Independent Contractor Presented by The Office of Contracting

Independent Contractor Presented by The Office of Contracting & Procurement

Overview Independent Contractor – Definition – How to identify Process Updates Engaging vendors through IC Process Payment

WHAT IS AN INDEPENDENT CONTRACTOR?

Definitions Employee - a worker who is hired through Human Resources or the Office of the Provost, and paid under a W-2 Independent Contractor - an individual or single member LLC engaged in an established business, trade or profession who provides services to Rowan University and the fees are reported on the IRS Form 1099-NEC

Why do we need to identify To determine if a vendor is: – An employee subject to tax withholdings (receives IRS Form W2) or – An IC responsible for paying their own taxes (receives IRS Form 1099-MISC)

Why do we do this? To comply with federal and state guidelines for consistent and fair classification of workers To avoid taxes, penalties, and interest assessed for noncompliance

How to Identify Vendors Requiring Determination Considered Independent Contractors Corporations Partnerships Require Careful Evaluation of Employee vs Independent Contractor Single Member Limited Liability Companies Individuals

Who Manages the Process? Collaborative Effort – – – – Human Resources Contracting & Procurement Accounts Payable Payroll Determination of independent contractor status can only be made by Human Resources

Making Determination of IC Status The more control the University has over a vendor, the more likely the vendor will be an employee rather than an IC Factors for determining IC status fall into three categories – Behavioral Control – Financial Control – Relationship of Parties

Behavioral Control Will the individual have control of how the services are provided or will the University have majority control?

Financial Control Will the individual have the ability of directing finances in connection with the services performed?

Relationship of Parties Do they offer services to other clients? There is a limited timeline with no continued relationship Are benefits provided?

Making Determination of IC Status In general, all three of the following requirements must be met to be considered an independent contractor: – Minimal Direction: the worker is free from the employer’s control or direction in the performance of his/her work. – Established Business or Trade: the worker is normally engaged in an independently established business or trade, which derives income from a number of clients including the University. – Expertise: the work requires professional knowledge or professional expertise that is not generally available at the University

Independent Contractor Process Updates Independent Contractor status determination is good for life of vendor, as long as: – No changes in vendor W9 – Same scope of services being utilized IC status is now determined during vendor onboarding – Vendor intake form, IC determination form must be submitted through the Vendor Portal IC Agreement template is updated to capture any changes in independent contractor status

You are requesting services from a vendor, now what? ENGAGING VENDOR

Overview of Steps Determine business type (individual, corporation, etc.) Identify Banner ID Certification for Determination of Independent Contractor Status necessary if individual/single member LLC Submit through Vendor Portal if new or deactivated vendor Requisiti on Purchase Order Receivin g Agreemen t IC Agreement Template signed by vendor and submitted through contract portal Invoice Payment

Resources Banner Finance Independent Contract Spreadsheet Vendor Portal Contract Portal Independent Contractor Workflow

Independent Contractor Determination Database Use to check pre-existing determinations on file

IC Certification for Determination Updated form Form should be completed digitally No longer requires departmental signature

Vendor Portal & Contract Portal Vendor Portal Contract Request Portal Use to: Use to: Establish new vendor Submit an agreement Set up an individual for for by Rowan legal payment/reimburseme Obtain authorized nt signature on Request the agreement reactivation of a terminated Banner ID** Set up a student to receive prize money, stipend, etc.

Existing Vendor Identify Banner ID Check Independent Contractor spreadsheet for determination status Ensure scope of services matches determination approval Complete IC agreement Submit contract through contract portal Submit requisition

Existing Vendor – No Determination on file OR Services do not match determination Complete independent contractor agreement details Send vendor the IC determination form and IC agreement Submit agreement and IC determination form through the contract portal If determined to still be an independent contractor – Contract must be completed If determined to be an employee – Next steps sent via email

IC Service Agreement Template Updates to Agreement Template – Vendor must complete this portion at the bottom of page 1

New Vendor – No Banner ID Submit New Vendor Intake packet and Independent Contractor Determination Form through Vendor Portal Banner ID will be received once the vendor is built and determination is made If determined to be IC – Complete IC agreement – Submit agreement through contract portal – Submit requisition If determined to be an employee – Next steps will be sent via email

Independent Contractor Resources Information for Independent Contractors can be found here: https://sites.rowan.edu/hr/independent contractor/index.html Includes: – IC Policy – IC Powerpoint – Certification for Determination (IC Checklist) – All required forms for both IC and employee. – IC Workflow Questions regarding IC determination: [email protected] Questions regarding new vendors: [email protected]

Payment Processing Invoice and PO# needs to be sent electronically to [email protected] for processing – Vendor can utilize the Independent Contractor Payment Request Form if they do not have an invoice to provide – Start & end date of the service need to be provided if not listed on the invoice – NOTE: The vendor needs to provide actual receipts for any reimbursable portion (ex. travel or cost of supplies). If this is the case, we recommend setting up the requisition with two lines: 1 for the service/consultant fee and 1 for the reimbursables. If receipts are not provided, the vendor will be sent a 1099 on the entire amount of the payment. Invoices are paid on a Net 30 basis unless otherwise stated on the contract – Vendors receive payment on or within 30 days of the invoice date which is the date services were completed

Electronic Receiving If receiving is required in order for the payment to be processed (regular purchase order utilized): – Automated daily emails are sent if receiving is incomplete – AP sends out reminder emails to process receiving – See Quick Reference Guide on Receiving

Payment Verification Utilize Banner Screen FOIDOCH to review the status of a particular document (can search by a requisition #, purchase order #, invoice #, or a check #) – If the invoice states “Receipt Required” either electronic receiving was not done on a PO or there may be an issue with the receiving document (Y number) – If the invoice states “Approved” invoice is approved, but payment has not been disbursed – If the invoice states “Paid” payment has been disbursed There will be a corresponding check disbursement document (CHK #) Utilize Banner Screen FAIVNDH to review all of the payments processed to a vendor – Utilize Banner Screen FOIDOCH to review the status of a particular document (can search by a requisition #, purchase order #, invoice #, or a check #) For detailed step-by-step instructions on utilizing these screens, visit Invoice Payments

Independent Contractor Workflow Interactive workflow to identify process for each IC