AIMS COMMUNITY COLLEGE PROCEDURE INDEPENDENT CONTRACTORS AND EMPLOYEE SUPPLEMENTAL SERVICES

Transcription

1 3-300D AIMS COMMUNITY COLLEGE PROCEDURE INDEPENDENT CONTRACTORS AND EMPLOYEE SUPPLEMENTAL SERVICES TABLE OF CONTENTS PURPOSE DEFINITIONS Independent Contractor Employee DOCUMENTATION AND REIMBURSEMENT EXCLUSIONS SPECIAL CONSIDERATIONS Personal Services Classification Analysis (H200) Independent Contractor Agreement for Individuals (H210) Payment Request For Independent Contractors (H212) Workers Compensation Waiver (H202) Employee Supplemental Services Agreement (H220)

2 Payment Request For Employee Supplemental Services Agreement (H222) PURPOSE PROCEDURES FOR INDEPENDENT CONTRACTORS and EMPLOYEE SUPPLEMENTAL SERVICES The purpose of this document is to outline the policies and procedures when contracting for services related to the use of independent contractors doing business as individuals, rather than as companies. If the total dollar amount expended with the independent contractor will be $25,000 or greater per contract, even though the payment will be made to an individual, the purchasing procedures related to competitive pricing and bidding will be followed. (Contact the Purchasing Office for further clarification.) Be prepared to give a detailed description of the service or product you require and the expected result of the work performed by the independent contractor. Additionally, provide information about the length of time the service will be required and the qualification criteria the independent contractor will meet. Purchasing procedures define reasonable time for notice and response by qualified respondents. In the case of a formal bid, the minimum solicitation time is 14 days. DEFINITIONS A careful evaluation will be made when classifying an individual as an independent contractor rather than an employee. An erroneous classification of an individual as an independent contractor, when in fact the person is an employee, could result in legal action being initiated by the Internal Revenue Service for violation of the Wage and Hour Laws relative to the withholding of taxes. In questionable situations, it is best to classify the individual as an employee. Independent Contractor An individual who is responsible to the College for the results of certain work but is not subject to the College s controls to the means and methods of accomplishing those results. Some examples of independent contractors are entertainment performers, guest speakers, officials for athletic events, and consultants. Briefly, an independent contractor generally: 1. Has a place of business and a business listing in a directory where the services are offered to the public.

3 2. Selects the clients and is free to work for one or more clients during any given interval. 3. Determines the time and place work will be performed. 4. Provides the tools and materials needed to perform the work. 5. Does not participate directly or indirectly in the benefit programs of the College. 6. May agree to perform specific services for a fixed price and generally does not receive regular amounts at stated intervals. Employee An individual who is subject to the will and control of the employer not only as to what shall be done but how it shall be done. It is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if the employer has the right to do so. Some of the usual characteristics of an employee are: 1. The right to terminate the relationship with the employer at any time. 2. The furnishing of tools and a place to work by the employer. DOCUMENTATION AND REIMBURSEMENT The Personal Services Classification Analysis form is completed in consultation with the independent contractor for each individual in order to determine the status of the person. The completed Personal Services Classification Analysis form is forwarded to Financial Services for review. Financial Services will make the determination as to the status of the person whether he/she is an independent contractor or an employee. Financial Services will note the determination on the form and return it to the originator. Determination should be made at least one week before any work is done. If Financial Services determines that the person is an independent contractor, an Independent Contractor Agreement For Individuals should be prepared. If it is determined that the worker is not an independent contractor, the department will be contacted by Financial Services and a different means of payment will be discussed. When requesting payment to an independent contractor, attach the original forms (Personal Services Classification Analysis, Independent Contractor Agreement For Individuals, certificate of insurance or Workers Compensation Waiver) to a completed Payment Request For Independent Contractors form, and submit to Financial Services. If partial payments are to be made to an independent contractor, the original forms are attached to the first Payment Request For Independent Contractors form. Subsequent payment requests

4 need only a copy of the Independent Contractor Agreement For Individuals attached. Original signatures certifying the work was done satisfactorily are needed for each request for payment. If the classification analysis indicates an independent contractor relationship but the Independent Contractor Agreement for Individuals indicates an employee relationship, the individual will be considered an employee and will be paid through the Payroll Office. When requesting payment to an employee for supplemental non-instructional services, submit a Payment Request for Employee Supplemental Services Agreement to the Payroll Office. EXCLUSIONS Materials purchased or services provided by firms or businesses are to be paid through the purchasing procedures. The following categories of individuals are not considered independent contractors and, therefore, are paid through the Payroll Office: 1. Continuing Education faculty. 2. Individuals who are considered employees of the College in another capacity. 3. A former employee who has been called back to train a new employee in his/her former position. 4. A contractor who is performing the same tasks an employee would perform. SPECIAL CONSIDERATIONS Students Employed by the College Students employed by the College (work-study, hourly, etc.) cannot be paid as independent contractors. An Employee Supplemental Services Agreement form, available from Payroll, would be used to request payment. Example: A student working for Associated Students performs a musical solo for a reception on campus.

5 PERSONAL SERVICES CLASSIFICATION ANALYSIS (H200) (Employee vs. Individual Independent Contractor) Questions A and B. If either question A or B is answered YES, the individual is an employee, and payment will be made through the Payroll Office. The following definitions are taken from the Internal Revenue Service and are intended to be used as guidelines in preparing the Personal Services Classification Analysis form. According to the IRS, factors that provide evidence of control and independence fall into three categories: behavioral control, financial control, and type of relationship. Behavioral Control. Facts that show whether the business has a right to direct and control how the worker does the task for which the worker is hired include the type and degree of: Instructions the business gives the worker. An employee is generally subject to the business s instructions about when, where, and how to work. Even if no instructions are given, sufficient behavioral control may exist if the employer has the right to control how the work results are achieved. Training the business gives the worker. An employee may be trained to perform services in a particular manner. Independent contractors ordinarily use their own methods. Financial Control. Facts that show whether the business has a right to control the business aspects of the worker s job include: The extent to which the worker has unreimbursed business expenses. Independent contractors are more likely to have unreimbursed expenses than are employees. Fixed ongoing costs that are incurred, regardless of whether work is currently being performed, are especially important. However, employees may also incur unreimbursed expenses in connection with the services they perform for their business. The extent of the worker s investment. An independent contractor often has a significant investment in the facilities he/she uses in performing services for someone else. However, a significant investment is not required. How the business pays the worker. An employee is generally paid by the hour, week, or month. An independent contractor is usually paid by the job. However, it is common in some professions, such as law, to pay independent contractors hourly. The extent to which the worker can realize a profit or incur a loss. An independent contractor can make a profit or loss. Type of Relationship. Factors that show the parties type or relationship include:

6 Written contracts describing the relationship the parties intended to create. Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay. The permanency of the relationship. If you engage a worker for a specific project or period, the worker is an independent contractor. The extent to which services performed by the worker is a key aspect of the regular business of the company. If a worker provides services that are a key aspect of your regular business activity, it is more likely that you will have the right to direct and control his/her activities. For example, if a law firm hires an attorney, it is likely that it will present the attorney s work as its own and would have the right to control or direct that work. This would indicate an employer-employee relationship. Check that the individual s name and social security number are filled in the appropriate spaces on the front of the form and that the authorized signature (administrator) is affixed. The completed Personal Services Classification Analysis form is forwarded to Financial Services for review. Financial Services will make the determination as to the status of the person whether he/she is an independent contractor or an employee. Financial Services will note the determination on the form and return it to the originator. Determination should be made at least one week before any work is done.

7 INDEPENDENT CONTRACTOR AGREEMENT FOR INDIVIDUALS (H210) This form is used to authorize service by an independent contractor. Provide all information requested on this form incomplete forms will be returned to the department. 1. Fill in the date the agreement is being signed. 2. Fill in the name of the independent contractor as it should appear on the check and the 1099 tax form. 3. State in detail the exact services and conditions that the independent contractor is to perform. Sufficient detail will be given so that the amount of control the College has over the individual can be determined. Attach additional sheets to the agreement if necessary. 4. Place(s) Fill in the place(s) of the service, performance, or workshop. 5. Date(s) Fill in the date(s) of the service, performance or workshop. 6. Time(s) Fill in the exact time(s) that the service is to be performed. 7. Aims Account Number(s) Fill in the College account number(s) to be used to pay for the services. If more than one account is charged, also state the amount to be charged to each account. 8. Payment Enter the TOTAL payment agreed upon for the services. If more than one payment will be made to the independent contractor, list all payments and the date of the payments. 9. The independent contractor will print and sign his/her name as shown in #2 above. The social security number will be provided. The address should be a personal address, since the check and 1099 tax forms will be mailed to this location. Make sure the address is complete with apartment or suite numbers plus zip codes. Checks cannot be produced without this information. Note: The General Conditions are incorporated in and are part of the contract (see back of Independent Contractor Agreement for Individuals form).

8 Routing and Signatures: 1. The initiator is the person initiating the request for services. 2. The administrator responsible for the Aims account number(s) listed will sign. 3. If applicable, the person responsible for grants will sign. 4. Financial Services is the final signature (Chief Administrative Officer will initial). Distribution: After Financial Services has signed the Independent Contractor Agreement For Individuals form, all copies will be returned to the initiator. The initiator then keeps a signed copy and gives a signed copy to the independent contractor. The signed original is attached to the Payment Request For Independent Contractors form when requesting payment.

9 PAYMENT REQUEST FOR INDEPENDENT CONTRACTORS (H212) This form is used to authorize payment to an independent contractor. To request payment for an independent contractor, submit a Payment Request for Independent Contractors form to Financial Services. Attach the Independent Contractor Agreement For Individuals, the Personal Services Classification Analysis, and the certificate of insurance or Workers Compensation Waiver. For multiple payments, only original signatures on the Payment Request For Independent Contractors and a copy of the Independent Contractor Agreement For Individuals need to be forwarded to Financial Services. If a check is to be handed to the independent contractor at the time of service, Financial Services needs at least one week to process the request. Provide all information requested on this form incomplete forms will be returned to the department. 1. Date Enter the date the document is being prepared. 2. Department Enter the name of the department that is responsible for the payment. 3. Initiator & Phone # -- Enter the name and phone number of the person who is to be called if there is a question or problem concerning the payment. 4. Independent Contractor Name & Address Enter independent contractor s name and a complete address. 5. Social Security # -- Enter the social security number of the independent contractor. 6. Full Payment or Full Payment At Time Of Service If the independent contractor is to be paid in one full payment, check the Full Payment box. If he/she is to be paid in full at time of service, check that box and indicate date the check is needed. 7. Partial Payment or Final Payment If the independent contractor is to be paid in more than one payment, check the Partial Payment box. If this is the final partial payment, check the Final Payment box. 8. Authorized Signatures An administrator s signature is required to authorize payment. If more than one account number is being charged, there will be an authorized signature (administrator) for each account. If the total amount is over $1,000, a Senior Management member s signature is required.

10 9. Financial Services Initials/Date After initialing, the Chief Administrative Officer will forward the request for payment to Accounts Payable. 10. Account Number Enter the account number(s) to be charged, including the object code. 11. Amount Enter the total amount to be charged to the account number on that line. 12. Check Stub Information This is the information that is printed on the check stub for the independent contractor. Be concise and use meaningful abbreviations. If a detailed explanation is required to assist Accounts Payable in processing the request, it should be put on the unused bottom lines of form or on a separate memo. WORKERS COMPENSATION WAIVER (H202) Payment to an independent contractor cannot be processed without a certificate of insurance or Workers Compensation Waiver. If the independent contractor does not provide a certificate of insurance, he/she will then complete a Workers Compensation Waiver (H202). Attach either a certificate of insurance or Workers Compensation Waiver (H202) to the original Payment Request for Independent Contractors. EMPLOYEE SUPPLEMENTAL SERVICES AGREEMENT (H220) This form is used to authorize an employee to perform additional non-instructional services for the College. Employee Supplemental Services Agreements are requests for wage payments supplemental to usual payroll period hourly or salary payments for Aims employees, and payments are subject to federal and state income tax withholding, PERA withholding, and Medicare tax, if applicable. For example, use an Employee Supplemental Services Agreement for: Additional compensation under a grant for responsibilities outside of regular assignment. Special project outside of regular assignment. Do not use an Employee Supplemental Services Agreement for: Part-time instruction Substitute teaching Regular part-time employee duties Work-study employee duties.

11 Non-exempt staff may receive supplemental payments under certain restricted conditions. Contact the Director of Human Resources to ensure that proposed payments to staff meet the requirements of the Fair Labor Standards Act before such payments are made or promised. Provide all information requested on this form incomplete forms will be returned to the department: 1. Employee Name & SSN Fill in the employee s name and social security number. 2. Department Where Additional Non-Instructional Services Are Being Performed List department where employee is performing the additional duties. 3. Additional Non-Instructional Services Performed State in detail the additional noninstructional services to be performed. 4. Date(s) Service To Be Performed List date or dates. 5. Amount of Payment Enter the TOTAL payment agreed upon for the additional services. If more than one payment will be made to the employee, list all payments and the date of payments. 6. Comments Include any additional information which might be helpful. 7. Charge To -- Indicate the account(s) to be charged and the amount to be charged to each account. Routing and Signatures: Note: All signatures authorizing the additional duties as independent of and in addition to the employee s normal assignment will be made before the services are performed. The employee s signature certifies that he/she will perform the additional non-instructional services for the College. The person supervising the additional non-instructional services to be performed will sign. The administrator responsible for the Aims account number(s) listed will sign. If applicable, the person responsible for grants will sign. The Director of Human Resources is the final signature. The Director approves supplemental payments to non-exempt staff employees before the service is performed to ensure compliance with all provisions of the Fair Labor Standards Act.

12 Distribution: After the Director of Human Resources has signed the Employee Supplemental Services Agreement form, all copies will be returned to the department initiating the agreement. The department then keeps a signed copy and gives a signed copy to the employee. The signed original is attached to the Payment Request For Employee Supplemental Services Agreement form when requesting payment. PAYMENT REQUEST FOR EMPLOYEE SUPPLEMENTAL SERVICES AGREEMENT (H222) This form is used to authorize payment to an employee who has performed additional noninstructional services as stated in his/her Employee Supplemental Services Agreement. To request payment, submit a Payment Request for Employee Supplemental Services Agreement form to the Payroll Office. Attach a copy of the employee s Employee Supplemental Services Agreement. A new payment request, with original signatures, will be submitted for each month in which a payment is to be made. A copy of the Employee Supplemental Services Agreement will be attached. Employee Supplemental Services Agreements may not be entered into the payroll system on a continuing or indefinite basis. Payment under a Employee Supplemental Services Agreement shall not create nor be construed as creating an express or implied contract or guarantee of employment for a definite or indefinite term. Non-exempt staff may receive supplemental payments under certain restricted conditions. Contact the Director of Human Resources to ensure that proposed payments to staff meet the requirements of the Fair Labor Standards Act before such payments are made or promised. Provide all information requested on this form incomplete forms will be returned to the department. 1. Date Enter the date the document is being prepared. 2. Employee / Social Security Number Enter employee s name and social security number. 3. Department where additional non-instructional services are being performed Enter the name of the department.

13 4. Full Payment If the employee is to be paid in one full payment, check the Full Payment box. 5. Partial Payment If the employee is to be paid in more than one payment, check the Partial Payment box. (Original signatures are required on each Payment Request For Employee Supplemental Services Agreement.) 6. Final Payment If this is the final payment, check the Final Payment box. 7. Contact Person Enter the name and phone number of the person who is to be called if there is a question or problem concerning the payment. 8. Authorized Signatures Signatures of the person supervising the additional service and the supervising administrator are required to authorize payment. If more than one account number is being charged, there will be an authorized signature (administrator) for each account. 9. Charge To -- Indicate the account(s) to be charged and the amount to be charged to each account. The fully completed form will be returned to Human Resources by the monthly payroll cutoff date to ensure payment on the next regularly scheduled payday. Forms lacking required information or signatures will be rerouted for completion, and payment may be delayed. Call Human Resources at ext if you have questions concerning supplemental wage payments. APPROVED: Aims Community College President Date: May 3, 1999 Revised: October 2001 September 2003 April 18, 2011