independentcontractormemo by HC120705055211

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									TO:              Vice Presidents, Deans, Directors and Department Heads

FROM:           Vincent J. Lembo
                Vice President and University Counsel

DATE:            May 26, 2010

RE:             Proper Classification of Individuals as Employees or Independent Contractors

CC:              President Aoun, Michael Armini, Stephen Director, Philomena Mantella, Diane
                  MacGillivray, and Jack McCarthy


Massachusetts law presumes that individuals providing services of any kind to employers are, unless
demonstrated otherwise, classified as employees. The Commonwealth is very concerned that employers
attempt to classify employees as independent contractors in order to avoid making social security
contributions and providing appropriate benefits, among other things.

The consequences of misclassifying an individual as an independent contractor can be severe. Financial
penalties, including violations of federal and state tax and wage requirements, litigation, negative
publicity, and even personal liability are among the potential outcomes.

Prior to engaging the services of an individual on behalf of the University, it is important to determine
whether that individual may legally be engaged as an independent contractor or whether the individual
should properly be classified as an employee.

To qualify an individual who is performing services for the University as an independent contractor, three
criteria must all be satisfied. If all three criteria are not fully satisfied, the person must be hired as an
employee.

To qualify as an independent contractor, the individual must:

     Be free from the control and direction of the University; and
     Perform services that are outside the usual scope of the employer’s business; and
     Be customarily engaged in an independent trade, occupation or business related to
      the services provided.

The process for engaging an independent contractor is detailed below. All steps must be followed.
Further information and the complete policy can also be found on the Accounts Payable, Purchasing and
Human Resources Management websites.

PROCESS FOR ENGAGING AN INDEPENDENT CONTRACTOR

1. A contract must be prepared to govern the relationship. The Northeastern University Professional
   Services Agreement template is available at the Purchasing or the University Counsel website and
   may be downloaded to assist with the preparation of the contract. The contract must be submitted to
   the University Counsel’s office. Once reviewed, the contract will then be forwarded to the
   Treasurer’s office for signature, in accordance with University policy.
2. The unit or department head who seeks to hire an independent contractor must also complete the
   Employee/Independent Contractor Certification Form, which can be downloaded from the
   Purchasing website.

3. The completed Employee/Independent Contractor Certification Form and signed Professional
   Services Agreement must then be submitted together to the Purchasing Department, along with a
   purchase requisition.

4. A purchase order will not be issued without the completed Certification Form and a properly executed
   contract. A purchase order is required for all independent contractors, regardless of the value of the
   assignment.

If you have any questions regarding whether an individual is an employee or an independent
contractor, please feel free to contact my colleagues or me in the Office of the University
Counsel at x2157.

								
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