t withhold money for Social Security or any other contributions. Again, this should be outlined clearly in your contract.
Working with a number of different clients gives you the opportunity to vary your income and expand your network. Because of this, your contracts should state that you have the right to market your services and work with other companies. Always look for non-compete clauses if you’re signing the client’s contract rather than providing your own.
Some may be reasonable, such as not working with another client in the same industry within a certain period, but this should apply to specific competitors for specific durations. You should always negotiate with a client if the contract is unclear about this subject.
You may need additional support to complete some projects. In that case, contracts should state whether or not you have the right to hire your own team. Clients sometimes leave this out of their contracts or include a clause that says they must approve any subcontracting in advance.
If you already have a team you work with, ensure your clients know this and verify it in your contracts. This is especially important if the client pays your team directly. This means they also need to be paid as independent contractors, and they have the same rights as you.
people are expected to work as freelancers in the U.S. by 2027, making up more than half of the total US workforce.
Source: Statista
When you’re self-employed, you’re responsible for providing your own benefits, employing and paying your staff, and ensuring you’re being paid for your work.
The client is not responsible for vacation or sick time, healthcare coverage, or retirement plans. This saves them a significant amount of money, so many choose to work with freelancers instead of hiring employees.
As a contractor, you:
Clients save on overhead, but you take on more responsibility.
Even if you and the client believe you’re working as an independent contractor, the IRS and state labor departments have their own definitions. At any point, you have the right to challenge your employment status, particularly if the IRS lists you as one type of employee and your client records your work differently.
Information like job location, client type, and your level of agency is all used to determine your employment status. If you’re ever unsure, work with an employment attorney to help you navigate this component.
Misclassification is one of the most common legal issues freelancers face. A business may call you an “independent contractor,” but that doesn’t automatically make it true in the eyes of the law.
So, how do you really know if you’re a contractor or an employee in disguise?
The IRS uses a "right-to-control" test, which considers:
If the client has heavy control in all three areas, you may legally be an employee.
Some states use the ABC Test for classification. To be considered an independent contractor, ALL three conditions must be met:
Fail any of these? You’re probably an employee under state law.
✔️ Do you set your own hours?
✔️ Can you subcontract your work?
✔️ Do you use your own tools and resources?
✔️ Can you work for multiple clients at once?
If you answered no to most of these, your status may need reevaluation.
Pro Tip: Keep written proof of your independence (contracts, invoices, business registration). It’s critical evidence if your classification is challenged.
Laws around contractors’ rights are evolving fast.
Other states like Massachusetts and New Jersey also have strict rules. Always check your state’s laws before signing a contract.
Want to protect yourself? Your contract should include:
Pro Tip: Store all agreements in the best contract management software so you can quickly reference them if disputes arise.
Think you’ve been misclassified? Here’s what to do:
Before you sign
While working
If disputes happen
As an independent contractor, you should handle your work contracts with great care. Many freelancers simplify their workload with contract management software that helps them create, track, and monitor formal agreements.
To be included in the contract management software category, platforms must:
*Below are the top five contract management software solutions from G2’s Summer 2025 Software Grid Report. Some reviews may be edited for clarity.
PandaDoc allows both individuals and teams to create, manage, and e-sign documents. With a centralized system for storing and searching past documents, it provides a way for users to build accurate, on-brand contracts and offers custom templates with a drag-and-drop editor.
"PandaDoc’s intuitive interface and seamless workflow automation are standout features. It simplifies the entire document lifecycle — from creation to e-signature and tracking — making it incredibly efficient to manage contracts and agreements. The ability to easily collaborate with stakeholders and the real-time document status updates have significantly improved our turnaround time and reduced manual follow-ups. Also, customer support is as good as great."
- PandaDoc Review, Ninad D.
"I have multiple tickets open with the PandaDoc support team for bugs that haven't been solved. One example is the mobile app butchering the placement of fields on documents, which makes it difficult for reps in the field to capture signatures. Speaking of support, the support team doesn't offer a way to get in touch live, even on their highest plan. You have to submit a ticket and wait a few hours at least for a reply. This creates some friction."
- PandaDoc Review, Seth F.
DocuSign CLM helps organizations automate and manage the entire contract process, from creation and negotiation to approval and renewal. It offers a centralized repository for easy contract search and tracking, customizable templates, and workflow automation to reduce manual tasks. With seamless integrations into CRM and ERP systems, it ensures faster, more compliant contract management at scale.
"What I like best about Docusign CLM is the ability to centralize and automate the entire contract lifecycle. Everything is streamlined in one place, from drafting and collaboration to approval and storage. The integration with other tools like Salesforce and the ability to create templates and workflows really helps reduce manual work and minimize errors. It is especially useful for tracking the contract versions and ensuring compliance across departments. The platform is intuitive, and once the workflows are set up, it saves a lot of time and back-and-forth. It is also easy user interface and mobile frendly so i can also use it on my mobile easily."
- Docusign CLM Review, Deepak K.
"It’s not plug-and-play. The onboarding process is a journey. Configuration is complex, and if you don't have someone on your team who really gets CLM systems or access to a DocuSign implementation partner, you’ll hit some snags. And while the tool is robust, the user interface feels a bit dated and can be clunky at times. Reporting also isn’t as flexible out-of-the-box as you'd expect."
- Docusign CLM Review, Erica B.
GetAccept is digital sales room software that helps sales and revenue-driven teams document workflows and sign contracts more easily. Freelancers and independent contractors use it to build a contract in four steps.
"The best thing is that the tools are actually being used by AEs. They use it all the time, whether it's for a proposal or signing a contract, or to share deal rooms or look at the engagement analytics to identify if the deals are trending up or not. GetAccept is a must-have for our tool stack at Simployer."
- GetAccept Review, Mohsen A.
"Customizing content is a little challenging. It feels clunky to adjust a bunch of blocks and organize to what you are trying to send to the customer. I would also like to see version options per proposal as most in my field need multiple proposals before landing on what they like."
- GetAccept Review, Joshua B.
Jotform Sign uses automated features and e-signing tools to help you create and complete legal documents like contracts, waivers, lease agreements, and consent forms. Users can choose from over 600 ready-made templates or build a document from scratch to include unique branding.
"As someone working in childcare, I deal with a lot of paperwork such as consent forms, enrollment documents, daily logs, and more. Job for Sign has truly been a game changer! I absolutely love all of its features. It’s incredibly convenient and makes the entire process of signing documents and filling out e-forms swift and stress-free. Everything is digital, which saves me so much time and energy. I also love that I can easily send copies directly to all clients and employees. No printing, scanning, or chasing signatures. If you’re in a field that requires frequent paperwork, this app will make your life a whole lot easier!"
- Jotform Sign Review, Jocelyn W.
"The WYSIWYG editing means that mistakes can be frustrating, (as deleting something requires recreating what was deleted rather than undoing the delete). Some of the instructions are unclear, such as allowing a password to be set for both the business and the client, but in practice only the most recent password is effective."
- Jotform Sign Review, Brett S.
LinkSquares is a tool powered by artificial intelligence (AI) that handles contracts and other legal documents. It’s an end-to-end contract lifecycle management platform where everything from first draft to final signature live in one place.
"As the only person managing contracts at a small but growing startup, I am grateful for a contract management solution that could help us get organized without overwhelming our lean team. Finalizing and analyzing have kept me from getting behind."
- LinkSquares Review, Tara S.
"While LinkSquares is powerful, its learning curve can be steep for new users. Some customization options are limited, and the platform occasionally feels rigid when trying to tailor it to specific workflows."
- LinkSquares Review, Becky K.
Have more questions? Find the answers below.
Independent contractors in the US have the right to control how they perform their work, negotiate contracts, and receive agreed-upon payment. They are not entitled to employee benefits like health insurance, minimum wage, or unemployment. Contractors retain intellectual property ownership unless specified otherwise in contracts.
You may be misclassified as an independent contractor if your employer controls your schedule, work methods, and tools, or if you work exclusively for one company. Employees typically receive benefits, tax withholdings, and consistent pay, while contractors manage their own taxes and set work terms.
A contractor agreement should include clauses on the scope of work, payment terms, deadlines, confidentiality, intellectual property rights, liability, termination conditions, and dispute resolution. Clear definitions of deliverables and ownership of work help prevent conflicts and ensure legal protection for both parties.
You can take legal action if a client misclassifies you as an independent contractor instead of an employee. File a complaint with the U.S. Department of Labor or your state labor agency. Misclassification may entitle you to back pay, benefits, and tax corrections under federal or state laws.
Contract management tools like DocuSign, PandaDoc, ContractWorks, and Adobe Acrobat Sign help manage agreements efficiently. These tools streamline document creation, enable secure e-signatures, track revisions, automate reminders, and centralize contract storage for easy access and compliance monitoring.
You are not entitled to employee benefits as a 1099 contractor. Independent contractors are self-employed, responsible for their own health insurance, retirement plans, and taxes. They do not receive employer-provided benefits like paid leave, unemployment insurance, or workers’ compensation.
Freelance workers in the US have limited protections under labor law. They are covered by contract law, copyright protections, and anti-discrimination statutes. However, as independent contractors, they are not entitled to minimum wage, overtime pay, unemployment insurance, or employer-provided benefits.
For most independent contractors, working as a self-employed freelancer is one of the best career decisions they’ve ever made. They have the freedom to work where and when they want, with people that they’ve chosen. But sometimes complex issues arise, even with contracts in place. Know your rights as an independent contractor so you can keep yourself protected and do your best independent work in the years ahead.
Don't risk late payments or misclassification. Manage your freelance contracts with smart e-signature software and stay in control.
This article was originally published in 2024. It has been updated with new information.
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