“When the Contractor Becomes the Defendant”: How Business Owners Get Burned by Independent Contractors

By Jesse David Eisenberg, Esq. | JDE Law Firm, PLLC

They weren’t an employee. No payroll taxes. No benefits. Just a 1099, a scope of work, and a handshake.

Then the project fell apart — and your business was left holding the bag.

Sound familiar?

Why 1099 Relationships Aren’t Risk-Free

Business owners love the flexibility of independent contractors — until they find out how little control they really have when things go wrong.

Here’s where things unravel:

• 🚧 Deadlines missed or ignored
• 🔒 Confidential data mishandled or leaked
• 💡 Intellectual property reused or resold
• 🧾 Contractors vanish after receiving partial payment

And if you didn’t have a tight, well-drafted agreement? You may be left chasing air.

What Courts Actually Look At

Contrary to popular belief, calling someone a “contractor” doesn’t immunize you from liability. In litigation, courts focus on:

• The actual level of control you exercised over their work
• The presence (or absence) of a written agreement with clear deliverables and IP ownership
• Whether the contractor’s failure caused measurable harm to your business

If they cost you time, revenue, or reputation, the question becomes: Can you prove it, and can you collect?

The Hidden Dangers of Contractor Deals

Even well-meaning business owners fall into these traps:

• Using template agreements that don’t match the scope of work
• Failing to get signed deliverables or work product logs
• Paying large amounts before milestones are hit
• Allowing contractors to work on trust, without written protections

When contractors default or disappear, your best asset is leverage. And that starts with enforceable terms.

What Business Owners Should Do Now

If you're currently working with independent contractors — or dealing with one who failed to deliver — here’s what to do:

1. 📝 Review your agreement — or draft one before it’s too late
2. 🧾 Document every communication, invoice, and missed milestone
3. ⚖️ Talk to a commercial litigator before the situation escalates

Contractor Disputes Aren’t Minor — They’re Business Risks

📞 If your contractor is costing you time, money, or peace of mind — it’s time to fight back:
www.jdelaw.nyc | NY: 718-966-0877 | NJ: 732-490-7120

My business is to protect your business.