CONSULTING

• 1.0 Purpose
• 2.0 Policy
• 3.0 Definitions
  • 3.1 Employee
  • 3.2 Employee-Teaching
  • 3.3 Independent Contractor
  • 3.4 Individual Contractual Teaching Services
  • 3.5 Contractual Teaching Services
  • 3.6 Non-Teaching Academic Consulting
  • 3.7 Honorarium
  • 3.8 Non-Academic Consulting
• 4.0 References
• 5.0 Approvals and Revisions

1.0 Purpose

This policy describes how consultants are classified and payed by the University.

2.0 Policy [Top]

Consulting

The University hires various forms of "consultants" for both academic and non-academic purposes. How the consultant is classified/defined determines his/her relationship with the University, which policies and procedures apply to that relationship, and how the University will process the payment for the services rendered.

Through this and the other companion policies and procedures, the University tries to properly classify and pay consultants.

"Consultant Type"	Payment Processed By Mean Of:	Payment System	Direct Questions To:
Teaching - Employee	Payroll	Payroll	Human Resources, Employment Services
Individual Contractual Teaching Services	Procedure 7-62	COMBO[1]	Academic or Medical Vice President
Contractual Teaching Services	Procedure 7-62	COMBO[1]	Academic or Medical Vice President
Non-teaching Academic Consulting	Procedure 7-62	COMBO[1]	Academic or Medical Vice President
Honoraria	Procedure 7-63	COMBO[1]	Academic or Medical Vice President
Non-academic Consulting	Procedure7-11	CAPPS[2]	Purchasing and Materials Services

LIMITED PURCHASE ORDERS (LPOs) CANNOT BE USED TO PAY FOR ANY TYPE OF CONSULTANT.

For additional information,

See also:

• Policy VII.R.12, "Contractual Teaching Services & Non-Teaching Academic Consulting"
• Procedure 7-62, "Authorizing Contractual Teaching Services and Non- Teaching Academic Consulting"
• Policy VII.R.13, "Honoraria"
• Procedure 7-63, "Approving Honoraria."
• Policy IV.G.2, "Taxation Instructions for Foreign National Recipients of Scholarships/Fellowships."
• Policy XII.F.1, "Payroll: Foreign National Individuals."

NOTE: Consultant payments to foreign national individuals may be limited by their type of visa. See also Procedure 6-3, "Paying Foreign National Individuals."

3.0 Definitions [Top]

3.1 Employee:

Performs services that are subject to the will and control of the employer--both what is done and how it is done. The employer's right to control, not the exercise of that right, is a key factor. The employer can allow the employee considerable discretion, so long as the employer has the legal right to control both the methods and results of the services.

3.2 Employee-Teaching:

In addition to the definition of an employee, a teaching employee also has a specific assignment which normally requires instruction, research, or public service. Part-time instructors, in most cases, will be treated as employees and will be placed on the University's payroll for the duration of the teaching service. For exceptions, see INDIVIDUAL CONTRACTUAL TEACHING SERVICES and CONTRACTUAL TEACHING SERVICES.

3.3 Independent Contractor:

As defined for federal tax purposes, this is a vendor having no employment relationship to the University either by statutory, common-law, or regulatory tests. Therefore, the University has no FICA or income tax withholding obligations for the independent contractor. An independent contractor is generally referred to as a "nonemployee." The University has the right to control the result to be accomplished but not the means and methods of accomplishing the result.

NOTE: There may be economic reasons why employers misclassify employees as independent contractors. HOWEVER, THE IRS IS KNOWN TO AGGRESSIVELY PURSUE THE CLASSIFICATION OF INDEPENDENT CONTRACTORS VERSUS EMPLOYEES. IF THE IRS DISCOVERS THAT INDEPENDENT CONTRACTORS SHOULD HAVE BEEN CLASSIFIED AS EMPLOYEES, THERE MAY BE SUBSTANTIAL ASSESSMENTS OF DELINQUENT TAXES, PENALTIES, AND INTEREST TO THE EMPLOYER. IN ADDITION, THE IRS MAY ADD PENALTIES FOR EMPLOYERS WHO FAIL TO FILE THE REQUIRED INFORMATION RETURNS.

NOTE: It is the department's responsibility to determine if an individual is an employee or an independent contractor. The "Employee/Independent Contractor" form in Procedure 7-62 is used for this determination. Each situation is different. Those with questions should contact:

The Director of Employment Services and Human Resource Systems,
Department of Human Resources, 924-4444

NOTE: ANY ASSESSMENT OF PENALTIES, INTEREST, OR UNPAID TAXES RESULTING FROM AN INCORRECT DETERMINATION OF EMPLOYMENT STATUS MAY BE THE RESPONSIBILITY OF THE CONTRACTING DEPARTMENT.

3.4 Individual Contractual Teaching Services:

In addition to the definition of an independent contractor, an individual contractual teaching service must meet the following three conditions:

• The teaching service is sufficiently short in duration (not greater than seven calendar days), AND
• The instructor does not meet the employer-employee test (see below), AND
• The teaching service is to be a one-time presentation only.

See also:

Procedure 7-62, "Authorizing Contractual Teaching Services and Non-Teaching Academic Consulting."

3.5 Contractual Teaching Services:

In addition to the definition of an independent contractor (see above), contractual teaching services are part-time teaching engagements conducted by a not-for-profit organization, public agency, or institution of higher education. The teaching engagement must meet both of the following conditions to qualify as a contractual teaching service. Otherwise, the contractor should be paid through the payroll system. The two conditions are:

• The teaching service is sufficiently short in duration (not greater than seven calendar days), AND
• The teaching service is to be a one-time presentation only.

See also:

Procedure 7-62, "Authorizing Contractual Teaching Services and Non-Teaching Academic Consulting."

3.6 Non-Teaching Academic Consulting:

In addition to the definition of an independent contractor (see above), this is a person(s) providing research or other academically related services on a short-term basis to the University. Training of faculty or staff does not qualify, nor does entertainment, repairing equipment, software development, or any other services which can be purchased using normal competitive procedures. The consultant's expertise may come from advanced degrees, published works, or accomplishments in his/her field.

3.7 Honorarium:

An honorarium is a token of appreciation paid to an individual for services performed for which payment is NOT REQUIRED. The individual receiving the honorarium must satisfy the definition of an independent contractor (see above). The services involved vary, but are generally associated with oral presentations made at University sponsored functions. The arrangement between the individual and the University is informal; it does not involve a contract and invoicing is not required.

See also:

Policy VII.R.13, "Honoraria."

3.8 Non-Academic Consulting:

In addition to the definition of an independent contractor (see above), non-academic consulting involves person(s) or vendors providing services to the University for non-academic purposes. The University procures non-academic consultants/services by means of purchase orders.

4.0 References [Top]

1. Process a COMBO form according to Procedure 6-4, AS LONG AS THE CONSULTANT FEE DOES NOT EXCEED $9,999.99. If $10,000 or greater, process according to Procedure 7-11, "Preparation of Purchase Requisition."
2. Process non-academic consulting services with a purchase requisition according to Procedure 7-11.

5.0 Approvals and Revisions [Top]