Contract Employment Terms

• A contract employee has the right to negotiate the terms of his contract with his client. The contract terms typically include the duration of the job, the contractor's responsibilities, the pay rate, grounds for termination of the contract, ownership of the product that results, dispute resolution methods and confidentiality. A contractor has the right to work with other clients, as long as the contract terms do not include a clause barring him from working for certain competitors.
  
  

Renegotiating a Contract

• A contractor has the right to refuse to renegotiate contract terms if she doesn't want to. If the contract is for two years and the client has decided that the worker is no longer needed, the client cannot terminate the contract unilaterally. If the contract employee agrees to end the contract earlier, she can, but she is not required to -- unless the contract states otherwise.
  
  

Benefits

• A contract employer -- the client -- does not have to carry worker's compensation insurance for contractors. Contract workers are not entitled to employee benefits such as vacation, sick leave, health insurance or stock options -- unless such benefits are addressed in the contract.
  
  

Work Rules

• Contractors have the right to work independently, without the supervision of an employer. A contract worker decides where, how and when to get the work done. The client has the right to tell the worker what they expect the outcome of the job to be, but has no say in how the work gets done.
  
  

Taxes

• Contract employers do not have to pay contractors' payroll taxes (Social Security and Medicare), nor do they have to withhold income taxes. Clients pay contractors the agreed-upon fee upon completion of a job or in installments as the work is being completed. It is the responsibility of the contract employee to pay her own payroll and income taxes. If the bulk of her income comes from contract work, she will need to make estimated tax payments over the course of the year.