Employee vs. Contractor Classification IRS and DOL tests focus on control, financial relationship, and type of relationship. Misclassification carries severe penalties. Employee Agreements Need IP assignment clauses Non-compete provisions (where legal) Confidentiality obligations At-will employment terms Contractor Agreements Need Independent contractor statement Work-for-hire IP transfer Project-specific scope Payment terms (milestone or project-based) Best Practices When in doubt, classify as employee to avoid penalties. Consult employment attorney for borderline cases.