Overview
Before engaging an individual to perform services for the University, departments must determine whether the relationship should be classified as an employee or an independent contractor. This determination must be made before any work begins, including before a verbal commitment is made, a start date is established, services are authorized, or payment arrangements are discussed.
The title used in an agreement or the method of payment does not determine classification. Instead, the University must evaluate the actual working relationship, including the University's right to direct and control the work and the worker's independence. Individuals providing services to the University are generally presumed to be employees unless the facts support independent contractor status.
Roles and Responsibilities
Business Services:
- Serves as the primary office responsible for independent contractor determinations
- Administers the Independent Contractor Classification Checklist
- Makes the final determination regarding independent contractor designation
- For questions regarding independent contractor classification, contact Business Services (Katie Jochens).
Human Resources:
- Serves as a consultative partner to departments
- Assists in evaluating the proposed work relationship
- Advises when the facts indicate an employment relationship requiring HR hiring processes
When to Contact HR or Business Services:
Departments should seek guidance when:
- Hiring an individual to perform services outside of the normal recruitment process
- Considering paying an individual through a contract, stipend, honorarium, invoice, or other non-payroll method
- Unsure whether a worker should be classified as an employee or independent contractor
- Engaging a current or former University employee for additional services
Early consultation helps ensure compliance with federal and state requirements and reduces the risk of worker misclassification.
Process
Before services begin, the department should contact Human Resources or Business Services and complete the University's Independent Contractor Classification Checklist. The checklist is used to evaluate the nature of the proposed working relationship.
Human Resources and/or Business Services will:
- Review the completed checklist.
- Gather additional information as needed.
- Evaluate all relevant facts and circumstances.
- Determine whether the proposed relationship appears to be employment or may qualify for independent contractor consideration.
Some situations may require additional review, including:
- Current or former employees performing similar work.
- Unclear or conflicting facts.
- Engagements involving foreign nationals, research activities, minors, protected data, intellectual property, or safety-sensitive work.
Based on the review:
Employee
- The individual must be hired through Human Resources and paid through payroll.
Potential Independent Contractor
- The engagement is referred to Business Services for independent contractor review and final determination. If the final determination is Independent Contractor, Business Services will assist you with preparing the contract and billing process through accounting services.
Indicators of Employee Status
A worker is more likely to be considered an employee when:
- The University controls when, where, or how the work is performed.
- The work is ongoing, recurring, or part of regular University operations.
- The individual is supervised like a member of the workforce.
- The University provides tools, equipment, workspace, systems, or resources.
- Pay is based on time worked rather than successful completion of a defined project.
- The relationship is expected to continue indefinitely.
The University's classification checklist similarly identifies employee status when the University provides instructions, training, scheduling requirements, or direct supervision of the work.
Indicators of Independent Contractor Status
A worker is more likely to be considered an independent contractor when:
- The engagement is for a specific project, deliverable, or outcome.
- The individual controls how the work is performed.
- The individual operates an independent business and may serve multiple clients.
- The individual provides their own equipment and resources.
- Compensation is tied to deliverables or project milestones.
- The work is performed with minimal day-to-day supervision.
The University's classification checklist also considers independent contractor status more likely when the individual is free from University instruction, training, scheduling, and supervision.
Important Reminders
- Worker classification must be reviewed before services begin.
- No single factor determines status; all facts must be considered.
- A department's preferred payment method does not determine classification.
- Misclassification can create significant legal, tax, and compliance risks for the University.
- When in doubt, consult Human Resources or Business Services before engaging the individual.