Free Kentucky Independent Contractor Agreement Template

A Kentucky independent contractor agreement is a written contract between a hiring business and a self-employed worker. It records the project, the fee, and the parties’ understanding that the worker is in business for themselves. Kentucky measures that understanding against how the work is really performed.

A Kentucky independent contractor agreement needs no filing, no notarization, and no prescribed wording. What the state does have is a court-built test and a liability rule that catches many businesses off guard.

The Six-Factor Test

The Kentucky Education and Labor Cabinet applies a six-factor test developed by the Kentucky Supreme Court:

• The permanency of the relationship between the parties
• The degree of skill the service requires
• The worker’s investment in equipment or materials for the task
• The worker’s opportunity for profit or loss depending on their skill
• The hiring party’s right to control the manner in which the work is performed
• Whether the service is an integral part of the hiring party’s business

Where those factors show the worker is economically dependent on the business, Kentucky treats them as an employee rather than a contractor.

When the Hiring Business Counts as a Contractor

KRS 342.610(2) deems you a contractor where you hire someone to remove, excavate, or drill soil, rock, or mineral, to cut or remove timber from land, or to perform work of a kind that is a regular or recurrent part of your trade, business, occupation, or profession. The provision does not apply to owners or lessees of land principally used for agriculture.

Proof of Coverage and Building Permits

Building work adds a checkpoint. KRS 342.610(6) requires a local building official to obtain proof of workers’ compensation coverage from the builder before issuing a building permit. An otherwise exempt contractor certifies that in writing instead, on a form the commissioner prescribes.

You can be, and coverage is the trigger. KRS 342.610(2) makes a contractor and its carrier liable for compensation owed to a subcontractor’s employees unless the subcontractor primarily liable has secured that payment. Practitioners call this up-the-ladder liability.

A contractor who ends up paying may recover the compensation paid and necessary expenses from the subcontractor primarily liable. Even so, recovery takes time and money.

There is a flip side worth knowing. KRS 342.690 treats a contractor covered by KRS 342.610(2) as an employer for exclusive remedy purposes, whether or not the subcontractor actually secured payment of compensation. Businesses in this position therefore carry exposure and protection at once. So the single most valuable habit in Kentucky is collecting a current certificate of insurance before anyone starts work.

1. Ask for a certificate of insurance. Get proof of the contractor’s workers’ compensation coverage before work begins.
2. Define the deliverable. Describe the finished result and leave the method to the contractor.
3. Pay against milestones. Fixed-price or milestone terms reflect an independent business better than an hourly rate.
4. Note who supplies equipment. Kentucky weighs the worker’s own investment in tools and materials.
5. Sign and file it. Nothing gets recorded with the state, so both sides keep their own copies.

Start with scope, fee, and schedule. Next, add an insurance clause requiring the contractor to carry and evidence their own coverage, since the state’s liability rule turns on exactly that. Round it out with terms on intellectual property, confidentiality, and termination.

Two more clauses pay for themselves. Spell out that the contractor may accept other clients, which speaks to the permanency factor. Then require them to supply their own equipment, which speaks to investment. Both mirror the test the Cabinet actually applies.