Key Takeaways:

  • Independent Contractor Rights: Contractors are responsible for setting their own rates, working conditions, and contracts but do not receive employee benefits or protections like minimum wage or overtime pay.
  • Payment Issues: If an independent contractor is not paid, they should first attempt to resolve the issue with the client before seeking legal assistance.
  • Legal Contracts Matter: A written contract significantly strengthens a contractor’s case for recovering unpaid wages.
  • Legal Recourse: Contractors can send demand letters, file small claims court cases, or seek assistance from a labor attorney.
  • Preventative Measures: Clearly defined contracts, upfront deposits, and periodic invoicing can help prevent payment disputes.

I am an Independent Contractor Not Getting Paid

Are you thinking, “I’m an independent contractor not getting paid what I’m worth?” Many contractors think that on occasion. What you need to remember is that as an independent contractor, you can set your own rates, choose your own jobs, and make your own decisions. If you are not getting paid what you think you are worth, or if you are not getting paid per your contract with your client, there are some steps you can take to remedy both situations.

Steps to Take When an Independent Contractor is Not Paid

If you are an independent contractor not paid for work, follow these steps to seek payment:

  1. Review Your Contract – Ensure the payment terms, deadlines, and penalties for late payment are clearly outlined.
  2. Send a Friendly Reminder – Sometimes, clients simply forget. A polite email or phone call can resolve the issue.
  3. Issue a Demand Letter – If reminders don’t work, send a formal demand letter specifying the amount owed, work performed, and a deadline for payment.
  4. Consider Mediation – Some disputes can be resolved through mediation before escalating to legal action.
  5. File in Small Claims Court – If the amount owed falls within your state’s small claims limit, this may be a cost-effective option.
  6. Hire a Collections Agency – For stubborn non-payers, professional collection services can help recover funds.
  7. Seek Legal Assistance – If all else fails, consulting an employment lawyer can help you determine further legal action.

What Does Independent Contractor Mean?

When you’re an independent contractor, you have more freedom as to how you want to do your work. However, you are held responsible for getting your own health insurance, paying your taxes, and paying into unemployment.

The terms for your work will be based on a contract or other agreement. The terms can be a formal contract or a verbal agreement. You will also generally work in your own office or in a place other than in the client’s business. Independent contractors also provide their own supplies for completing a job if it is necessary.

Legal Protections for Independent Contractors

Unlike employees, independent contractors are not covered by many federal labor laws, such as:

  • Fair Labor Standards Act (FLSA) – Does not apply to independent contractors, meaning no minimum wage or overtime protection.
  • National Labor Relations Act (NLRA) – Contractors do not have the right to unionize or negotiate collectively.
  • State Protections – Some states, like California, have enacted laws (e.g., AB5) to classify certain contractors as employees, offering more protection.

Despite these limitations, contractors can protect themselves by having well-drafted contracts, keeping records of work performed, and knowing their rights in case of non-payment.

Difference Between an Employee and Contract Worker

Employees and independent contractor are two very different forms of working situations. There is much more difference than just the title. If you are a contractor, you are not entitled to receive the same rights as an employee under the law. For instance, you will not have any discrimination rights like an employee will.

Employees are also guaranteed certain wages, including minimum wage and overtime payments. Independent contractors are not entitled to any specific wages, just those that you contracted for in your agreement with the client. The client also does not have to provide you with any type of insurance or other benefits. Employers are required to deduct payroll taxes for employees, but not for contractors.

On-demand workers are a new category of contractor that are employees that do work for an online or app-based company. An example would be a person who drives for Lyft or Uber. In this working situation, the employers have been criticized for how on-demand workers are treated.

The issue is that the on-demand worker is not an employee and employers will use this logic to defend themselves. The critics of on-demand workers say that companies utilizing them are performing a labor-brokering function. Therefore, there is currently legislation being developed to cement the rights of these workers.

In true fashion, an independent contractor works for him or herself. The independent contractor has many benefits including:

  • The ability to take on as much or as little work as he or she would like
  • Working for many clients at any given time
  • Setting his or her own rates
  • Deciding how the work is done
  • Choosing where the work will be completed
  • Choosing when to work

On the flip side, an employee is allowed to work for one or two employers at a time. The employee has to work at the place of business, follow rules set by the employer, follow a set schedule, and is paid a salary offered by the employer, working on tasks assigned by the employer.

Common Misclassification Issues

Some companies misclassify workers as independent contractors instead of employees to avoid taxes and benefits. Signs of misclassification include:

  • The company controls your work schedule and tasks.
  • You rely on company-provided tools and workspace.
  • You work exclusively for one client with no independent discretion.

If you suspect misclassification, you may be entitled to back wages, benefits, and tax relief. The IRS Form SS-8 can help determine your employment status.

Non-Payment of Contract Workers

If you’re a contract worker and you do not have a contract, you could face problems getting paid for your work. If you aren’t paid for your work, you need to submit a letter to the business that details the work you completed and the payment that you expect to be paid.

If you have been paid by this client in the past, it helps establish the fact that you had a form of contract. You need to document any payments made to you previously and gather all tax documents provided by the client. This includes your 1099-MISC tax forms that show you were paid prior.

Once you have presented this evidence to your client and you still have not received payment for your work, you need to consult with an employment law attorney so that you can get the law applied to your own circumstances.

How to Prevent Payment Issues as an Independent Contractor

To minimize the risk of not getting paid as an independent contractor, consider these preventative measures:

  • Use Detailed Contracts – Include payment terms, late fees, and dispute resolution methods.
  • Request Upfront Deposits – Asking for a percentage before starting work secures commitment.
  • Invoice Promptly – Send invoices immediately upon completion of work.
  • Set Payment Deadlines – Specify due dates and follow up immediately if payment is late.
  • Use Secure Payment Methods – Platforms like PayPal, Stripe, or escrow services can protect payments.

Being proactive about payment agreements can help ensure that you receive compensation for your work on time.

Frequently Asked Questions:

  1. What legal action can an independent contractor take if they are not paid?
    Independent contractors can send a demand letter, file a case in small claims court, hire a collections agency, or consult a lawyer.
  2. Can an independent contractor file a lawsuit for unpaid wages?
    Yes, an independent contractor can sue for breach of contract, unjust enrichment, or under state-specific labor laws.
  3. How long does an independent contractor have to claim unpaid wages?
    This depends on state laws and contract terms. Some states allow claims within two to six years from the date of non-payment.
  4. Can a contractor charge late fees for unpaid invoices?
    Yes, if the contract includes a late fee clause, contractors can legally charge penalties for overdue payments.
  5. How can an independent contractor prove they are owed money?
    Contracts, email communications, completed work samples, invoices, and payment records can serve as evidence in a dispute.

If you need help with getting paid as an independent contractor, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law, and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.