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The Department of Labor is blunt about the stakes, stating that misclassifying employees as independent contractors is a serious problem because misclassified employees may not receive the minimum wage and overtime pay to which they are entitled under the Fair Labor Standards Act, or other benefits and protections to which they are entitled under the law. Whether the Act applies turns on whether an employment relationship exists.

For wage and hour purposes the Department applies an economic reality analysis weighing several factors together: the opportunity for profit or loss depending on managerial skill; investments by the worker and the potential employer; the degree of permanence of the work relationship; the nature and degree of control; the extent to which the work performed is an integral part of the potential employer's business; and skill and initiative. No single factor decides the question.

The IRS applies its own common-law rules for tax purposes, grouped under three headings: behavioural control, meaning whether the business controls or has the right to control what the worker does and how; financial control, covering how the worker is paid, whether expenses are reimbursed and who supplies tools; and type of relationship, covering written contracts, employee-type benefits, whether the relationship will continue and whether the work is a key aspect of the business. The IRS states there is no set number of factors that makes someone an employee or a contractor and no single factor stands alone. Where the answer is genuinely unclear, the IRS accepts Form SS-8 for an official determination, and says it may take at least six months to receive one.

Note that state law may apply a different and stricter test than either federal agency, so a classification that survives both federal analyses can still fail at state level. This is a question for your own advisers, not for the assistant's contract template.

A written agreement should state the scope, the rate and unit, how hours are recorded and approved, notice on both sides, and who owns the work product. Ownership matters more than people expect: if an assistant writes your standard operating procedures, drafts your templates or builds your spreadsheets, say in writing that those belong to the business.

Confidentiality should be a specific clause, not an assumption, and it should survive the end of the engagement. Where an assistant handles customer personal information, set out what they may do with it, where they may store it, and what they must do if they lose a device or suspect a breach.

One category needs particular care. If the assistant will handle protected health information for a medical practice or another covered entity, a business associate contract is required under HIPAA, and that obligation is described in detail in the answering services guide. The same applies to any assistant touching patient scheduling, billing or records.