The master service agreement sets the general terms between you and the contractor, and each SOW defines one piece of work under it. A well-drafted SOW fixes what you are paying for and documents an outcome-based relationship that supports contractor status.
What it contains
The SOW describes deliverables rather than hours, sets milestones with acceptance criteria, states the price and payment schedule, fixes start and end dates, and says who supplies equipment. It also includes an intellectual property assignment clause.
Why it matters for classification
An open-ended day rate with no deliverables describes employment. Defined outputs, contractor control over method and a fixed end date describe contracting. Repeated renewals of the same SOW erode that distinction, so you re-run the worker classification check at each renewal.
SOW versus employment contract
An employment contract creates an ongoing relationship with statutory rights attached, while an SOW creates a project with an end. A time and materials SOW is acceptable where scope cannot be fixed in advance, provided it carries a cap and an end date.