Individual Consultants/Independent Contractors HR 100.4:

Transcription

1 Individual Consultants/Independent Contractors HR 100.4: Purpose To define a process for determining whether an individual consultant/independent contractor relationship exists in order for the College to properly comply with state and federal laws. Applicability All individuals retained to provide consulting services. Source College Policy IRS Regulation (c)-1 Federal Awards Regulations Policy Prior to engaging an individual to provide goods or services, the Office of Human Resources must review the request to determine whether he/she qualifies as a consultant/independent contractor or employee of the College, whether nepotism is a factor, and whether the same goods or services could be provided through existing College sources. The agreement to engage a consultant/independent contractor must undergo contract review and must be signed by an appropriate contracting authority. (See BF 200.1). All consultants/independent contractors must provide the Office of Business and Finance with a valid federal taxpayer identification number. This policy does not apply to businesses/corporations; entertainers; or athletic officials functioning under NCAA or similar rules. Determination of Consultant/Independent Contractor Status: 1

2 The Office of Human Resources makes the ultimate determination as to whether an individual is a consultant/independent contractor. When seeking to hire a consultant/independent contractor, units should provide written justification to the Office of Human Resources. In the absence of such justification, any individual providing goods or services for the College will be presumed to be doing so as an employee of the institution. If a unit is unsure about whether or not to characterize an individual as a consultant/independent contractor, it should err on the side of classifying him/her as an employee because if it is later determined that a consultant/independent contractor should have been paid as an employee, the College may be subject to taxes and/or penalties by the Internal Revenue Service. (Under certain conditions, such taxes and penalties may exceed forty percent [40%] of the amount paid to the individual.) The College reserves the right to charge the department engaging the consultant/independent contractor for taxes and penalties, if any accrue. Units that desire to retain an individual as a consultant/independent contractor should complete the Consultant/Independent Contractor Test form. This form, which can be obtained from the Office of Human Resources, sets forth the following criteria for evaluation: 1. Is the worker required to comply with instructions about when, where, and how the work is done? 2. Is the worker provided training that would enable him/her to perform a job in a particular method or manner? 3. Are the services provided by the worker an integral part of the College operations? 4. Must the services be rendered personally? 5. Does the College hire, supervise or pay assistants to help the worker on the job? 6. Is there a continuing relationship between the worker and the person for whom services are performed? 7. Does the recipient of the services set the work schedules? 2

3 8. Is the worker required to devote his/her full time to the person for whom he/she performs services? 9. Is the work performed at the place of business of the College or at specific places designated by the College? 10. Does the recipient of the services direct the sequence in which the work must be done? 11. Are regular oral or written reports required to be submitted by the worker? 12. Is the method of payment hourly, weekly or monthly (as opposed to on commission or by the job)? 13. Are business and/or travel expenses reimbursed? 14. Does the College furnish tools and materials used by the worker? 15. Has the worker invested in equipment or facilities used to provide the services? 16. Does the arrangement put the person in the position of realizing either a loss or profit on the work? 17. Does the worker perform services exclusively for the College rather than working for a number of companies at the same time? 18. Does the worker in fact not make his/her services regularly available to the general public? 19. Is the worker subject to dismissal for reasons other than nonperformance of contract specifications? 20. Can the worker terminate his/her relationship without incurring a liability for failure? A YES answer to any of these criteria indicates a factor in favor of assessing the individual as an employee and not as a consultant/independent contractor. If there are factors in favor of employee status, the department must prepare written justification and supporting documentation for engaging the individual as a consultant/independent contractor and attach them to the requisition when submitting it to the Office of Human Resources. 3

4 If the relationship between the College and the provider of the goods or services does not clearly meet all of the consultant/independent contractor criteria, the individual must be hired as a College employee. Procedure Responsible Party Action Hiring Unit 1. Contact the Office of Human Resources when it desires to retain an individual as a consultant/independent contractor. 2. Complete the Consultant/Independent Contractor Test form and forward it, with supporting documentation, to the Office of Human Resources. Office of Human Resources 3. Review the Consultant/Independent Contractor Test form and make a determination as to an individual s status. If the Office of Human Resources determines that the individual is a College employee: Hiring Unit 4. Proceed with the normal recruitment process for hiring new employees. If the Office of Human Resources determines that the individual is a consultant/independent contractor: Office of Human Resources 5. Confer with the general counsel about a contract that will then be forwarded to the individual for execution prior to the work being performed. 4

5 Hiring Unit 6. Complete the purchase requisition and provide the necessary vendor information to the business office. (See BF 400.1, BF 400.2, BF 500.1, and BF ) Revision History Last revision completed on