INDEPENDENT CONTRACTORChanges to Procedure

Many factors must be considered when designing procedures at Boise State University

• IRS default = Employee• University must demonstrate IC • Penalties for misclassification as IC

Independent Contractor or Employee?

Business Entity Vs. Non Business Entity

Business Entity• Corporations• Partnerships• Multi-owner LLC• Governmental agencies & trusts

• Presumed independent contractors

• Unique facts and circumstances• Retain the right to classify any

service provider as an employee

Non-Business Entity• Individual (file under SSN)• Single-member LLC • Sole Proprietors

• Must make determination whether Independent Contractor or Employee

• IC Classification Checklist

Contingent on how they file their taxes….Vendor Information form W9

What is an Independent Contractor?

An individual who provides a highly technical or unique service or has a particular set of skills not available elsewhere in the University.

Independent contractors typically have a separate workplace, are not supervised by a University employee, and are needed only for a short duration to complete a specific project.

How do I know if the service provider qualifies

as an Independent Contractor?

Behavioral Control

Financial Control

Relationship Between PartiesServices provided

Duration of Assignment

Recurrence of Assignment

Employee statusRelationship to BSU employee

Characteristics of the ASSIGNMENT and INDIVIDUAL must be considered within the CONTEXT OF THE UNIVERSITY to determine Independent Contractor or Employee status

Step 1: Approv

e

Step 2: Define

Step 3:Pay

IC Classification Checklist(1)

W9(2)

Contract for Services(3)

Copy of Contract for

Services(5)

Payment Request form(4)

Form

s Re

quire

d

1) Must have formal approval of IC classification BEFORE the service start date or be paid as an employee. Replaces the IC Status form.2) Required for any vendor. Provides data used for IRS compliance. 3) Required for all Independent Contractor assignments regardless of dollar value4) Revised effective 2/1/2012 to replace the Statement of Services Rendered form.5) Required with first incremental payment only.

IC Classification ChecklistSeries of YES/NO questions to assess Assignment within context of the University

Email form to accounts-payable@boisestate.edu

Must have formal approval BEFORE service begin date or REQUIRED to be paid as EMPLOYEE

Positions approved by 12/31/2011 will be grandfathered

Contract for ServicesRequired for ALL regardless of dollar value (standardized procedure)

No reimbursed expenses (all costs should be built into the rate)

Standard Signature Authority Requirements (no auto-routing to OSP if paid on grant/contract)

Standardized Contract for Services - If not revised & < $10k does NOT need Legal review approval (2 – 3 weeks)

Copy with first payment increment ONLY (contract management via Access)

Payment Request Form

Consolidating:IC Statement of Services Rendered

Non-compensatory Payment Request FormHonorarium & Expense Authorization FormHost Family Statement of Services Rendered

Form

Revisions - SUMMARYPolicy Changes•Approval BEFORE service start date or default to employee•Approval = Individual + assignment + range of dates (a change to any factors requires new approval)

Form Changes•IC Classification Checklist replaces IC Status form•Contract for Services (standardized & revised thus no Legal review if not modified)•Consolidation of multiple forms into Payment Request form (Non-compensatory payment request, IC Statement of Services Rendered, Honorarium & Expense Authorization, Host Family Statement of Services Rendered)

Procedure Changes•W9 (or W8) required for all vendors•Contract for Services for ALL IC, regardless of dollar value (standardized)•Standard signature authority rules apply (no default OSP)•Copy of Contract for Services with first payment increment only (Access)•Email IC Classification Checklist•Payee sign Payment Request (rather than ICSSR)