Legal Question in Business Law in California

There isn't just a single-factor test to determine whether someone is an employee or an independent contractor. The usual factors examined include who provides the tools and the workplace, who sets the hours, whether the person can and does have other clients, who pays for the worker's comp insurance, and things like that. I'm having a hard time figuring how this particular contract clause makes a difference. Maybe the reasoning goes this way: Dischargeability for cause is a feature of being an employee, but employees can usually be terminated at will also; whereas independent contractors are generally terminable only for a cause that is a breach of the contract.

So, I'd say the termination clause would be necessary if you are a contractor, and unnecessary if you are an employee.

Maybe the company wants it in because it makes the contract look more like it was written with a contractor in mind, and therefore adds a little to an argument that the person is an independent contractor. It seems like a minor element in the status determination. However, I can easily see why the employer wants it left in - without it, they are stuck with you since you are a contractor. It has more to do with managing their contractors than with identifying them as such.

No. But to effectively set up a contractor relationship that avoids a claim of 'employee status', there are several issues that have to be covered. This is one way of doing it, in the opinion or the company attorney. There are other ways. If you are serious about getting legal help in this, and avoiding problems downstream, feel free to contact me.