Employee vs. Independent Contractor Finance Division Presentation Minneapolis College of Art & Design Auditorium 150 March 17, :30 – 2:30 pm

PURPOSE OF TRAINING Higher scrutiny on classification of workers within businesses due to increase in tax evasion and fraud. Significant fines and penalties administered to businesses that incorrectly classify workers. Need for clarification on how to differentiate between the types of workers.

IRS TEST or ABC TEST? IRS TEST 1.Behavioral control 2.Financial control 3.Relationship of the parties ABC TEST 1.Absence of control 2.Business is unusual and/or away 3.Customarily doing business as an independent contractor

WHAT’S THE DIFFERENCE? EMPLOYEE –We provide training –We control hiring, supervising and paying of assistants –We set hours of work –We set required work order or sequence –We pay by the hour, week, or month –We provide tools and materials –Continuing, exclusive relationship INDEPENDENT CONTRACTOR –Specialized skills –Independently hires, directs and pays subcontractors assistants –Work hours self- determined –Work order or sequence self-determined –Paid by project –Bring/use own tools and materials –Provides similar services to multiple businesses

Determination of Work Status Form Employee PAYROLL: Employee Action Notice W-4 Form I-9 Form Independent Contractor ACCOUNTS PAYABLE: W-9 Form (US Persons) W-8 Form (Non-US Persons) Check request IC Agreement PROCEDURES

Determination of Work Status Form

INDEPENDENT CONTRACTOR FORMS

Federal W-9 Form

W-9 Detail Use Form W-9 only if Payee is a US person. –Definition of a US person: An individual who is a US citizen or US resident alien. A partnership, corporation, company, or association created or organized in the US or under the laws of the US. An estate (other than a foreign estate) or A domestic trust Exempt payees are: –Organizations exempt from tax under section 501(a) –The US or any of its agencies or instrumentalities –Foreign governments and international organizations –Corporations

W-8 Form, page 1

W-8 Form, page 2

Independent Contractor Agreement

MCAD Check Request Form

EMPLOYEE FORMS

Employee Action Notice Form

Federal I-9 Form

Federal W-4 Form

FORMS CAN BE FOUND ON INTRANET AT: EMPLOYEE FORMS MCAD Intranet > Department and Services > Human Resources > Forms > Employment Employee Action Notice I-9 Form W-4 Form INDEPENDENT CONTRACTOR FORMS: MCAD Intranet > Department & Services > Business Office > Downloads Determination of Work Status Form W-9 Form (US Persons) Check Request Form IC Agreement *W-8 Form (Non-US persons)- please contact Gao Thao

Questions?? AP-Independent Contractor: Mary Yang Thao, Asst. Controller x1742 Gao Thao, Accounting Asst. (A/P) x 1712 Payroll-Employee: Hope Denardo, Accounting Asst. (Payroll) x 1710 Jo Bailen, HR Asst. x 1770