Independent Contractor Policy

							  Independent
Contractor Policy
Independent Contractor
  Why?
    Internal Revenue and Department of Labor
    rulings
    Proper classification of employee versus
    contractor and tax implications
    Penalties may be imposed by IRS for
    misclassification
Independent Contractor Policy
  Applies to all colleges, departments, etc
  Consult HR to determine appropriate status
    Employee or Independent Contractor
Independent Contractor Policy
  Individuals who cannot be Independent Contractors
  for OU
    Current employees or employees who have terminated
    from OU within the past 12 months (Norman, Tulsa,
    OKC)
    Individuals who have retired from the Oklahoma State
    Higher Ed within the past 24 months
    Previous employees can be reappointed or paid on special
    pay
    Individuals who do not meet Independent Contractor IRS
    test
Independent Contractor Policy
  Processing Contracts
     ITIN/SSN
        Send Approval Form to HR Compensation
           Sponsored funds – send to HR after proposal is
           awarded
           Non-sponsored funds routed to Financial Services
           if less than $5K or Purchasing if greater than $5K
           - after HR review and approval
    EIN
        Sponsored funds to ORA
        Non-sponsored funds to Purchasing
Independent Contractor Policy
IRS Guidelines
  Behavioral Control
    Employee is generally told
      When, where and how to work
      What tools or equipment to use
      What workers to hire or assist with work
      Where to purchase supplies & services
      What work must be performed by a specified
      individual
      What order or sequence to follow
Independent Contractor Policy
IRS Guidelines
  Financial Control
     Extent to which the worker has unreimbursed
     expenses
     Extent of worker’s investment
     Extent to which the worker makes services
     available to the relevant market
     How the business pays the worker
     Extent to which worker can realize a profit or loss
Independent Contractor Policy
IRS Guidelines
  Type of Relationship
    Written contracts describing the relationship the
    parties intended to create
    Employee-type benefits
    The permanency of the relationship
    How integral the services are to the principal
    activity
Independent Contractor Policy
  If Foreign National
  • If the services will be provided inside the U.S. by
    an individual who is not a U.S. Citizen or
    permanent US resident complete and attach a
    Foreign National Information Form and forward
    with the Independent Contractor Form to Human
    Resources Compensation.
  • If the services will be performed outside the U.S.,
    contact Accounts Payable for further
    documentation requirements.
Independent Contractor Approval Form
  Position information
    Be specific
    Dates of service
    Department and service provider certification
    ORA contracts now require
    certification/acknowledgement of Independent
    Contractor status
Independent Contractor Approval Form
  20 Question Test – To be completed by
  service provider
    Instructions
       Service Providers freedom to determine how work is
       done
    Training
       Service Providers hired for expertise
    Services
       Service Providers have the latitude to assign
       associates
Independent Contractor Approval Form
    Continuing Relationship
       Hired for a particular job and ends when complete
    Hours of work
       Service Provider sets own hours; business may
       impose deadlines
    Full-time Effort
       Service Providers perform services for other entities
Independent Contractor Approval Form
    Work on employer’s premises
       Service Providers normally perform work off business
       premises
    Order or sequence set
       Service Providers exercise some discretion on the
       order of work
    Profit or loss
       Service Providers agree to bear the risk of loss
Independent Contractor Approval Form
    Simultaneous work for multiple organizations
       Independent contractors make their services available
       to the general public
    Right to discharge
    Right to terminate
 Honorarium
Payment Policy
  Honorarium Payment Policy
Nominal payment to an individual given in
gratitude for services rendered
Typically a one time non-recurring payment
A payment given to a professional person for
services for which fees are not legally or
traditionally required
  Honorarium Payment Policy
The giving of it and the amount are both
discretionary
An honorarium is appropriately given to a
person who has volunteered time and
effort on behalf of the University and who
is not otherwise being remunerated for
the service provided
  Honorarium Payment Policy
The individual must not have been on the
payroll of the University for one year prior to
providing services
The individual must not have been retired from
the Oklahoma State System of Higher
Education within the past two years
  Honorarium Payment Policy
The service must be of the type which the
University stipulates only the desired objective
The individual is free to determine the process
or procedures to achieve that objective
Generally, the individual should be an authority
or recognized expert in the field of endeavor
for which retained
The service should not be available within the
staffing of the University
  Honorarium Payment Policy
The individual may not lecture in an accredited
course to students. This would be a serving in
a faculty position and must be classified as an
employee and paid via special pay. If you have
questions about whether or not a person must
be paid by special pay please contact Royce
Whaley in HR in OKC or Connie Gould in HR in
Tulsa.
  Honorarium Payment Policy
Generally, an honorarium is not allowed on
sponsored (SPNSR) funds. If the payment is to
be made on SPNSR funds, please contact the
Office of Research Administration (ORA) to
inquire on the allowability of the payment, prior
to arrangements. The individual may have to
be classified as an Independent Contractor.
  Honorarium Payment Policy
An honorarium payment is to include all
expenses, including travel expenses,
associated with the service provided. Whether
paid in a lump-sum payment or separately, both
the honorarium and expense reimbursement
must be coded as a professional service
expense. The combined honorarium and
expense reimbursement payment(s) will be
reported to the IRS on Form 1099.
  Honorarium Payment Policy
Qualifications for non-resident aliens
  B-1 , B-2, WB, or WT status are eligible to receive
  honorarium and travel. B-2 and WT visitors must
  meet the 9/5/6 rule. Please request that your visitor
  enter on a B-1 or WB when inviting them to visit.
  This is a visa specific for business. The visitor can
  present your invitation letter as proof of intent to do
  business within the US.
  9/5/6 Rule - Services last no longer than 9 days at
  any single institution and has not accepted such
  payment or expenses from more than 5 institutions
  or organizations in the previous 6 month period
  Honorarium Payment Policy
Qualifications for non-resident aliens
(continued)
  All other visa entry types have to be reviewed
  individually according to merit. All requests must be
  submitted prior to making travel arrangements or
  services being rendered.

    ALL FOREIGN INDIVIDUALS WHO ARE NOT
     PERMANENT US RESIDENTS WHO WILL BE
        RECEIVING AN HONORARIUM MUST
         COMPLETE A FOREIGN NATIONAL
   INFORMATION FORM (FNIF) AND SUBMIT IT TO
                HR FOR REVIEW.
  Honorarium Payment Policy
Non-resident alien documentation requirements:
  Documentation from the non-resident alien listing the
  number of days the individual has been in the United
  States during the current calendar year, the 1st
  preceding year, the 2nd preceding year, and the total
  number of such payments or expenses he/she has
  received in the previous six months
  Copy of valid passport
  Copy of United States Visa
  Front and back copy of INS Form I-94, Arrival-
  Departure Record – MUST BE OBTAINED WHILE IN
  THE US
  Honorarium Payment Policy
Non-resident alien documentation requirements
(cont):
  Copy of Social Security Number (SSN) card,
  Individual Tax Identification Number (ITIN) card, or
  IRS Authorization Letter
  Completed Request for Honorarium Approval form
  and Foreign National Information Form (FNIF)
  Copy of the letter of invitation issued by the inviting
  department prior to travel to be presented by the
  non-resident alien at entry into the United States.
  The letter must contain a description of the event or
  activity to include the dates, locations, and amount
  of honorarium offered. This is required for B-1 and WB
  status ONLY.
Summary
Summary
  Honorarium and Contractor policies are
  BOTH effective immediately.
  We are honoring current contracts begun
  before 7/1/05 and ends after 7/1/05. Still
  need to send a copy of the contract to HR for
  a signature to attach to paperwork. ALL
  renewals must be submitted on the new
  contractor form.
  Both the honorarium and contractor forms
  must be completed by the department in
  conjunction with the provider IN FULL.
Routing & Questions
  Contractor forms direct questions and submit forms to
  Human Resources:
     OKC: 271-2190, SCB 120, fax 1-3925.
     TULSA: 918-660-3193, 1C114, fax 918-660-
     3200
  Honorarium forms direct questions and submit forms to
  AP Vendors: 405-271-2410, Campus Ext. 46385, SCB
  218, or fax 405-271-2496.

  Departments are responsible for keeping all forms on
  file for 7 years.

                 NOTE: Auditing will
              be looking for these forms.
Vendor Forms
Vendor Forms
 Vendor Form – Domestic Company
    All US companies
 Vendor Form – Individual
    All individuals that are US citizens or resident aliens
 Vendor Form – Foreign Companies and Individuals
    All foreign companies (without a US EIN) or non-resident alien
    individuals

  USE NEW FORMS EFFECTIVE IMMEDIATELY TO
      AVOID VENDOR DELAYS – BE SURE TO
    ALWAYS USE THE CURRENT FORM POSTED
          ON THE AP VENDOR WEBSITE