Independent Contractor Policy
In particular, independent contractor or consultant status for services must be approved by the Office of General Counsel before the performance of services. This policy applies to all University faculty and staff who engage service providers.
A. Employee: A worker is an employee if the individual/unit for whom the services are performed has the right to direct and control the worker, not only as to the result to be accomplished, but also as to the details as to how the work is to be accomplished.
B. Independent Contractor or Consultant: If the worker is not an employee and meets the Internal Revenue Service (IRS) criteria, the worker is an independent contractor or consultant.
III. Determination and Approval of Independent Contractor or Consultant Status
Proper determination of whether a service provider is an employee of the University or an independent contractor or consultant is necessary so that the University complies with the requirements of The Fair Labor Standards Act, Immigration and Naturalization Service regulations and statutes regarding income tax withholding, unemployment insurance taxes, and Social Security and Medicare taxes. Improper classification may result in penalties to the University. For this reason, approval of the independent contractor or consultant status and contract must be obtained from the Office of General Counsel before services are provided to the University. No guarantees should be made to the potential hire until the status and contract have been approved.
To expedite the review process, in preparing the proposed independent contractor or consultant agreement the department seeking to make the hire should review the employee and independent contractor or consultant definitions set forth in this policy and the IRS twenty question checklist guidance athttp://counsel.cua.edu/res/docs/twenty-questions.pdf. Once completed, proposed independent contractor or consultant agreements must be routed for review and approval in accordance with the Contract Approval and Signature Authority Policy.
Departments that allow individuals to work before their status as a service provider has been determined and approved by the Office of General Counsel may be required to absorb the costs resulting from the improper classification. Failure to follow these requirements also may preclude indemnification of an employee by the University if a problem arises (see the Employee Indemnification Policy).
IV. Risk Management and Insurance
An independent contractor or consultant providing services to the university may be required to provide Proof of Liability Insurance to the University's Risk Manager before beginning to provide services.
V. Present and Former University Employees as Independent Contractors or Consultants
In general, services provided by employees of the University must be paid through Payroll, even if the services are for a different department or type of work. Generally, an independent contractor or consultant may not be both an independent contractor or consultant and an employee for the University in the same calendar year. In very limited circumstances, if an employee is performing services for the University that are totally unrelated to his or her employment with the University and that the employee regularly provides to others in pursuit of a trade or business, he or she may be considered an independent contractor or consultant. In such circumstances the Office of General Counsel must make the determination of independent contractor or consultant status for the University employee in accordance with the requirements of this policy. Royalty payments to University employees may be made through Accounts Payable without the requirement of determining independent contractor or consultant status. See Section VII, Item 3 of this policy.
VI. Citizens of Other Countries
Only resident aliens, U.S. citizens or those persons with TN visas may work as independent contractors or consultants in the U.S.
The types of payments set forth below may be processed without further consideration of employee versus independent contractor or consultant status. All of these payments are subject to IRS reporting (1099 and 1042S) as appropriate.
1. Payments to corporations
2. Payments to certain professional firms or partnerships (accounting firms, architectural firms, engineering firms and law firms)
3. Royalty or permission fees (including royalty payments to University employees)
4. Honoraria (payments to confer distinction or symbolize respect or admiration, paid at the discretion of the University and not as a fee charged by the person being paid, and not related to the performance of services). An honorarium paid to an employee MUST be paid through Payroll. See the Honoraria Policy for further details.
5. Prizes or Awards (rewards for a competition or other scholastic achievement given to a non-employee). All prizes or awards to employees (including student employees) must be made through Payroll.