An Independent Contractor is an individual who is not affiliated with the University or The University Corporation (TUC) and is in business for him/herself to provide services. An Independent Contractor maintains control over the work processes and have greater flexibility over when and how the work is performed.
Determination between Employee and Independent Contractor
It is important to note that there is a significant risk to TUC in classifying individuals as independent contractors and not employees. Before services are performed, the Principal Investigator desiring to contract for services in a sponsored project must assess the relationship with the individual provider and the university to ensure that the individual is properly classified.
TUC must comply with California and federal laws and CSU policies regarding the proper classification of employees and independent contractors. Misclassification of a worker as an independent contractor can result in serious wage obligations, financial penalties, tax, compensation and other liabilities to TUC and other consequences.
Services such as lecturing, speaking, or other special trades.
TUC may not enter to an independent contracting agreement with the following:
• Employees, including student and graduate assistants, of CSUN, TUC, and other CSUN auxiliaries
• Individuals who are debarred or suspended. The list of debarred/suspended individuals is visible to the public through https://www.sam.gov/SAM/
• Federal government employees
• Companies (please use purchase order)
Only TUC is authorized to enter into a legal agreement with an Independent Contractor. The Principal Investigator or other project staff are not authorized to enter into such an agreement.
Payments to Independent Contractors may include fees for services, reimbursement of travel expenses, and supporting costs. Because unsubstantiated amounts must be reported as income to the contractor on the IRS instrument, copies of receipts must be submitted for any reimbursements. Guidelines of the granting agency apply to travel reimbursements for independent contractors (ex. alcoholic beverages are not reimbursable on a federal project).
The compensation section of the "Request for Independent Contractor" form should show separately the rate and time calculation (dollars per hour/day/week/multiplied by the hours/days/weeks) and the amount of travel reimbursement, if applicable, included in the total amount due.
Rates charged for services (excluding travel) cannot exceed 125% of the comparable salary rate of a Full Professor in the highest salary category. A letter of justification must accompany any request containing a payment exceeding the maximum allowable.
For independent contractors providing instruction or lectures, the rate is calculated on an hourly basis and includes reimbursement for preparation, lecturing, and evaluation, if necessary.
Coding of the Accounting String
The Request for 'Independent Contractor' must be coded with an 'Accounting String' to ensure the proper allocation of the expenses to the correct project and the correct account.
Account Fund Department Project Amount
625200 S4000 24200 4XXX XXXX $XX.XX
Procedure for Independent Contractors
The Principal Investigator (PI) completes the form "Independent Contractor Request Form" and sends the completed request form to The University Corporation (TUC) Human Resources department. The request must describe the scope of work, i.e. explicitly and inclusively delineate all services expected of the Independent Contractor. The request must also attach information pertaining to the Contractor's expertise and attest to the fact that they are in business for themselves providing contract services to others (ex. curriculum vitae or resume of the contractor).
The University Corporation Human Resources department must receive the form "Request For Independent Contractor" at least two weeks prior to the expected dates of the services. If the independent contractor is a nonresident alien (NRA), or if the department is unsure of the residency status of the independent contractor, contact TUC prior to retaining services.
Once it is determined that the individual is an independent contractor, TUC Financial Services department will prepare and send a 'Lecturer and Independent Contractor Agreement', signed by an authorized TUC official, and accompanied with a (sample) invoice to the independent contractor.
After receiving the 'Lecturer and Independent Contractor Agreement', the independent contractor reviews and signs the agreement, maintains a copy for his/her records, and returns a fully executed agreement to TUC.
All independent contractors, who are non-U.S. citizens and non-U.S. permanent resident aliens, must complete a tax analysis using Thomson Reuters Online Tax Compliance System before payments can be made. Prior to submitting an invoice, they must provide an email address, either by including it in the request or by contacting The University Corporation at 818-677-7289 or at firstname.lastname@example.org. Once the individual completes Thomson Reuters, the individual must bring the tax summary report to TUC Financial Services with the required document copies specified in the summary report.
After completing the contracted services the independent contractor will send the pre-prepared invoice directly to TUC, which will forward a copy of the invoice to the PI.
The Principal Investigator will complete a "Check Request" and submit it with the invoice attached to TUC's Financial Services department. TUC will then review the request and will issue payment upon approval.
Independent Contractors Outside of the United States
Requests for work to be done outside of the United States present a difficult and still more complex set of challenges and risks. If you plan to engage someone outside of the United States, you should understand that each situation will be unique as the country in which the work will be performed has their own set of labor laws, as well as requests must adhere to export control policy and procedure of the campus. When considering an Independent Contractor who will perform the work outside of the United States, please be sure to allow additional time to work with the available resources to reach a proper determination. If the independent contractor is a nonresident alien (NRA), or if the department is unsure of the residency status of the independent contractor, contact TUC prior to retaining services. TUC Financial Services department requires an email address to enter the information in Thomson Reuters System to determine the appropriate tax withholding of the individual. TUC must verify residency status and/or Visa status prior to making a commitment to retain the independent contractor. Failure to do so may result in the university being unable to enter in to the agreement. The requestor may also be subject to tax liability.
Requests submitted during or after the work is performed
Any work performed by the contractor before a fully signed contract or agreement is executed can be considered as having been done at the contractor's own risk and as volunteer work. PIs are responsible to ensure that a fully executed contract or agreement is in place before the work is performed in any sponsored project.
Date of Last Revision: 1/1/21
Questions regarding initial contractor evaluation:
Associate Director, TUC Human Resources
Phone: 818-677-5040; Email address: email@example.com
Questions regarding Independent Contractor procedure
Accounts Payable department
Phone: 818-677-7289; Email address: firstname.lastname@example.org