Included is a generic independent contractor’s agreement provided by Emily’s Maids’ attorney. You have our permission to use this agreement for your cleaning service. Before using this contract, please read on because you will want to 1) be aware of the legality of using contract labor and 2) how to possibly prevent the government forcing your house cleaners to be employees.
1) Maid Services Must Use Employees By Law. If you are organized as a maid service you are required, by law, to have employees. Originally Emily’s Personnel Service (dba Emily’s Maids) was not organized as a maid service, rather Emily’s Maids was a referral agency matching housekeepers with homeowners.
The border between employee vs contractor can be quite grey. According to law, as long as you are far enough on the independent contractor side then you are safe; you can use contractors for housecleaning. However what the law states and what the government does do not always coincide.
Emily’s Personnel Service workers fell on the contractor’s side on 18 or the 20 rules (see “Employment Status” below). By law Emily’s Maids was clearly on the contractor side, therefore legally we should have contractors. However when Emily’s was audited by the Texas Workforce Commission, they used items “3 Integration” and “12 Payment” (see below) to force the house cleaners to be employees. Why? Because it was in the government’s financial interest to do so.
Interestingly my attorney shared a story where a business he represented was forced to have contractors instead of employees because, again, it was in the government’s interest despite the business clearly being in on the Employee side.
Here are the 20 items Texas businesses need to look at to determine if they have employees or contractors (This may be different in States other than Texas):
EMPLOYMENT STATUS – A COMPARATIVE APPROACH
|Under the common law test, a worker is an employee if the purchaser of that worker’s service has the right to direct or control the worker, both as to the final results and as to the details of when, where, and how the work is done. Control need not actually be exercised; rather, if the service recipient has the right to control, employment may be shown.||Depending upon the type of business and the services performed, not all of the twenty common law factors may apply. In addition, the weight assigned to a specific factor may vary depending upon the facts of the case. If an employment relationship exists, it does not matter that the employee is called something different, such as: agent, contract labor, subcontractor, or independent contractor.|
|1. INSTRUCTIONS:||11. ORAL OR WRITTEN REPORTS:|
|An Employee receives instructions about when, where and how the work is to be performed.
An Independent Contractor does the job his or her own way with few, if any, instructions as to the details or methods of the work.
|An Employee may be required to submit regular oral or written reports about the work in progress.
An Independent Contractor is usually not required to submit regular oral or written reports about the work in progress.
|2. TRAINING:||12.PAYMENT BY THE HOUR, WEEK, OR MONTH:|
|Employees are often trained by a more experienced employee or are required to attend meetings or take training courses.
An Independent Contractor uses his or her own methods and thus need not receive training from the purchaser of those services.
|An Employee is typically paid by the employer in regular amounts at stated intervals, such as by the hour or week.
An Independent Contractor is normally paid by the job, either a negotiated flat rate or upon submission of a bid.
|3. INTEGRATION:||13. PAYMENT OF BUSINESS & TRAVEL EXPENSE:|
|Services of an Employee are usually merged into the firm’s overall operation; the firm’s success depends on those Employee services.
An Independent Contractor’s services are usually separate from the client’s business and are not integrated or merged into it.
|An Employee’s business and travel expenses are either paid directly or reimbursed by the employer.
Independent Contractors normally pay all of their own business and travel expenses without reimbursement.
|4. SERVICES RENDERED PERSONALLY:||14. FURNISHING TOOLS & EQUIPMENT:|
|An Employee’s services must be rendered personally; Employees do not hire their own substitutes or delegate work to them.
A true Independent Contractor is able to assign another to do the job in his or her place and need not perform services personally.
|Employees are furnished all necessary tools, materials, and equipment by their employer.
An Independent Contractor ordinarily provides all of the tools and equipment necessary to complete the job.
|5. HIRING, SUPERVISING & PAYING HELPERS:||15. SIGNIFICANT INVESTMENT:|
|An Employee may act as a foreman for the employer but, if so, helpers are paid with the employer’s funds.
Independent Contractors select, hire, pay, and supervise any helpers used and are responsible for the results of the helpers’ labor.
|An Employee generally has little or no investment in the business. Instead, an Employee is economically dependent on the employer.
True Independent Contractors usually have a substantial financial investment in their independent business.
|6. CONTINUING RELATIONSHIP:||16. REALIZE PROFIT OR LOSS:|
|An Employee often continues to work for the same employer month after month or year after year.
An Independent Contractor is usually hired to do one job of limited or indefinite duration and has no expectation of continuing work.
|An Employee does not ordinarily realize a profit or loss in the business. Rather, Employees are paid for services rendered.
An Independent Contractor can either realize a profit or suffer a loss depending on the management of expenses and revenues.
|7. SET HOURS OF WORK:||17. WORKING FOR MORE THAN ONE FIRM AT A TIME:|
|An Employee may work “on call” or during hours and days as set by the employer.
A true Independent Contractor is the master of his or her own time and works the days and hours he or she chooses.
|An Employee ordinarily works for one employer at a time and may be prohibited from joining a competitor.
An Independent Contractor often works for more than one client or firm at the same time and is not subject to a non-competition rule.
|8. FULL TIME REQUIRED:||18. MAKING SERVICE AVAILABLE TO THE PUBLIC:|
|An Employee ordinarily devotes full-time service to the employer, or the employer may have a priority on the Employee’s time.
A true Independent Contractor cannot be required to devote full-time service to one firm exclusively.
|An Employee does not make his or her services available to the public except through the employer’s company.
An Independent Contractor may advertise, carry business cards, hang out a shingle, or hold a separate business license.
|9. LOCATION WHERE SERVICES PERFORMED:||19. RIGHT TO DISCHARGE WITHOUT LIABILITY:|
|Employment is indicated if the employer has the right to mandate where services are performed.
Independent Contractors ordinarily work where they choose. The workplace may be away from the client’s premises.
|An Employee can be discharged at any time without liability on the employer’s part.
If the work meets the contract terms, an Independent Contractor cannot be fired without liability for breach of contract.
|10. ORDER OR SEQUENCE SET:||20. RIGHT TO QUIT WITHOUT LIABILITY:|
|An Employee performs services in the order or sequence set by the employer. This shows control by the employer.
A true Independent Contractor is concerned only with the finished product and sets his or her own order or sequence of work.
|An Employee may quit work at any time without liability on the Employee’s part.
An Independent Contractor is legally responsible for job completion and, on quitting, becomes liable for breach of contract.
(Source: 40 T.A.C. § 821.5, adopted to be effective June 1, 1998, as published in the Texas Register, May 29, 1998, 23 TexReg 5732.)
The law says there is a grey area and a business needs to be far enough on either side of the spectrum to classify their workers as employee or contractor. The reality is that you must be 100% on one side or the other, otherwise the government will force you to have whatever classification most benefits them (at least in Texas).
Quite frustrating how the government bends the law however there may be an answer…
2) Ensure Your Contractors Are Incorporated. In addition to setting up your cleaning business to be a referral agency, you will want your cleaners to be under their own Limited Liability Company (LLC). This may shield you from governmental whims. Granted, it may be hard to find house cleaners willing to do this; after all the legal stuff can be quite daunting to anyone. However a friend of mine owns one of the largest moving companies in Dallas along with a House Cleaning service. He requires all of his workers (movers and maids) to have an LLC, though over lunch a few weeks ago, he did voice concern about being audited and forced to have employees. I think he will probably safe if all his workers are LLCs though I suppose the jury is still out on this.
Good job if you have read this far. I hope this helps your business avoid any issues with Uncle Sam. Anyway, on to the independent contractor’s agreement. Please note if you are in Texas, then the only thing you will probably want to customize within the independent contractor agreement is Appendix A.
EMILY’S PERSONNEL SERVICE LLC
INDEPENDENT CONTRACTOR AGREEMENT
This Agreement, when accepted by Emily’s Personnel Service, L.L.C., a Texas limited liability company located at 2606 Manor Way, Dallas, Texas 75235 (“Company”), is made as of ____________ by and between the Company and ______________________________________________, a Sole Proprietorship, located at ________________________, _____________ TX _______ (“Contractor”).
IN CONSIDERATION of their mutual promises made herein, and for other good and valuable consideration, the parties hereby agree as follows:
- Scope of Work
The Company engages the Contractor to furnish the work described in the Schedule attached to this Agreement, and incorporated herein by reference as Exhibit A. Contractor agrees to furnish the work at the times scheduled and agreed upon at the amounts specified in the Schedule. The attached Schedule may be modified, from time to time, upon agreement of the parties. If the Company requests modified or additional services, the Contractor shall provide the Company with an estimate of changes to the compensation payable and the impact upon the schedule for completion of the services, if any. The Contractor shall proceed with such modified or additional services only upon receipt of written approval by the Company.
- Price and Payment
The Company agrees to pay the Contractor in accordance with the price and payment terms set forth in the Schedule attached to this Agreement, and the Contractor agrees to accept such amounts as full payment for its work and to sign such waivers of lien, affidavits and receipts as the Company shall request in order to acknowledge payment. The Contractor acknowledges that its federal employer tax identification number, or social security number in the case of an individual, is correctly set forth in the Schedule attached to this Agreement.
- Independent Contractor Relationship
The Contractor is an independent contractor and is not an employee, servant, agent, partner or joint venturer of the Company. The Company shall determine the work to be done by the Contractor, but the Contractor shall determine the legal means by which the Contractor accomplishes the work specified by the Company. The Company is not responsible for withholding, and shall not withhold, FICA or taxes of any kind from any payments it owes the Contractor. Neither the Contractor nor its employees shall be entitled to receive any benefits which employees of the Company are entitled to receive and shall not be entitled to workers’ compensation, unemployment compensation, medical insurance, life insurance, paid vacations, paid holidays, pension, profit sharing, or Social Security on account of their work for the Company.
- Business of Contractor
The Contractor represents and warrants to the Company that the Contractor is engaged in an independent calling of providing household and other services and has complied with all local, state, and federal laws regarding business permits and licenses that may be required to carry out the independent calling and to perform the services specified in this Agreement. Upon request by the Company, the Contractor shall provide the Company with copies of all documents reasonably requested by the Company to verify the Contractor’s established business and the representations set forth herein. Notwithstanding any due diligence performed by the Company with respect to the subject matter of these representations, the Contractor shall indemnify and hold the Company, its directors and officers, and its agents and employees, harmless from any and all claims, causes of action, losses, damage, liabilities, costs and expenses, including attorney fees, arising from breach of the representations set forth in this Section.
- Employees of Contractor
The Contractor shall be solely responsible for paying its employees. The Contractor shall be solely responsible for paying any and all taxes, FICA, workers’ compensation, unemployment compensation, medical insurance, life insurance, paid vacations, paid holidays, pension, profit sharing and other benefits for the Contractor and its employees, servants and agents.
The Contractor shall furnish the Company with current certificates of coverage of the Contractor, and proof of payment by the Contractor, for workers’ compensation insurance, general liability insurance, motor vehicle insurance and such other insurance as the Company may require from time to time. The Contractor shall maintain all such insurance coverage and shall furnish the Company with certificates of renewal coverage and proofs of premium payments. If the Contractor fails to pay a premium for insurance required by this paragraph before it becomes due, the Company may pay the premium and deduct the amount paid from any payments due the Contractor and recover the balance from the Contractor directly.
The Contractor shall perform the work at its own risk. The Contractor assumes all responsibility for the condition of tools, equipment, and materials, and job site. The Company will not reimburse the Contractor for any expenses incurred by Contractor as a result of services rendered under this Agreement, including, but not limited to, car-related expenses, telephone expenses, costs of cleaning supplies, and equipment.
- Indemnity and Warranty
The Contractor shall at all times comply with all applicable laws, statutes, ordinances, rules, regulations and other governmental requirements. The Contractor shall indemnify and hold the Company, its directors and officers, and its agents and employees, harmless from any and all claims, causes of action, losses, damage, liabilities, costs and expenses, including attorney fees, arising from the death of or injury to any person, from damage to or destruction of property, or from breach of the warranties in this Section, arising from the provision of services by Contractor, its agents or employees.
The Company may assign any or all of its rights and duties under this Agreement at any time and from time to time without the consent of the Contractor. The Contractor may not assign any of its rights or duties under this Assignment without the prior written consent of the Company.
- Term and Termination
Time is of the essence in the provision of services under this Agreement. This Agreement is effective as of the date signed by both parties. Both parties acknowledge that additional services may be requested under the agreement. The agreement shall terminate upon Contractor’s completion of the services agreed to in accordance with the Schedule attached to this Agreement, unless terminated in accordance with the provisions set forth in this Section. Notwithstanding anything herein to the contrary, the Company reserves the right to terminate this Agreement at any time upon delivery of written notice of termination, and Contractor shall be compensated for all services provided prior to such termination. The Company may terminate this Agreement immediately, however, should Contractor fail to perform any of its obligations hereunder, including without limitation completion of the services provided for herein in a timely manner. The Contractor acknowledges and agrees that its obligations pursuant to Section 8, as well as any obligation to protect confidential information or trade secrets of the Company and assign intellectual property rights to the Company, shall survive the termination or expiration of this Agreement.
- Non-Compete Agreement
- While this agreement is in effect, Contractor shall not be allowed to be hired independently (directly paid) or work with the homeowner unless the Contractor pays an exit fee.
- After the Contractor has ended the provision of services to the Company the Contractor agrees to not provide services for any homeowner provided by the Company without written permission of the Company. The Contractor agrees that they will not provide services for a period of one year after termination of services.
- The Contractor may alternatively pay an Exit Fee of $750.00 to the Company only after six months of service has been provided to the Company if the Contractor wants to work directly for the homeowner. The Company shall have no further obligation to the Contractor including scheduling, obtaining work, or any other act performed in the relationship between Company and Contractor.
- Liquidated Damages. Should Contractor fail to pay the exit fee and continue to provide services directly to any homeowner obtained through the Company then the Contractor agrees to be liable for the sum $10,000 plus reasonable attorney’s fees and costs of collection. The amount of liquidated damages are agreed due to the difficulty of determining the exact amount of monetary damages.
- Settlement by Arbitration
Any claim or controversy that arises from or is related to this agreement shall be determined through Arbitration in Dallas County. The arbitration shall be based upon the Rules of The American Arbitration Association. Any Court in Dallas County, Texas with Jurisdiction may enter judgment
If for any reason, any provision of this agreement is held invalid, all other provisions of this agreement shall remain in effect. If this agreement is held invalid or cannot be enforced, then to the full extent permitted by law any prior agreement between Company (or any predecessor thereof) and the Contractor shall be deemed reinstated as if this agreement had not been executed.
- Effect of Prior Agreement
This agreement supersedes any prior agreement between the Company or any predecessor of the Company and the Contractor, except that this agreement shall not affect or operate to reduce any benefit or compensation inuring the Contractor of a kind elsewhere provided and not expressly provided in this agreement.
- Limited Effect of Waiver by Company
Should Company waive breach of any provision of this agreement by the Contractor that waiver will not operate or be construed as a waiver of further breach by the Contractor.
- Assumption of Agreement by Company’s Successors and Assignees
The Company’s rights and obligations under this agreement will inure to the benefit and be binding upon the Company’s successors and assigns.
- Oral Agreements are Not Binding
This instrument is the entire agreement of the Company and the Contractor. Oral changes have no effect. It may be altered only by a written agreement signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought.
- Governing Law
This Agreement shall be governed and construed in accordance with the laws of the State of Texas.
The Contractor acknowledges and agrees (a) that all intellectual property and any other plans, specifications, designs and other documents and materials created pursuant to this Agreement or related to the services to be provided hereunder and any information, work in progress, trade secrets or other secret or confidential matter related to the business or projects of the Company constitute confidential information (“Confidential Information”), and (b) that the Contractor shall not use, copy or disclose to any person, firm or corporation any such Confidential Information, unless such use, copying or disclosure is necessary to accomplish the Contractor’s duties hereunder and has been authorized in writing by the Company.
- Entire Agreement
This Agreement represents the entire agreement of the parties hereto relating to the subject matter hereof, and any prior agreements, promises, negotiations, or representations, whether oral or written, not expressly set forth in this Agreement are of no force and effect. This Agreement may be modified only by a writing signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date shown above.
Emily’s Personnel Service, L.L.C.
Company Representative’s Signature
Company Representative’s Printed Name
Contractor’s Printed Name
[This area is where you will want to customize for your business]
The Company shall pay Contractor $_____._____ per one hour block for the services of the Contractor, payable at regular payroll periods.
For example, if Contractor is paid $15.00 per one hour block, then the pay schedule would follow considering a minimum of three hours:
3 Hour Block = $45.00
4 Hour Block = $60.00
5 Hour Block = $75.00
6 Hour Block = $90.00
7 Hour Block = $105.00
8 Hour Block = $120.00
I hope you found value in this post. If you have, share the knowledge by linking to this page! It is my personal belief that sharing knowledge with other cleaning services is indicative of having the right mindset for being successful. If you do direct a link to this page, shoot me an email of the link and I’ll send you a free SEO Guide for beginners 🙂
If you are in Texas, you may want to read further on classifying employees and independent contractors.