Legal Pitfalls in Freelancer Agreements
We live in a gig economy, which means freelancers and independent contractors fuel innovation with flexibility and untethered growth potential. However, there are many pitfalls in freelancer agreements that many contractors fail to notice. Let’s discuss what you should know.
Common Freelancer Contract Mistakes
Verbal agreements can be comforting and are legally binding, but they’re also legally messy. Written contracts provide the necessary proof in the event of a dispute, offering both parties clarity on scope, payment, and responsibilities. Avoid this common freelancer contract mistake by putting everything in writing.
TIP: Include details about deliverables, deadlines, payment terms, and intellectual property rights.
Pitfalls in Freelancer Agreements
One of the most common freelancer contract mistakes is agreeing to a vague scope of work. This can lead to scope creep, missed expectations, budget overruns, and more. Avoid pitfalls in freelancer agreements by working with an estate planning attorney who can help guarantee that everything is clearly defined in the contract. Contact the Nicole Pavlik Law Firm today to craft or review your freelancer agreement before signing.
Undefined payment terms are another pitfall in freelancer agreements. Leaving room for misunderstandings is risky, so be sure to spell out payment details, such as:
- Amounts for tasks or time
- Due dates and deadlines
- Late fees (where applicable)
- Accepted payment methods
- Payment schedule
As a freelancer, consider milestone payouts for larger projects, and add a clause about reimbursement of out-of-pocket expenses.
Ignoring Intellectual Property Rights in Freelancer Agreements
Many businesses assume they own the work product, but unless the freelancer contract includes a “Work for Hire,” “At-Will,” or IP assignment clause, the freelancer may retain rights to the work. And if the freelancer wants to maintain portfolio usage, both parties must agree on the terms.
Freelancer relationships can sour over time, with intellectual property disputes that can happen as a result of both parties going their separate ways. A termination clause in freelancer agreements is crucial for this reason, as it explains how and when either party can terminate the contract, including notice periods, fees, and what happens to finished or unfinished work.
Moreover, confidentiality protections are essential to binding the freelancer (and any subcontractors) to keep private information secure. This clause should extend beyond the project timeline, so contact an estate planning attorney today to button up your contract before it’s too late.
Overlooking Dispute Resolution and Independent Contractor Status
What happens if one party breaches the agreement? Dispute resolution clauses help both sides avoid costly, drawn-out legal battles. Choose whether you’ll resolve issues through mediation, arbitration, or court. Then, ensure “freelancer” is classified in the contract.
Misclassified independent contract statuses can have serious legal and tax implications. Businesses could be held liable for employment taxes, benefits, or penalties if the IRS reclassifies the relationship. Consult the Nicole Pavlik Law Firm today to check classifications, dispute resolution terms, and other contractual details.
The Importance of Updating Freelancer Agreements Over Time
Not updating your freelancer agreement is a common mistake that many miss. But projects evolve, the economy changes, and work environments or duties shift with time. Therefore, using an outdated freelancer contract for an ongoing or repeat collaboration can cause confusion, professional issues, legal risks, and financial problems.
It’s not always about checking contracts for rock-solid terms. Sometimes, it’s about updating your agreement to suit new developments, skills, and expectations. However, writing new terms using a DIY template can be challenging and risky, since many automated systems ignore these common freelancer contract mistakes.
Build an Iron-Clad Contract with Nicole Pavlik
Protecting your work, time, and legal standing starts with the right contract. Don’t wait until there’s a discrepancy to realize something is missing. Avoid common pitfalls in freelancer agreements by scheduling a consultation with the Nicole Pavlik Law Firm to ensure your freelancer contract supports your goals and can withstand the test of time.