Fire an Independent Contractor | Complete Payroll

Short answer: No, you can’t "fire" an independent contractor like you would an employee.

Longer answer: You can end a relationship with an independent contractor if they're not meeting the terms of your agreement. However, it’s not technically "firing" because independent contractors are self-employed and not your employees.

What is an Independent Contractor?

An independent contractor is a self-employed individual or entity who offers specialized services based on a contractual agreement. Here’s what sets independent contractors apart from employees:

• Control: Independent contractors decide how, when, and where the work is performed.
• Tools and Equipment: They use their own tools and resources to complete tasks.
• Time Management: They set their own schedules and manage their time independently.
• Taxes: They are responsible for their own tax filings and payments.
• Training: Independent contractors maintain their skills and knowledge independently.
• Nature of Work: Typically, they perform work that is not core to your business operations. For example, a plumber repairing your office’s pipes might be an independent contractor, while your in-house IT technician is an employee.

How to Handle an Underperforming Independent Contractor

The first step is to review the contract you have in place. A well-written contract should include termination provisions, which specify how and under what circumstances either party can end the agreement. It might also outline any notice periods or procedures that need to be followed.

To protect your business legally:

• Adhere strictly to the contract terms if you decide to end the relationship.
• If the contractor’s performance doesn’t justify termination based on the contract, consider having a professional conversation. Many contractors are open to adjusting their approach to maintain their professional reputation.

Remember: You don’t have the right to control how the contractor completes the work, only that it is completed as per the contract.

What if There Are No Termination Clauses in the Contract?

In the absence of specific termination provisions, communication is key. Have a direct and professional discussion about your concerns. It's possible to reach a mutual agreement to end the relationship amicably.

If your contract includes a dispute resolution section, follow those guidelines to resolve any disagreements. Additionally, be mindful that expectations you might have for employees—such as dictating methods, tools, or scheduling—do not apply to independent contractors.

Best Practices for Future Contracts

Moving forward, all contracts with independent contractors should include clear termination provisions. This will reduce ambiguity and provide both parties with a clear understanding of the circumstances under which the agreement can be ended.

The Benefits of Terminating a Contractor vs. an Employee

Ending a contract with an independent contractor is usually simpler than terminating an employee. You avoid the complexities of unemployment claims, severance pay, or other employee-specific requirements. Additionally, adhering to your contract’s terms can protect you from potential legal disputes.

Need Assistance with Contract Terminations?

For further insights into legal considerations, best practices, and strategies related to employee and contractor terminations, explore our resource page: A Complete Guide to Employee Terminations. This page covers everything you need to know, from scripting difficult conversations to understanding legal requirements.

Additional Resources on Terminations

• How to Script Your Termination Meeting
• Can You Fire An Employee For Something They Did Outside of Work?
• Paying a Terminated Employee Their Last Paycheck

Download your free toolkit and ensure you're following best practices when terminating contracts or employees.

For more information and insights into the laws, best practices and complexities around terminating employees, check out our resource page, A Complete Guide to Employee Terminations. It's an all-in-one page that includes thorough insights, instructions and plenty of links to other helpful resources.