| University of Washington Administrative Policy Statements |
Rev/Feb 1997 | 32.3 |
|
Table of Contents |
A Guide for Determination of Employee
|
| 1) | The IRS "Common Law"
Test—As indicated in the definitions
above, the most important consideration in determining
whether an employer-employee relationship exists
with an individual is whether the University has
the right to instruct and control the individual
with respect to both the results and the details
of the work that is to be performed. The IRS has
developed a 20-factor "common law" test which
it uses to determine whether sufficient control
and supervision exist to warrant an employee classification
of an individual. However, no definitive combination
of factors has been established by the IRS with
which a concrete determination can be made. The
factors are simply indicators which may be used
to assist in determining the degree of control
that may be exercised over the individual, and
thus the most appropriate classification for the
individual. |
| 2) | Classification Checklist
and Criteria—In an effort to simplify
the determination process for the most common
situations in which the University seeks to obtain
the services of individuals, the Employee Versus
Independent Contractor Classification Checklist
form has been developed for use by University
departments. The checklist may be used in evaluating
whether an individual should be classified as
an employee or an independent contractor and is
a required attachment to any purchase requisition
(submitted via the Purchasing/Accounts Payable
System (PAS) online) to obtain the services of
an independent contractor. The checklist is self-explanatory.
Included with the checklist are classification criteria for classifying an individual as an independent contractor based on the 20 factors used by the IRS. These classification criteria are provided as additional guidance to departments for determining an individual's classification and are not required to be completed by the department. |
The primary responsibility for determining the classification of an individual as an employee or an independent contractor rests with the department obtaining the personal services. The department must make the initial determination by completing the Employee Versus Independent Contractor Classification Checklist form. If the department determines that an individual should be classified as an employee, the individual must be placed on and paid through the University Payroll system as outlined in Section 5 of this policy statement. If the department determines that an individual may appropriately be classified as an independent contractor, the individual may be paid through the PAS system as outlined in Section 6 of this policy statement.
Upon receipt of a purchase requisition to acquire the services of an individual as an independent contractor, the assigned buyer will first confirm that the individual has been appropriately classified as an independent contractor before proceeding to obtain the services. In confirming independent contractor status, the buyer will review the description of services contained in the purchase requisition and the attached Employee Versus Independent Contractor Classification Checklist form submitted by the department, and will also access the Higher Education Payroll/Personnel System (HEPPS) to determine if the individual has ever been paid as an employee of the University by any department. In questionable cases, the buyer will discuss the determination with the requesting department to gain consensus on the appropriate classification. Additional documentation or evidence may be requested to support the final determination. The buyer may seek the counsel of his or her supervisor, the Director of the Purchasing Department, or the Director of the Payables and Accounting Operations Office, as necessary. In extreme cases where classification as an independent contractor is still questionable after thorough review, and the department or individual resists appointment as an employee of the University, an IRS Form SS-8 will be submitted to obtain an official determination from the IRS before acquiring the services of the individual.
The examples below are not all-inclusive. Departments should determine an individual's classification by using the Employee Versus Independent Contractor Classification Checklist as a guide whenever doubt exists as to the proper classification of an individual providing services to the University.
Employee examples include:
Employees are paid through the HEPPS system. Employees are placed on the HEPPS system when the hiring department completes a Personnel Action (PAF) form, an IRS Withholding Allowances Form W-4, and an Immigration and Naturalization Service Employment Eligibility Verification Form I-9, and submits them to the Payroll Office.
The examples below are not all-inclusive and may not be suitable depending upon circumstances and the amount of control the University has over the individual performing the services. Departments must complete the Employee Versus Independent Contractor Classification Checklist form to support any determination that an individual is to be classified as an independent contractor.
Independent contractor examples include the following when the individuals provide services to other entities or the general public in addition to the University:
Independent contractors are paid through the PAS system. Departments acquiring the services of an independent contractor must complete a purchase requisition (submitted via the PAS online system) and an Employee Versus Independent Contractor Classification Checklist form as an attachment to be submitted to the Purchasing Department. Note: It is recommended that the purchase requisition be submitted prior to making a commitment with the individual for the performance of services. Additionally, even if the department is submitting a "confirming" purchase requisition, an Employee Versus Independent Contractor Classification Checklist must still be submitted as an attachment. Except for payment of honoraria to a guest lecturer or payment to an artist or musician where it is customary to pay the individual immediately after a performance, the independent contractor is required to submit an invoice to the Accounts Payable Office Office, Box 351130, subsequent to performance of the services.
For payment of honoraria to guest lecturers or payment to artists and musicians, an Invoice Voucher/Receiving Report form may be submitted as an attachment to the purchase requisition (or sent directly to the Accounts Payable Office, Box 351130) so that the payment may be prepared for presentation to the individual immediately after the performance of service.
| 1) | Independent Contractors
Who Are United States Citizens or Resident Aliens
for Tax Purposes—For an independent contractor
who is a United States citizen or resident alien
for tax purposes, a Taxpayer Identification Number
(TIN) and a permanent mailing address are required
prior to making payments to an independent contractor,
since the University must accumulate payments
for possible information return reporting on a
Miscellaneous Income, IRS form 1099. The TIN for
an individual is their Social Security number.
Note: The preferred method of obtaining
the TIN and address is by having the independent
contractor complete a Request for Taxpayer Identification
Number and Certification, IRS form W-9, and submitting
it with the invoice or Invoice Voucher/Receiving
Report to obtain payment. The Request for Taxpayer
Identification Number and Certification, IRS form
W-9, may be obtained from the Accounting Operation
Office, 206–543–8414, or from the IRS
directly. |
| 2) | Independent Contractors Who Are Nonresident Aliens for Tax Purposes—For independent contractors who are nonresident aliens for tax purposes, see Administrative Policy Statement 32.4. |