Cybersecurity and Independent Contractors: Avoiding Legal Liability

You’re likely aware of the manifold benefits of independent contractors (ICs), but reliance on them can introduce a major cybersecurity vulnerability. In fact, the IC’s personal device or remote network may be the “weakest link” in your organization’s digital infrastructure.  

The consequences of failing to implement adequate IC security aren’t limited to data loss. They can trigger massive regulatory fines, class-action lawsuits, and catastrophic operational downtime. That’s in addition to the loss of consumer trust, since your customers and business partners likely don’t care whose device was responsible for your company losing their data.  

In this article, we share how you can reduce the risk of legal liability stemming from your use of ICs. 

Outlining the Problem: The Risk of Insider Threats 

Insider threats are a specific type of cyberattack that involves either an individual who works for a company or someone (like an IC) who has authorized access to a company’s networks, systems, or both. And while insider threats are usually framed as a person who maliciously uses that access to download or use data in a way that harms a company, most cybersecurity professionals actually use a broader definition that includes malicious, intentional, and unintentional actions. In practice this looks like:  

1. Negligent Insider: The IC whose device is compromised due to weak passwords, failure to patch, or falling for a phishing attack (including new sophisticated, AI-driven attacks). 
2. Compromised Insider: The attacker who steals the IC’s valid credentials (often via a lack of Phishing-Resistant Multi-factor authentication) and uses them to gain trusted access. 
3. Malicious Insider: The disgruntled IC who intentionally exfiltrates data before or after an engagement ends. 

Regardless, the average cost of an ‘insider incident’ in 2025 is $17.5 million, according to the 2025 Ponemon Cost of Insider Threats reporting. So, insider threats are typically a risk that’s well worth managing.  

When To Mandate Cybersecurity Standards for Independent Contractors 

Before we dig into the how of mandating cybersecurity standards for your non-employee workforce, we wanted to clarify that not all independent contractors will need strict and/or auditable cybersecurity standards.  

For some ICs, the burden of requiring cybersecurity standards won’t be worth it.  

This is typically true when the IC doesn’t have access to your data and/or your internal systems. If they’re relying on publicly available data, for example, cybersecurity audits would be more burdensome than beneficial. We often see this when ICs are engaged for marketing tasks, like creating content for social media, or consultants hired to report on industry trends. The key is that the ICs work must be segregated from your internal networks and data storage.  

The same might be true for some commercial documents, like a brand guideline given to a web designer. These could be more easily contractually protected through a non-disclosure agreement (NDA) – especially if it’s not going to be the end of the world if the documents are made public.  

So, When Do Security Standards Matter for ICs? 

The need for strict cybersecurity standards for an IC usually becomes important when the work involves access to or processing of sensitive data or critical systems. This is where the risk of legal and financial liability is highest. 

It becomes especially true if the IC has access to sensitive personal information, including health information, as well as:  

• Confidential business information 

• Internal credentials  

• Access to proprietary information 

• Access to financial systems, especially those used for transactions 

• Access to tools essential for service delivery. 

Implementing Cybersecurity for Independent Contractors 

We won’t go into the legal tests for determining if a worker is an IC here. If you’re uncertain, you should work with an employment attorney. But companies do need to balance managing cybersecurity risks with maintaining IC status.  

The key to navigating both independent contractor classification standards and required security measures is to mandate results, not methods. For example:  

Mandating Results/Outcomes 

• Contractually require the use of Phishing-Resistant Multi-Factor Authentication. 

• Contractually require all data access to be funnelled through a Virtual Desktop Infrastructure (VDI) instance or Secure Access Service Edge (SASE). 

• Require a specific level of Cyber Liability Insurance and compliance with recognized security standards (e.g., NIST standards). 

Avoid the following

• Dictating the IC’s daily login hours or requiring them to use a specific, uncustomizable computer operating system. 

• Demanding that the IC installs your general-purpose employee surveillance software on their personal machine. 

• Train the contractor alongside employees on the company’s internal HR policies and employee handbooks. A better approach would be to provide contractor-appropriate security and privacy training that covers topics like handling personal data, secure communication, and confidentiality — without referencing employee handbooks or HR processes 

Company-Level Cybersecurity Standards 

The reality is that your company-level cybersecurity standards are going to play a key role in managing the risk your independent contractors pose. 

At the company level, you should implement processes and protections that limit the ability of independent contractors to access or download personal or sensitive information. You should also ensure that independent contractor access to personal or sensitive information is included in your organizational data mapping.  

Additionally, all ‘the usual’ protections should apply to your independent contractors too. At a minimum, you should require: 

• 2-factor authentication whenever they login, and 

• Ensure your systems require users to create unique usernames and passwords. 

Additionally, independent contractors should only be provided access to the personal or sensitive information they reasonably need to successfully complete their work, and access and downloads should be carefully monitored. There should also be systems in place that allow you to revoke access once the engagement ends.  These can include:  

• Strict Least Privilege Access and Segmentation: Independent contractors should only be provided access to the exact data and systems they need to complete their work. This is the Principle of Least Privilege. 

• Network Micro-segmentation. This  ensures that if an IC’s account is compromised, the attacker cannot move laterally across your internal network to access unrelated databases or systems. (This is a really common method used by hackers!) 

• Continuous Data Mapping and Access Monitoring: You must know exactly who has access to what, and when. 

• Revocation Mechanisms: Automated systems should be in place to instantly revoke all access the moment an engagement ends, or a suspicious activity is detected. 

• Time-Bound Access: For ICs working directly within shared cloud environments (AWS, Azure, Google Cloud), ensure IC access credentials are timed and short-lived and that any access requires multi-factor authentication – yes, even internally.  

Minimum Security Standards for Independent Contactors 

Your agreements should, at a minimum, require independent contractors to meet the following security standards: Use a VPN while undertaking work for your company, particularly when accessing personal or sensitive information. 

• Avoid downloading any personal or sensitive information to their device, wherever possible. You should also outline that any personal or sensitive information they do download must be deleted or destroyed when no longer necessary and, in any event, no later than when the engagement ends.  

• Sign a non-disclosure agreement; and  

• Immediately notify your company of any suspected security incident and cooperate in your investigation.  

Beyond a non-disclosure clause in your IC contract, we also recommend considering the following for IC agreements – though be sure the requirements are commensurate with the risk that IC poses (as opposed to using a standard template for all):  

• Require Cyber Liability Insurance for ICs handling personal or sensitive consumer data or confidential company data. You could mandate that the IC maintain a minimum level of cyber liability insurance. The contract could also require the IC to name the hiring entity as an additional insured party, if appropriate. 

• Right-to-Audit Clauses can grant the right to review the IC’s documentation and access logs, and conduct security assessments of the IC’s designated work environment. 

• Mandate a Strict Incident Response Clause requiring the IC to  cooperate fully in any security incident response including granting the company access to perform forensic analysis related to company data. 

If you need help managing your cybersecurity obligations, reach out. Our privacy attorneys would love to assist you.  

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