Consultant/Independent Contractor Training Guide

Consultant/Independent ContractorWhat is it?

Employee/Employer Relationships vs. Independent Contractors will govern the decision to determine whether or not an individual may be engaged as a Consultant or Independent Contractor. All staffing requirements are to be considered employee/employer relationships and paid through the University payroll process unless proven otherwise. In unique situations, departments may purchase services from independent contractors (individuals or firms) Personnel Policy/Procedure 122 It is critical that the designation of Independent Contractor/Consultant is properly applied to avoid IRS tax liability and associated fines. An Independent Contractor/Consultant agreement should not be used when an Employer-Employee relationship exists.

When to Use It?

NOTE: This process is applicable to individuals who are hired by the University as contractors, including sole proprietorships. The process is NOT applicable where the University is engaging the services of larger companies, such as a temporary employment agency.”

Consultants and Independent Contractors may be engaged when:

• The required knowledge or expertise is not available at the University, or—

• The required knowledge or expertise exists but may not be available to the department, or—

• The services are only required for a one time task and short period of time.

Consultant/Independent Contractor relationship may exist if:

• The individual or firm is engaged to independently perform a specific task or service for a stated rate or total fee.

• The individual or firm is solely responsible for determining the manner and details of performance.

• The University defines the final result or end products only.

All the individual's or firm's activities are done at his own risk. (The University Will Require Proof Of Minimum Insurance Prior To Performance.)

The individual or firm may elect to perform the required activities on or off-site.

In certain situations where an independent contractor will not be paid on a recurring basis, it may be appropriate to request payment for the contractor via a Request for Payment to Accounts Payable.

Consultant/Independent ContractorWhy is it important?

WHY IS PROPER WORKER CLASSIFICATION IMPORTANT?

Proper classification of workers is extremely important for purposes of compliance with federal and state laws governing worker classification, taxation, payroll, and unemployment. If it is determined that the University incorrectly classified a worker as an independent contractor when the individual should have been classified as an employee, the University can be held responsible for back payroll taxes (including FICA), back unemployment taxes, plus interest, and also be subject to significant monetary penalties. It is therefore critical that an analysis be undertaken prior to an individual beginning any work of whether the individual is an independent contractor or an employee. The individual’s own preference as to how he or she wants to be classified or hired should never be permitted to be the deciding factor in determining proper classification. To the contrary, except as otherwise provided in the guidelines below, a meaningful analysis and case-by-case review must be engaged in before simply deciding that an individual is truly an independent contractor.

Are there classification exemptions?

Predetermined worker classifications appropriate as Independent Contractors:

For additional assistance in assessing worker classification, the University has identified several situations in which an individual would be an independent contractor and use of the internal assessment and certification forms will normally not be required:

Performers, professional entertainers, and professional athletes who provide services to the University for a fee (e.g., professional singers or musicians, DJs, bands, comedians, magicians, clowns, motivational speakers). (However, individuals who are employed by the University as music professionals should be paid through extra compensation for individual performances.)

Announcers, commentators, and sporting officials and athletic events.

Non-UR guest speakers and non-UR lecturers who provide services on a one-time basis for a class or audience for a fee or honorarium

Trainers who provide specialized subject matter expertise otherwise not available internally

Consultants who provide specialized subject matter expertise (e.g., engineers or attorneys hired for specific projects).

Academic program review consultants (including accreditation team members)

Individuals NOT typically classified as Independent Contractors:

The University also has identified several scenarios in which the individual should be considered employees and not independent contractors:

Individuals providing instruction or teaching services. (Education is one of the primary missions of the University and therefore performing instruction or teaching services is almost always going to qualify the individual as an employee, even if of a temporary or TAR nature.)

Employees performing work or services related to regular job duties.

Former employees performing work or services related to former job duties (but a former employee who is working in an entirely different role [an attorney working as a caterer] or a role unlike that any other current employee is performing may possibly qualify for independent contractor status depending on the outcome of a status).

Any individual performing work or routine services the same as or similar to work or services currently being performed by a University employee.

Individuals performing administrative, clerical, secretarial, housekeeping, maintenance, temporary or seasonal laborers, and event workers (e.g., cashiers, ticket takers, wait staff, parking attendants, ushers, etc.).

University of Rochester faculty, staff or students performing work/services for the University regardless of the source of payment (i.e., whether from departmental funds, grant funding, foundation funding, corporate funding, etc.).

Consultant/Independent ContractorWhat else Do I need to know?

When Not To Use It

It is critical that the designation of Independent Contractor/Consultant is properly applied to avoid IRS tax liability and associated fines. An Independent Contractor/Consultant agreement should not be used when an Employer-Employee relationship exists.

An Employer-Employee relationship exists when:

• The University (which includes) any Faculty or Staff members acting in an official capacity) has the ultimate right to direct and control the way an individual works. The control need not be exercised but is maintained by the University.

• The University controls both final results and the details of when, where, and how the work is done.

• The services are ones that can be performed by an employee.

Examples:

• An individual working for the University is required to comply with instruction about when, where, and how to complete the work.

• An individual is involved in activities that place him/her within the University's general direction and supervision.

• An individual who has established working hours must perform certain tasks at certain times, is paid a regular amount at stated intervals, can be discharged, or has the right to terminate a relationship without incurring liability.

Additional Notes:

When an individual is a current employee, the person must be paid through the University Payroll process.

Staff recruitment, selection, and hiring guidelines and procedures are outlined in Personnel Policy #133, "Recruitment and Selection." Call the Employment Center at 275-4989 for the appropriate forms and assistance.

Student employment follows similar guidelines and procedures. Call the Student Employment Office at x5-2138 for assistance.

Temporary assistance can be used if the position is to be filled for no more than 4 months. Contact the Employment Center at 275-4989.

Call Temporary Services Program/Strong Staffing, a division of the Human Resources Department at x5-7873 for assistance. Temporary Services maintains a pool of employees for clerical, support services, and professional services. They can also arrange for the hiring of professional employees on a temporary basis through temporary employment agencies.

Time as Reported (TAR). This mechanism can be used when an individual does not have a weekly work schedule or where one has a weekly work schedule of less than 17.5 hours.

Consultant/Independent Contractor

How do I Request a Consultant/Independent Contractor Purchase Order?

Note: This paperwork should be submitted at least four (4) weeks prior to requesting or starting services.

The Submission Of These Forms Does Not Insure That A Purchase Order Will Be Issued. Departments will be notified if a review indicated that a Consultant/Independent Contractor agreement is not appropriate. If a contract is not the appropriate method for obtaining the services requested, Human Resources should be contacted concerning the employment process. Approval must be obtained prior to commencement of work. Offers extended without prior approval of human resources and/or Corporate Purchasing may be rescinded.

Consultant/Independent Contractor

1. Supplier Qualification Process

If the request is for a new consultant/independent contractor that has not done business with the University or any affiliates previously, they will need to complete the University’s Supplier Qualification process.

Prior to submitting a 312 requisition and supporting Consultant/Independent Contractor paperwork, the department requesting to utilize the consultant/independent contractor can initiate the Supplier Qualification Process https://www.urmc.rochester.edu/purchasing/supplier/qualification.cfm with them.

The Supplier Qualification process is intended to mitigate risk to the University by having the supplier sign and accept the University’s terms and conditions as well as provide proof of University insurance requirements.

Consultant/Independent Contractor

2. Complete a 312 Requisition

What is it?A 312 Requisition is the document used to initiate a purchase of goods (supplies or capital equipment) or services for the University through Corporate Purchasing. The 312 Requisition is not a Purchase Order. All commitments of funds must be made on official purchase orders.

How do I obtain them?To obtain blank 312 requisition forms for ordering, you will need to order the forms online from our Forms Supplier, RR Donnelley and their Custom Point website. You can register to order on line using the Supplier On Line Ordering (SOLO) Registration form. Contact CariAllardice (249-7710) at RR Donnelley for training on the Custom Point Website.

How do I complete it?The departmental requestor should complete the requisition including the required sections/fields noted in red. Please refer to the 312 Requisition Training Guidefor assistance to complete your 312 Requisition.

Consultant/Independent Contractor

3. Complete an Initial Assessment Questionnaire

What is it?An Initial Assessment Questionnaire is a guide to assist with evaluating whether a person should be classified as a contractor or employee to ensure the University’s compliance with IRS Guidelines.

Where can I find it?The Initial Assessment Questionnaire is available on the Purchasing Website under the Forms Bank. Forms Bank - Purchasing and Supply Chain - University of Rochester Medical Center

How do I complete it?Review and answer each question based on the service the individual will be providing to your department.

What are the next steps after completing it?Upon completing the Initial Assessment Questionnaire, submit it along with your 312 requisition, Independent Contractor Certification Form and Professional Services Agreement to Purchasing by fax at 273-1241, intramural mail at Box 278901 or email Helpdesk_Purchasing@urmc.Rochester.edu

Consultant/Independent Contractor

4. Complete an Independent Contractor Certification Form

What is it?An Independent Contractor Certification Form is a 3-page form to identify, determine and certify the Independent Contractor.

Where can I find it?The Independent Contractor Certification Form is available on the Purchasing Website under the Forms Bank. Forms Bank - Purchasing and Supply Chain - University of Rochester Medical Center

Who is responsible for completing this form?The individual(s) responsible for completing each section is identified below.

What are the next steps after completing it?

Upon completing the Independent Contractor Certification Form, submit it along with your 312 requisition, Initial Assessment Questionnaire and Professional Services Agreement to Purchasing by fax at 273-1241, intramural mail at Box 278901 or email Helpdesk_Purchasing@urmc.Rochester.edu

Consultant/Independent Contractor

5. Professional Services Agreement

What is it?A Professional Services Agreement is a 3-page agreement between the University and the Consultant/Independent Contractor to define the scope of work and requirements under the engagement.

Where can I find it?The Professional Services Agreement is available on the Purchasing Website under the Forms Bank. Forms Bank - Purchasing and Supply Chain - University of Rochester Medical Center

Who is authorized to sign this Agreement?As designated in the Signature Authority Policyhttp://internal.rochester.edu/counsel/ContractPolicy.pdf

What are the next steps after completing it?Upon completing the Independent Contractor Certification Form, submit it along with your 312 requisition, Initial Assessment Questionnaire and Professional Services to Purchasing by fax at 273-1241, intramural mail at Box 278901 or email Helpdesk_Purchasing@urmc.Rochester.edu

Consultant/Independent Contractor

Where do I send my completed Consultant/Independent Contractor Request for processing?

Submit your completed paperwork noted below to Purchasing by fax at 273-1241, intramural mail at Box 278901 or email Helpdesk_Purchasing@urmc.Rochester.edu

Completed Consultant/Independent Contractor paperwork:

Initial Assessment Questionnaire

Independent Contractor Certification Form

Professional Services Agreement

Other Required paperwork:

312 Requisition

Supplier Price Justification Conflict Information Form

If >$25,000 or

Sole Source (no other company with known capability, proprietary or patented product/service)

Please make sure appropriate signatures are obtained on all of the paperwork prior to submitting it. Incomplete documentation can contribute to a delay in processing of your request.

Consultant/Independent Contractor

What can I expect after Purchasing receives my Request?

The documents will initiate a review by Corporate Purchasing in consultation with Human Resources and legal counsel as appropriate of the proposed relationship to determine independent contractor/consultant or an employer/employee status in accordance with I.R.S. Regulations, Personnel Policy #122 and Finance Department policy on Taxable Payments to Individuals.

If the request is for a new consultant/independent contractor that has not done business with the University or any affiliates previously, they will need to complete the University’s Supplier Qualification process. If this has not been completed, Purchasing will contact the consultant/independent contractor to complete this process. https://www.urmc.rochester.edu/purchasing/supplier/qualification.cfm

Questions or further assistance needed?

There are many resources available to you for assistance in determining the appropriate worker classification of an individual who is going to perform services for the University, including in the Human Resources Employment Center (275-5821), a department’s assigned Human Resource Business Partner or representative, and Purchasing & Supply Chain (275-2002). These individuals will consult with the Office of Counsel as necessary.

Corporate Purchasing will review the information submitted, and if the relationship qualifies as an Independent Contract/Consultant relationship, Corporate Purchasing will draft and issue the Purchase Order and Consultant/Contractor Contract