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Sponsored Funds Financial Management
Sponsored Funds | Independent Contractors
Policies regarding Independent Contractors are being established to ensure that:
- Payments for services performed by individuals are classified correctly according to IRS Guidelines
- Current University and Research Foundation faculty and staff are paid in accordance to guidelines
- Independent Contractor services are obtained according to University procurement guidelines, Affirmative Actions policies, and applicable Government regulations
- No conflict of interest exists
- All payments made to independent contractors are supported by proper documentation regarding selection, scope of work, and payment
- Services retained which reach or exceed $10,000 on any award are established under a formal agrement or contract for services
Classifying a worker as an independent contractor rather than as an employee may appear to result in financial savings and less paperwork. However, if the employee is misclassified as an independent contractor, these perceived advantages are offset by the potential penalties that could be assessed by the Internal Revenue Service (IRS) or New York State Department of Labor, by potential Workers' Compensation or unemployment claims, and by liability or malpractice suits.
Efforts should be taken to properly classify when reviewing application budgets, when hiring an employee, or when engaging an independent contractor.
The Research Foundation is legally obligated to properly classify workers even if a sponsor provides funds for independent contractors in an award.
The IRS provides a twenty question “Common Law Test” to assist in the classification process.
Independent Contractor: An individual who, under agreement, performs a service for another person or business and who is subject to the controls of the other only in regard to the result achieved. The contractor is not controlled in regards to the manner or means by which their services are performed. Services provided are typically task oriented, specific in nature, short in duration, or sought based on expertise. Compensation is usually according to an agreed upon amount or rate, for a given task.
Employee: Generally speaking, an employee is subject to the control of the employer as to what work must be done and how the work must be done. It is not necessary that the employer actually direct or control the manner in which the services are performed; it is enough that the employer has the right to do so. Services performed are in the course of the general business of the employer, typically performed on-site for a long or indefinite period of time. Compensation is usually made on a time or piece-work basis.
Approval for Engagement of Services
Requests for Approval for Independent Contractors should be made prior to engaging the service of any individual. This will ensure that the individual is classified correctly and the appropriate documentation is obtained.
It is essential to document that a process was employed in identifying the selected contractor. Requests submitted should contain a description of such process as well as a justification of reasonable price to be paid.
Requests for approval must also contain a detailed description of the services to be performed. A statement of work or list of deliverables should be attached as applicable. Research Foundation policy requires that a formal agreement be drawn for work of $10,000 or more. While contracts of less value do not require a formal agreement, contracts may be employed in efforts to clearly outline the services to be performed.
Completed Requests for Approval should be submitted to the Office for Sponsored Funds Personnel, and will then be forwarded to Sponsored Funds Financial Management for subsequent review. Please note that the engagement of the contractor is not approved until all required approvals from Research Foundation offices are obtained.
Payment for Services
In accordance with applicable federal regulations, payment for services should not be made until service has been completed. Upon completion of services, an Independent Contractor Payment Request form should be submitted accompanied by an invoice or other supporting documentation and in accordance with service as outlined in the Request for Approval.
Requests to reimburse contractors for related expenses, not accounted for in established fee or rate, should be made in accordance with associated Research Foundation policies and procedures.
Vendor Contract: Work to be performed by a business or entity, rather than an individual. Requests should be directed to the Office of Purchasing and Contracts.
Internal Contractors (Extra Service): Work performed by a member of the University. Work to be performed is either in a different department or involves a separate work location. The work is done in addition to their normal University obligations. This work is to be paid as Extra Service through the appropriate payroll department.
Honoraria: Payment to an individual for a non-extensive or incidental lecture or speaking engagement, or when the individual has not requested compensation. Payment should be requested utilizing the Request for Payment for Lecturers and Speakers form and supported by appropriate documentation. Additional information can be found on the Other Expenses page.
Human Subject Payment: Payment to a living individual about whom an investigator (whether professional or student) conducting research obtains (1) data through intervention or interaction with the individual or (2) identifiable private information. Payment should be requested utilizing the Human Subjects Payment form and supported by appropriate documentations. Please see Subject Cost page for additional information.
Participant Stipend: payment made to an individual for their attendance at an event. Participation is not required. Payment should be requested utilizing the Participant Stipend forms and supported by appropriate documentation. Please see Participant Stipends page for additional information.
Independent Contractor Approval Request Form
Independent Contractor Payment Request Form
Independent Contractor Agreement Boilerplate
Exhibit X for Agreement Boilerplate
Request for Payment for Lecturer or Speaker