ACCOUNTS PAYABLE

POLICY AND PROCEDURES

INTRODUCTION:

The purpose of this policy is to provide for the engagement, by the University, of non-University personnel (consultants/ independent contractors) for expertise required to fulfill University commitments and objectives. Consultants/ Independent Contractors may be utilized when necessary expertise cannot be adequately provided by regular employees within the scope of their University employment agreement. The policy and procedures outlined below are designed to meet University and Federal requirements.

DETERMINATION OF WHETHER A PERSON SHOULD BE AN EMPLOYEE OR AN INDEPENDENT CONTRACTOR:

The first step in engaging non-university personnel is to make a determination of whether the individual should be engaged as an employee or as a consultant / independent contractor in accordance with IRS regulations.

It is the responsibility of the University to make the appropriate decision. If the University improperly designates a person as a "consultant / independent contractor" rather than an "employee", the University is liable for any employment taxes not paid by the individual as well as interest and penalties.

Have the individual providing the services fill out the Independent Contractor Determination and Certification in its entirety. This form and the criteria listed below will assist you in making the correct status determination.

The IRS definition of an independent contractor / consultant is based on various court decisions and IRS rulings. To determine the status of a person, the IRS considers the following tests important (none of which is given more weight than another):

• Is the person required to comply with instructions about when, where, and how to work? If yes, the person is ordinarily an employee.
• Does the University train and supervise the worker? If yes, the individual is probably an employee. Independent contractors and consultants ordinarily use their own methods and receive no training from the purchaser of the services.
• Are the person's services integrated in the business operations of the University (i.e. teaching, research, etc.)? If yes, this generally shows that the person is subject to direction and control and is normally considered an employee.
• Is there the existence of a continuing relationship between an individual and the University? If yes, this is a factor tending to indicate the existence of an employee relationship.
• Does the University establish set hours of work? If yes, this is a factor indicative of an employee relationship.
• Does the worker devote full time to the business of the University, rather than engaging in other gainful work? If yes, the individual is probably an employee.
• Are the business services made available to the general public and does the person have a business license, advertise his/her services, and make an investment in his/her own facilities in performing services for another? If no, the individual is probably an employee.
• Is the worker paid by the hour, week, or month instead of by the job and is the worker reimbursed for expenses? If yes, the individual is probably an employee.
• Is the worker taking a financial risk (profit or loss)? If no, the individual is probably an employee.
• Is the individual a University employee for other services? An individual cannot be both an employee and an independent contractor / consultant. If the individual is already an employee and is being engaged for work outside his normal duties, he must be compensated as an employee through Payroll and satisfy the University's Conflict of Interest Policy.

If the individual does not meet the criteria for a consultant / independent contractor, follow the procedures for placing an individual on payroll as an employee. The procedure for hiring an individual includes completing an employee requisition form, obtaining the necessary approvals, completing the appropriate payroll authorization form, and arranging for the individual to report to Personnel Services to complete the necessary paperwork.