An hourly contract is a legal agreement between two parties in which the independent contractor charges the client an hourly rate for the time taken on the project.
There are two standard types of contract—an hourly contract and a fixed fee contract.
Note: To edit this legally vetted hourly contract template, sign up to Bonsai.
Working as a freelancer or independent contractor is becoming more and more popular—as of 2020, freelancers made up 36% of the U.S. workforce, and is expected to grow 14% over the next six years.
If you find yourself working as a freelancer, you may be tempted to charge a fixed fee, however, it's super easy to end up doing more work than you're being paid for—especially if you have a joint venture or you enjoy working for a particular client.
Charging an hourly rate and clearly outlining the scope of work ensures that you're not only paid for all the work you've agreed to do, but also for all the extras that are requested along the way.
Alongside this specific advantage, this type of independent contractor agreement also ensures:
Here, we've outlined the necessary components of your freelance hourly contract. It's essential to be as comprehensive as possible when talking about the upcoming project to ensure all parties acknowledge and understand their responsibilities and roles throughout.
In this section, you'll include information relating to your organization and the client—such as your name as the independent contractor, the client’s name, and the start date. Be as attentive as you possibly can here—the entire agreement could be invalidated if you include any incorrect information or details.
This section of the service agreement is paramount for independent contractors that choose to be paid hourly—it's where you outline the exact details of the work you're being contracted to complete.
You need clear guidance around what's expected from you—the independent contractor—in order to accurately invoice and receive payment from the client.
Include any deliverables you expect to submit, and include what conditions must be met for the project to be considered finished. This is when you'll receive the final payment and be on your way to new projects and clients.
Here's where you provide information on when you'll be hitting the milestones you outlined in the scope of work. This gives you and the client an idea of how long the project will run, and when certain aspects will be finished.
The written agreement surrounding the schedule guides the progression of the project and ensures everyone's on the same page when it comes to expectations.
In an hourly contract, this section is especially important. It outlines all the details regarding payment—in this case, your hourly rate and any additional fees for extra services.
It's essential here to highlight that your client isn't just paying for the hours you spend working on their project, but also all the hours you spend on providing other services related to the project. This includes things like replying to emails, research, liaising with third parties, catch-up calls, or any other tasks related to the project.
You'll also need to include information on payment, such as when the payment is due and the expected payment period following your invoice.
Clients often request an estimate for the final fees to be able to stick to a budget—it's up to you whether you accommodate this and using a timesheet is the easiest way to do it.
This relates to the scope of work—specifically what happens if the independent contractor is required to complete extra work. This contract clause spells out how you'll be dealing with any additions, revisions, or changes to the original contract.
Extra work means extra hours—hours you need to ensure aren’t completed at your own expense.
This clause protects you from being held responsible for any damages a client or third party believes they have suffered as a result of the services performed. You don't want anything to go wrong or for the relationship to turn sour, however, sometimes it's inevitable and it’s smart to prepare for it.
Liability will also put your client’s mind at ease, knowing you’re taking responsibility for the work you’re doing.
It's essential to outline who gets what when the project is finalized. Creative work is often subject to intellectual property disputes, so it's key to ensure this is handled up front. It also protects the confidential information of your client’s company and yours as the independent contractor.
Prior written consent is essential when it comes to intellectual property rights as all parties must agree to—and stick to—the final result being one party's sole and exclusive property.
This clause is your escape plan—it outlines what happens when either party wants to abandon the project, including any consequences for the terminating party.
This provides remedies—such as written notice— for both you and the client, however, from your perspective it:
Nowhere is the phrase time is money more fitting than when working for an hourly fee as an independent contractor. You're in charge of everything—which is flexible and free but also somewhat overwhelming. Legal advice is expensive and timely and sometimes going solo is your only option.
Bonsai takes the guesswork out of your service arrangement and allows you to source and edit legally approved contract templates for all types of projects. It saves you precious time to use elsewhere—like on the project at hand.
Creating contracts with Bonsai couldn't be any easier:
There are several methods you can use to calculate your hourly rate. It’s good to note that the hourly rate or dollar amount you choose to charge depends on a variety of factors, such as:
Your hourly rate is entirely up to you, and it’s important to make sure it represents your expertise and that you’re happy with it.
Not all freelancers are paid by the hour. Freelancers can charge an hourly rate or a fixed fee, with both having their pros and cons depending on the work involved.
Choosing to charge an hourly rate ensures you’ll receive fair payment for the amount of work you do. It also means you need to be especially thorough when outlining what the project will entail.
Take a look at our hourly contract template below to begin creating your ideal agreement.
To save you the hassle and automate your work, Bonsai has got you covered. Bonsai's free hourly rate contract template has the necessary legal clauses a contract needs. You can edit and customize to your needs.
Absolutely! Writing your own hourly rate contract does not require a law degree. The best news is, Bonsai has done the leg work for you. Just download and edit our pre-fab hourly rate contract template.
Bonsai has some hourly rate contract templates you can easily edit and download. Pick Bonsai's template depending on your role or customize our general hourly contract template here.
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This Contract is between Sample Client (the "Client") and cool company, an Arizona corporation (the "Contractor").
The Contract is dated [the date both parties sign].
1.1 Project. The Client is hiring the Contractor to do the following: hourly writing & editing
1.2 Schedule. The Contractor will begin work on June 08, 2023 and will continue until the work is completed. This Contract can be ended by either Client or Contractor at any time, pursuant to the terms of Section 6, Term and Termination.
1.3 Payment. The Client will pay the Contractor a rate of $100.00 (USD) per hour. Of this, the Client will pay the Contractor $500.00 (USD) before work begins.
1.4 Expenses. The Client will reimburse the Contractor's expenses. Expenses do not need to be pre-approved by the Client.
1.5 Invoices. The Contractor will invoice the Client at the end of the project. The Client agrees to pay the amount owed within 15 days of receiving the invoice. Payment after that date will incur a late fee of 1.0% per month on the outstanding amount.
1.6 Support. The Contractor will not provide support for any deliverable once the Client accepts it, unless otherwise agreed in writing.
2.1 Client Owns All Work Product. As part of this job, the Contractor is creating “work product” for the Client. To avoid confusion, work product is the finished product, as well as drafts, notes, materials, mockups, hardware, designs, inventions, patents, code, and anything else that the Contractor works on—that is, conceives, creates, designs, develops, invents, works on, or reduces to practice—as part of this project, whether before the date of this Contract or after. The Contractor hereby gives the Client this work product once the Client pays for it in full. This means the Contractor is giving the Client all of its rights, titles, and interests in and to the work product (including intellectual property rights), and the Client will be the sole owner of it. The Client can use the work product however it wants or it can decide not to use the work product at all. The Client, for example, can modify, destroy, or sell it, as it sees fit.
2.2 Contractor's Use Of Work Product. Once the Contractor gives the work product to the Client, the Contractor does not have any rights to it, except those that the Client explicitly gives the Contractor here. The Client gives permission to use the work product as part of portfolios and websites, in galleries, and in other media, so long as it is to showcase the work and not for any other purpose. The Client does not give permission to sell or otherwise use the work product to make money or for any other commercial use. The Client is not allowed to take back this license, even after the Contract ends.
2.3 Contractor's Help Securing Ownership. In the future, the Client may need the Contractor's help to show that the Client owns the work product or to complete the transfer. The Contractor agrees to help with that. For example, the Contractor may have to sign a patent application. The Client will pay any required expenses for this. If the Client can’t find the Contractor, the Contractor agrees that the Client can act on the Contractor's behalf to accomplish the same thing. The following language gives the Client that right: if the Client can’t find the Contractor after spending reasonable effort trying to do so, the Contractor hereby irrevocably designates and appoints the Client as the Contractor's agent and attorney-in-fact, which appointment is coupled with an interest, to act for the Contractor and on the Contractor's behalf to execute, verify, and file the required documents and to take any other legal action to accomplish the purposes of paragraph 2.1 (Client Owns All Work Product).
2.4 Contractor's IP That Is Not Work Product. During the course of this project, the Contractor might use intellectual property that the Contractor owns or has licensed from a third party, but that does not qualify as “work product.” This is called “background IP.” Possible examples of background IP are pre-existing code, type fonts, properly-licensed stock photos, and web application tools. The Contractor is not giving the Client this background IP. But, as part of the Contract, the Contractor is giving the Client a right to use and license (with the right to sublicense) the background IP to develop, market, sell, and support the Client’s products and services. The Client may use this background IP worldwide and free of charge, but it cannot transfer its rights to the background IP (except as allowed in Section 11.1 (Assignment)). The Client cannot sell or license the background IP separately from its products or services. The Contractor cannot take back this grant, and this grant does not end when the Contract is over.
2.5 Contractor's Right To Use Client IP. The Contractor may need to use the Client’s intellectual property to do its job. For example, if the Client is hiring the Contractor to build a website, the Contractor may have to use the Client’s logo. The Client agrees to let the Contractor use the Client’s intellectual property and other intellectual property that the Client controls to the extent reasonably necessary to do the Contractor's job. Beyond that, the Client is not giving the Contractor any intellectual property rights, unless specifically stated otherwise in this Contract.
The Contractor won’t work for a competitor of the Client until this Contract ends. To avoid confusion, a competitor is any third party that develops, manufactures, promotes, sells, licenses, distributes, or provides products or services that are substantially similar to the Client’s products or services. A competitor is also a third party that plans to do any of those things. The one exception to this restriction is if the Contractor asks for permission beforehand and the Client agrees to it in writing. If the Contractor uses employees or subcontractors, the Contractor must make sure they follow the obligations in this paragraph, as well.
Until this Contract ends, the Contractor won’t: (a) encourage Client employees or service providers to stop working for the Client; (b) encourage Client customers or clients to stop doing business with the Client; or (c) hire anyone who worked for the Client over the 12-month period before the Contract ended. The one exception is if the Contractor puts out a general ad and someone who happened to work for the Client responds. In that case, the Contractor may hire that candidate. The Contractor promises that it won’t do anything in this paragraph on behalf of itself or a third party.
5.1 Overview. This section contains important promises between the parties.
5.2 Authority To Sign. Each party promises to the other party that it has the authority to enter into this Contract and to perform all of its obligations under this Contract.
5.3 Contractor Has Right To Give Client Work Product. The Contractor promises that it owns the work product, that the Contractor is able to give the work product to the Client, and that no other party will claim that it owns the work product. If the Contractor uses employees or subcontractors, the Contractor also promises that these employees and subcontractors have signed contracts with the Contractor giving the Contractor any rights that the employees or subcontractors have related to the Contractor's background IP and work product.
5.4 Contractor Will Comply With Laws. The Contractor promises that the manner it does this job, its work product, and any background IP it uses comply with applicable U.S. and foreign laws and regulations.
5.5 Work Product Does Not Infringe. The Contractor promises that its work product does not and will not infringe on someone else’s intellectual property rights, that the Contractor has the right to let the Client use the background IP, and that this Contract does not and will not violate any contract that the Contractor has entered into or will enter into with someone else.
5.6 Client Will Review Work. The Client promises to review the work product, to be reasonably available to the Contractor if the Contractor has questions regarding this project, and to provide timely feedback and decisions.
5.7 Client-Supplied Material Does Not Infringe. If the Client provides the Contractor with material to incorporate into the work product, the Client promises that this material does not infringe on someone else’s intellectual property rights.
This Contract is ongoing until the work is completed. Either party may end this Contract for any reason by sending an email or letter to the other party, informing the recipient that the sender is ending the Contract and that the Contract will end in 7 days. The Contract officially ends once that time has passed. The party that is ending the Contract must provide notice by taking the steps explained in Section 11.4. The Contractor must immediately stop working as soon as it receives this notice, unless the notice says otherwise. The Client will pay the Contractor for the work done up until when the Contract ends and will reimburse the Contractor for any agreed-upon, non-cancellable expenses. The following sections don’t end even after the Contract ends: 2 (Ownership and Licenses); 3 (Competitive Engagements); 4 (Non-Solicitation); 5 (Representations); 8 (Confidential Information); 9 (Limitation of Liability); 10 (Indemnity); and 11 (General).
The Client is hiring the Contractor as an independent contractor. The following statements accurately reflect their relationship:
8.1 Overview. This Contract imposes special restrictions on how the Client and the Contractor must handle confidential information. These obligations are explained in this section.
8.3 Third-Party Confidential Information. It’s possible the Client and the Contractor each have access to confidential information that belongs to third parties. The Client and the Contractor each promise that it will not share with the other party confidential information that belongs to third parties, unless it is allowed to do so. If the Client or the Contractor is allowed to share confidential information with the other party and does so, the sharing party promises to tell the other party in writing of any special restrictions regarding that information.
Neither party is liable for breach-of-contract damages that the breaching party could not reasonably have foreseen when it entered this Contract.
10.1 Overview. This section transfers certain risks between the parties if a third party sues or goes after the Client or the Contractor or both. For example, if the Client gets sued for something that the Contractor did, then the Contractor may promise to come to the Client’s defense or to reimburse the Client for any losses.
10.2 Client Indemnity. In this Contract, the Contractor agrees to indemnify the Client (and its affiliates and their directors, officers, employees, and agents) from and against all liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of: (i) the work the Contractor has done under this Contract; (ii) a breach by the Contractor of its obligations under this Contract; or (iii) a breach by the Contractor of the promises it is making in Section 5 (Representations).
10.3 Contractor Indemnity. In this Contract, the Client agrees to indemnify the Contractor (and its affiliates and their directors, officers, employees, and agents) from and against liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of a breach by the Client of its obligations under this Contract.
11.1 Assignment. This Contract applies only to the Client and the Contractor. The Contractor cannot assign its rights or delegate its obligations under this Contract to a third-party (other than by will or intestate), without first receiving the Client’s written permission. In contrast, the Client may assign its rights and delegate its obligations under this Contract without the Contractor's permission. This is necessary in case, for example, another Client buys out the Client or if the Client decides to sell the work product that results from this Contract.
11.2 Arbitration. As the exclusive means of initiating adversarial proceedings to resolve any dispute arising under this Contract, a party may demand that the dispute be resolved by arbitration administered by the American Arbitration Association in accordance with its commercial arbitration rules.
11.3 Modification; Waiver. To change anything in this Contract, the Client and the Contractor must agree to that change in writing and sign a document showing their contract. Neither party can waive its rights under this Contract or release the other party from its obligations under this Contract, unless the waiving party acknowledges it is doing so in writing and signs a document that says so.
11.4 Notices.
(a) Over the course of this Contract, one party may need to send a notice to the other party. For the notice to be valid, it must be in writing and delivered in one of the following ways: personal delivery, email, or certified or registered mail (postage prepaid, return receipt requested). The notice must be delivered to the party’s address listed at the end of this Contract or to another address that the party has provided in writing as an appropriate address to receive notice.
(b) The timing of when a notice is received can be very important. To avoid confusion, a valid notice is considered received as follows: (i) if delivered personally, it is considered received immediately; (ii) if delivered by email, it is considered received upon acknowledgement of receipt; (iii) if delivered by registered or certified mail (postage prepaid, return receipt requested), it is considered received upon receipt as indicated by the date on the signed receipt. If a party refuses to accept notice or if notice cannot be delivered because of a change in address for which no notice was given, then it is considered received when the notice is rejected or unable to be delivered. If the notice is received after 5:00pm on a business day at the location specified in the address for that party, or on a day that is not a business day, then the notice is considered received at 9:00am on the next business day.
11.5 Severability. This section deals with what happens if a portion of the Contract is found to be unenforceable. If that’s the case, the unenforceable portion will be changed to the minimum extent necessary to make it enforceable, unless that change is not permitted by law, in which case the portion will be disregarded. If any portion of the Contract is changed or disregarded because it is unenforceable, the rest of the Contract is still enforceable.
11.6 Signatures. The Client and the Contractor must sign this document using Bonsai’s e-signing system. These electronic signatures count as originals for all purposes.
11.7 Governing Law. The laws of the state of Arizona govern the rights and obligations of the Client and the Contractor under this Contract, without regard to conflict of law principles of that state.
11.8 Entire Contract. This Contract represents the parties’ final and complete understanding of this job and the subject matter discussed in this Contract. This Contract supersedes all other contracts (both written and oral) between the parties.
THE PARTIES HERETO AGREE TO THE FOREGOING AS EVIDENCED BY THEIR SIGNATURES BELOW.
