Delaware Independent Contractor Agreement
Delaware does not use one classification test for every purpose. Unemployment insurance applies a three-part ABC test, the construction industry has its own statute with penalties of $5,000 to $20,000 per misclassified worker, and the wage payment law excludes independent contractors altogether. A signed agreement supports contractor status but does not decide it.
What Delaware law does to this document
Unemployment insurance uses an ABC test
Services performed for wages are covered employment unless the Department of Labor is satisfied of three things. The individual must be free from control and direction over the work. The service must be outside the usual course of the business or performed outside all of its places of business. The individual must be customarily engaged in an independently established trade, occupation, profession or business of the same nature as the service performed.
19 Del. C. § 3302(14)(K)Construction work: the Workplace Fraud Act
This statute applies only to the construction services industry. An employer-employee relationship is presumed when an individual performs work for pay, unless the employer shows the Department that the individual is an independent contractor or an exempt person. The contractor definition tracks the ABC elements and adds an alternative for a registered contractor working outside the employer's place of business.
19 Del. C. §§ 3501, 3502, 3503Construction penalties and the written notice
A violation carries a civil penalty of not less than $5,000 and not more than $20,000, and each misclassified employee is a separate violation. A construction employer must give each independent contractor written notice of the classification at hiring, in English and Spanish, signed by both parties. Failing to give the notice is evidence of a knowing violation and carries a $500 administrative penalty per individual.
19 Del. C. §§ 3505, 3511The wage payment law does not cover true contractors
The Wage Payment and Collection Act states that it does not apply to independent contractors, and it defines that term by reference to the Workplace Fraud Act definition in 19 Del. C. § 3501. Invoice timing and late-payment terms for a real contractor therefore come from the contract. If the worker is in fact an employee, the Act applies in full, including liquidated damages of 10 percent of unpaid wages per day up to the amount of the unpaid wages.
19 Del. C. §§ 1101(a)(4), 1101(a)(6), 1103(b)A contractor doing business in Delaware needs a business license
The Division of Revenue requires any person or entity conducting a trade or business in Delaware to obtain a state business license. The annual fee is generally $75 for a first location, which is the statutory general service license fee. A client that wants evidence of an independent business can ask for the license number.
30 Del. C. §§ 2101, 2301(b)Non-solicitation clauses are not rewritten for the drafter
Delaware courts enforce non-solicit agreements that are reasonable in geographic scope and duration, advance a legitimate economic interest, and survive a balancing of the equities. The Delaware Supreme Court has affirmed a refusal to cut an overbroad covenant down to an enforceable size. A 12-month clause limited to people the contractor worked with is easier to defend than a blanket ban.
Sunder Energy, LLC v. Jackson, 332 A.3d 472 (Del. 2024)Where people go wrong in Delaware
- Treating the signed agreement as proof of contractor status, when the unemployment statute asks what the facts show to the satisfaction of the Department of Labor.
- Engaging a construction subcontractor on the generator's agreement alone: the draft does not include the signed English and Spanish classification notice that 19 Del. C. § 3511 requires at hiring, and that notice has to be prepared separately.
- Paying a Delaware-based contractor for years without confirming that the contractor holds a Delaware business license.
How the generator works
A work-for-hire consulting agreement that assigns IP, sets payment and SOW terms, and is drafted to support genuine contractor classification under the ABC test. Answer a short interview and the draft assembles as you go, with Delaware already set as the governing state. Download it as PDF or Word. No fee. No account.