In the eyes of federal, regional and local administrations, a contractor is independent from a tax point of view. An agreement on independent contractors allows the recruitment company and the contractor to describe in detail what is expected and why, for legal and tax reasons, the contractor is not an employee. As a general rule, the IRS treats independent contractors as self-employed and their income is subject to self-government tax. On the other hand, when there is an employer-employee relationship, the hiring company is responsible for Medicare and Social Security taxes. An agreement for independent contractors is a written contract between two parties for a given service or project. One person or company hires another to help with a short-term task. Ancillary Benefits: The Contractor may not participate in the retirement, health, leave, sickness or unemployment benefits of the recruitment company Independent Subcontracting Agreement This independent subcontracting agreement exists between the University of San Francisco, a California non-profit corporation („University“) and („Contractor“) and is dated. The university wants that. While you can use a service contract letter for both staff and contractors, be sure to respect the language you use in the document. Here, too, you want to prevent employees from being misclassified under the name of another contract. Service agreement letters should accurately reflect the laws under which the state classifies and protects people working for a company….