revised 2/9/2011 TT

 Definition of Independent Contractor  Types of Contracts  Completing the Contracts  Requesting Payment  Other issues:  Risk Assessment  Payments to PERA Service Retirees  Payments to non-US Citizens  Contract Violations   Contacts revised 2/9/2011 TT

 What is an Independent Contractor? An individual operating under a SS#, performing a service for payment but is not subject to UNC’s controls to accomplish the results of the contract. revised 2/9/2011 TT

 Employers are legally required to pay employment taxes and withhold income tax on the wages of workers classified as employees.  If the worker is legitimately characterized as an independent contractor, the employer is not responsible for employment-related taxes.  Determining the correct employment relationship is often an ambiguous task. revised 2/9/2011 TT

 To determine if employee or independent contractor, the IRS looks at: Who controls the process: work place, hours worked, reporting time, paperwork, etc.  This is important because…. ~UNC could lose delegated authority to write contracts; ~Contracts would have to go to the State for approval, causing delays; ~UNC could be responsible for payingback taxes for the person being paid revised 2/9/2011 TT

 Subject to the will and control of the employer  In what must be done  And how it must be done  An employee can be given considerable discretion and freedom of action, however…  The employer has the legal right to control both the method and the result of the services. revised 2/9/2011 TT

 Not subject to the will and control of the employer.  The employer can only control the result of the work, not the means and methods of accomplishing the result.  Independent contractors are hired for their expertise and receive no training from the institution that purchases their services. revised 2/9/2011 TT

 Employee vs. Independent Contractor (person cannot be both in same calendar year)  Review 20/10 questions to determine status  If answer “Yes” to “A” or “B”, person MUST be paid as employee  A. Does UNC pay others to do same duties?  B. Has individual been paid as employee previously for performing the same duties he/she will be performing? revised 2/9/2011 TT

 1. Are there instructions?  2. Is there training or direction?  3. Services integrated into business operation?  4. Services rendered personally?  5. Do they work with other employees?  6. Continuing relationship?  7. Are there set hours?  8. Is it considered full-time?  9. Is work completed on employer’s premises?  10. Is the sequence of work set by employer? revised 2/9/2011 TT

 11. Regular reports?  12. Regularly scheduled payments?  13. Payment for business/travel expenses?  14. Employer furnishes tools and materials?  15. Works for one employer at a time?  16. Quit without incurring liability?  17. Can person be fired?  18. Profit/loss from services rendered?  19. Major investment by employee?  20. Do they offer same services to public? revised 2/9/2011 TT

 Independent contractor operating under a SSN to be paid less than $25,000…… revised 2/9/2011 TT

 Standard Services Invoice – SSI  Independent Contractor Agreement revised 2/9/2011 TT

Must meet the following criteria:  Under $5,000 for entire project  Under 6 months to perform service  Payment will be made in a lump sum when work is completed revised 2/9/2011 TT

Simple and easy:  SSI Contract (revised version 07/10)  Colorado Special Provisions (terms and conditions)  10 questions  W-9  Check Request revised 2/9/2011 TT

 Prepare SSI and W-9  Signed by all parties  Remember to include Disclosure Statement if contractor is a PERA retiree collecting benefits  Attach to Check Request  Send to Accounts Payable  Remember: Payment can only be made in advance if department will hold check and present upon completion of service revised 2/9/2011 TT

Must be used when ANY one of the following apply:  $5,000 or more for entire project  ~ but under $25,000  6 months or more to perform service  Multiple payments to be made during service period revised 2/9/2011 TT

 The independent Contractor Agreement MUST be filled out and signed by all parties before the contractor starts work.  What is a complete contract?  Signed by contractor  Signed by authorized signer for FOAP being charged  Signed by Human Resources Director  Signed by Grants Administrator (SPARC), if applicable  Signed by UNC Controller  Reviewed by Accounts Payable revised 2/9/2011 TT

 Independent Contractor Agreement  ~ Revised version 07/10  Colorado Special Provisions (terms and conditions)  20 questions (Personal Services Classification Analysis)  W-9 revised 2/9/2011 TT

 Send all documents to Accounts Payable. We will route for HR, grant, purchasing if over $5000 and controller’s signatures.  A/P will return completed contract to originating department once contract is signed in full.  To request payment, attach contract to check request and submit to Accounts Payable. revised 2/9/2011 TT

 Single payment:  Original signature at bottom section of Page 4 authorizing payment: Left side for payment after services complete Right side for check to be held and presented upon completion of services Attach original contract to check request and submit to Accounts Payable revised 2/9/2011 TT

 Make copies of contract  Submit original contract with first payment request. Attach to check request.  For subsequent payments, use copy of contract with check request. However:  Needs original signature in bottom section of Page 4 authorizing partial payment  Complete section for multiple payments revised 2/9/2011 TT

 How do I pay people: What about…  Employees  Former employees  Businesses  Sole Proprietors revised 2/9/2011 TT

 Active faculty member - use PSA  Active GA/TA – most likely can pay as temporary or technical/professional, hourly or salaried Contact Human Resources for assistance  Active student employee – pay using EPAF Contact Financial Aid if student receives work study revised 2/9/2011 TT

 Remember – an individual cannot be paid as an employee and as an independent contractor in the same calendar year  Faculty member – temporary or technical/professional  GA/TA – temporary or technical/professional Contact Human Resources for assistance  Former student employee – pay using EPAF revised 2/9/2011 TT

 Independent contractor doing business as a sole proprietor, operating under a FEIN (Federal Employer Identification Number):  Use DPO for payments under $2,000  Use purchase requisition (PO) for payments of $2,000 or more revised 2/9/2011 TT

 Independent contractor doing business under a SSN (Social Security Number) to be paid more than $25,000:  Competitive bidding applies  Contact Purchasing department for assistance revised 2/9/2011 TT

Fully executed contract consists of:  Independent Contract with all signatures  FOAP authorization & date  Contractor signature & date  HR signature & date  SPARC signature & date (if grant funds)  Purchasing signature if over $5,000 (encumbered)  UNC Controller & date  A/P review and initialed revised 2/9/2011 TT

Advantages of SSI? Fewer signatures required No pre-approvals 10 questions instead of 20 (no signature required) Processing Timeframes:  Allow 1-2 weeks for Independent Contracts  Allow 1-2 days for SSI  Get all paperwork and signatures to avoid delays in processing revised 2/9/2011 TT

 Avoid vague wording:  “Fall/Spring semester” (need specific dates)  “Various” or “Approximately”  “Contractor’s Choice”  If don’t know exact $ amount them put in maximum $  Don’t say “amount plus expenses”  Don’t make travel arrangements or try to reimburse for expenses  These items must be included in contract amount revised 2/9/2011 TT

 When we contract with an individual who is retired under Colorado Public Employees Retirement Association (PERA)  We must send pay PERA contributions on their payments  UNC Payroll calculates amount due and sends monies to PERA  Effective January 1, 2011 PERA will be withholding an amount equal to 10.5% of the amount paid to the retiree by the University from their benefit.  Contact PERA for question regarding this issue revised 2/9/2011 TT

 Check status at time contract is being discussed  Could be tax/treaty requirements  Contact Lacey Snyder, Tax Accountant,  revised 2/9/2011 TT

 When completing the Independent Contractor Agreement, all signatures must be acquired and dated prior to the service beginning  If contractor starts work prior to fully executed contract, then requires State of Colorado approval (long delays) revised 2/9/2011 TT

 Terri Thomas, AP Manager, Carter Hall 1002, Fax ,  Mary Jantz, UNC Purchasing Department, Carter Hall 1002, , Fax ,  Sandi Coleman, UNC Contract Coordinator, Carter Hall 4 th Floor, ,  Lacey Snyder, Payments to non-US citizens, General Accounting, Carter Hall 1002, , Sue Stone, PSA and Temporary Employment, Human Resources, Carter Hall 2002, , revised 2/9/2011 TT