ROWAN UNIVERSITY POLICY
Title: Independent Contractor Policy
Subject:
...
Human Resources
Policy No:
...
HR: 2016:01
Applies: University-Wide
Issuing Authority: President
Responsible Officer:
...
Chief Human Resources Officer
Adopted: 04/01/2006
Last Revision:
...
11/
...
01/
...
2023
Last Reviewed:
...
11/
...
01/
...
2023
I. PURPOSE
...
United States Federal and State law requires the University to properly classify its workers as either Employees or Independent Contractors. This policy identifies the steps, documents, and processes necessary to ensure proper classification of Independent Contractors.
II. ACCOUNTABILITY
At the direction of the President, the
...
Chief Human Resource Officer shall implement this policy and the
...
Senior Vice Presidents, Vice Presidents, Deans, Directors, Department
...
Service Requestors and Supervisors shall ensure compliance with this policy.
III. APPLICABILITY
This policy applies to all Rowan University departments (Academic and Administrative) who wish to engage the services of an
...
Independent Contractor who is not an employee of the University; those who opt to engage the services of an
...
Independent Contractor must remain within the outlined margins of this policy.
...
IV. DEFINITIONS
- Employee - a worker who is hired through Human Resources or the Office of the Provost, Human Resources (Human Resources) and paid under a W-2.
- Independent Contractor- an individual or firm engaged in an established business, trade or profession who provides services to Rowan University and is be paid using a the fees are reported on the IRS Form 1099-MISC. An independent contractor Independent Contractor is notan employee of the University; it an Independent Contractor is a worker who: (a) is engaged in an independently established profession or business; (b) provides a service outside of the University's University’s usual course of business; and (c) is free from the University's University’s control or direction when providing services. The criteria for determining whether or not a worker is an independent contractor Independent Contractor is discussed in the policy section below.
V. REFERENCES
- IRS Regulations - Independent Contractor Defined
- State of New Jersey, Department of Labor - Employee or Independent Contractor
- IRS Regulations - U.S. Tax Withholding on Payments to Foreign Persons
- IRS Publication 15 A – 2016 -A Employer's Supplemental Tax Guide
- Publication 15, Circular E, Employer's Tax Guide
- Rowan University, Human Resources Department - Recruitment and Staffing
VI. POLICY
- The University recognizes that departments often request the services of individuals who are not employees of the University, including independent contractorsconsultants, guest lecturers, entertainers, suppliers, and others. It is important to correctly distinguish the differences between an independent contractor Independent Contractor and an employee to ensure the appropriate compensation method and the applicable tax obligationobligations.
- Payments to Independent Contractors are processed through Accounts Payable. As such, as such an independent contractor Independent Contractor is not an employee of the University and is treated differently than an employee with respect to tax withholdings, employee benefits, and payment methods.
- Please note that the University may not control or direct an Independent Contractor; the Independent Contractor performs work utilizing his/her own methods, and how the work is accomplished is not controlled by the employer.
- Rowan employees are not considered Independent Contractors. Rowan employees are hired either through Human Resources
- and paid through
- Payroll Services.
- An Independent Contractor is an individual who meets all of the following criteria:
- Renders a service to the University for a specified payment amount for a specified result;
...
- Engages in an independently established profession or business (those who offer similar services to the general public on a consistent basis);
- Provides a service outside of the
...
- University’s usual course of business;
- Is not currently paid through
...
- University’s Payroll and has not been paid through Payroll within the current calendar year;
- Provides services through a written contract (namely, the University's Independent Contractor Service Agreement or another University-approved form of agreement
...
- .
...
- )
- Is free from University control or direction when providing services.
...
- Has clearly delineated, mutually agreed upon dates of service and/or agreed
...
- upon service schedule for a set fee.
- As a general rule, an individual (who is not currently employed and has not been employed in the same fiscal year) can be hired as an independent contractor Independent Contractor only if all three of the following requirements are met:
- Minimal Direction: the worker is free from the
...
- employer’s control or direction in the performance of
...
- his/her work.
- Established Business or Trade: the worker is normally engaged in an independently established business or trade, which derives income from a number of clients including the University.
- Expertise: the work requires professional knowledge or professional expertise that is not generally available at the University.
- How to identify and engage an Independent Contractor (IC):
- The following
- includes all the steps a
- Service Requestor must take
- to properly identify and engage an Independent Contractor
- :
- The Service Requestor sends theCertification for Determination of Independent Contractor Status and Vendor Intake Form to the potential Service Provider
- to complete and return with supporting documentation.
- The manager then completes the Independent Contractor Determination Checklist using the information provided in the Service Provider Questionnaire.
- After completing the Independent Contractor Checklist, if the form still indicates the service provider is an Independent Contractor, the manager may enter a requisition in Banner.
- Forward copies of the Service Provider Questionnaire and Independent Contractor Checklist along with requisition number to the Office of Contracting and Procurement. On the other hand, if the form indicates the provider should be treated as an Employee, or if a determination could not be made, the manager should contact the Office of Human Resources for further assistance.
- Once the Certification is returned, the Service Requestor submits documentation to the Office of Contracting & Procurement for review and onboarding via the Vendor Portal.
- The Office of Contracting & Procurement will provide Human Resources with the submitted documents for review, evaluation, and determination of whether the Service Provider should be identified as an employee or as an Independent Contractor.
- Once the determination is made as an Independent Contractor, The Office of Contracting & Procurement will complete the vendor onboarding and provide a Banner ID.
- Upon advisement of the Office of Contracting & Procurement, the Independent Contractor Service Agreement will need to be drafted and sent to the vendor for review and signature.
- The signed agreement is submitted through the Contract Portal for University review and authorized signature.
- If Human Resources determines the Service Provider to be an employee, Human Resources will notify via email to the Service as to the appropriate method of payment. The Service Requestor obtains the following completed documents and forwards them to Human Resources:
- IRS FormW-4;
- Direct Deposit Form;
- Completed I9 form; and
- In special situations, a current University employee or student may provide a service outside the scope of their normal position responsibilities. In these cases, the employee should still be paid through Payroll
- Special Assignment Contract (Salary Voucher)
- Adjunct Contract
- by an appropriate method of payment determined by Human Resources.
- Process for Soliciting Services from an Independent Contractor
- The Criteria for Identifying Independent Contractors
- United States Federal and State law requires the University to properly classify its workers as either Employees or Independent Contractors. This policy and the accompanying checklist identify the steps, documents, and processes necessary to ensure proper classification of Independent Contractors.
- Paying Foreign Nationals and International Parties as Independent Contractors.
- To ensure compliance with IRS regulations, prior to engaging a foreign national for services, the University must analyze the foreign
- party’s eligibility to work in the
- United States as well as
- the individual’s residency status for tax purposes.
- Please review the IRS
- https://www.irs.gov/forms-pubs/about-form-w8“U.S. Tax Withholding on Payments to Foreign
- Persons” to help plan engagements.
- ATTACHMENTS
...
- Submission of a W8 form may be required.
- Please review the Payroll website for more information onForeign Tax Benefits.
Hiring Manager |
|
Service Provider | 2. Completes Questionnaire and W9 and returns to the hiring manager. |
Hiring Manager | 3. Completes the Independent Contractor Determination (ICD) Checklist based on information received and collected from the Service Provider Questionnaire (SPQ). |
Hiring Manager | 4. If the service provider qualifies as an independent contractor, the hiring manager sends an Independent Contractor Agreement (ICA) or other approved form of agreement to the service provider for completion. If not, skip to Step 11 below. |
Service Provider | 5. Completes Independent Contractor Agreement (ICA) or other approved form of agreement and returns to the hiring manager. |
Hiring Manager | 6. Creates a requisition in Banner, and scans attachments of the SPQ, ICD Checklist, ICA, and W-9/W-8 to the Office of Contracting & Procurement dedicated mailbox requisitions@rowan.edu |
Procurement | 7. Reviews information and verifies compliance before issuing Purchase Order (PO) and returning the PO to the hiring manager via e-mail. |
Service Provider | 8. Independent Contractor performs service and sends invoice or ICA with PO number to Accounts Payable dedicated inbox invoices@rowan.edu |
Hiring Manager | 9. Completes Receiving in Banner upon performance of the service. |
Accounts Payable | 10. Reviews information and verifies compliance before processing the invoice |
Hiring Manager | 11. On the other hand, if the (ICD) Checklist indicates the provider should be treated as an employee or if a determination could not be made, the manager should contact the Office of Human Resources for assistance. |
...
- Hiring Manager sends a Service Provider Questionnaire (SPQ) and W9 to the potential service provider to complete and return with supporting documentation.
- Hiring Manager completes the Independent Contractor Determination (ICD) Checklist based on information received and collected from the Service Provider Questionnaire (SPQ).
- If the service provider qualifies as an independent contractor, the Hiring Manager sends an Independent Contractor Agreement (ICA) or other approved form of agreement to the service provider for completion.
- On the other hand, if the form indicates the provider should be treated as an employee, or if a determination could not be made, the manager should contact the Office of Human Resources for assistance.
- Hiring Manager creates a requisition in Banner, and scans attachment of the SPQ, ICD Checklist, ICA, and W-9/W-8 to requisitions@rowan.edu.
- Independent contractor performs service and sends invoice or ICA to Accounts Payable.
...