An independent contractor is an individual or sole proprietor who is contracted to perform work for the university utilizing their own methods, and the means by which the work is accomplished is not controlled by Carnegie Mellon University. An independent contractor is normally engaged in an established business, trade or profession. As such, an independent contractor is not an employee of Carnegie Mellon and is treated differently with respect to tax withholdings, employee benefits and payment methods.
Mistakenly classifying an employee as an independent contractor can result in significant fines and penalties. The IRS continues to seek out and impose penalties on organizations that treat employees as independent contractors and fail to withhold taxes. As a result, the IRS considers 20 factors in determining a worker's status. Meeting just one of the conditions may qualify that worker as an employee; however, the 20 factors are used as guidelines to determine whether sufficient control is present to establish an employer-employee relationship. Not every factor is applicable in every situation and the degree of importance of each factor depends on the type of work and individual facts and circumstances. All relevant factors are considered in making a determination and no one factor is decisive.
Carnegie Mellon University uses an Independent Contractor Checklist [.pdf] to assist schools and departments in determining whether individuals performing services should be hired as an employee or an independent contractor.
If the determination is an independent contractor, please refer to the Guide to Supplier Forms [.pdf]. All the necessary steps for determining and procuring the services of an independent contractor should be completed before any services are performed.
If you need assistance of have any questions regarding the Checklist or determination of independent contractors vs. employees, please contact the the Taxation Department directly.
What is the difference between an independent contractor and an employee?
What should the department do if they are not sure whether an individual is considered an independent contractor or employee?
The department that is interested in an individual performing a service for Carnegie Mellon should complete the Independent Contractor Checklist [.pdf] and answer the questions based on the individuals facts, circumstances and type of work. For assistance with the completion of the checklist, they should contact the Human Resources Compensation Office at firstname.lastname@example.org.
What is the process for hiring independent contractors?
- If a department is interested in an individual performing services at Carnegie Mellon, they should first contact the University Contracts Office (UCO) at email@example.com to discuss whether an Independent Contractor Checklist (ICC) needs to be completed and to start the contract process.
- The department will complete the Independent Contractor Checklist [.pdf], providing the necessary information and answering the questions regarding the individual who will potentially provide services to Carnegie Mellon.
- The completed ICC will be submitted via email to the Compensation Office at firstname.lastname@example.org. Additional information may be requested by the Compensation Office or University Tax Department during the review process.
- Once the ICC is approved by Compensation Office and University Tax Department , University Tax Department will provide the approved ICC to Accounts Payable and the UCO to continue the setup process.
If an individual cannot be hired as an independent contractor, they will be notified by the Compensation Office or University Tax Department .
What if I forget to complete the checklist and contact the University Contracts Office instead?
The UCO or Accounts Payable will provide an email reminder asking you if you have completed the Independent Contractor Checklist and received approval from Compensation Office and University Tax Department .
What is the purpose of the Independent Contractor Checklist?
Who should complete the Independent Contractor Checklist?
The university department/buyer that is engaging with the individual or sole proprietor, not the independent contractor.
Does the Independent Contractor need to sign the Checklist?
Where does the completed Independent Contractor Checklist get sent for approval?
The completed Independent Contractor Checklist should be submitted to the Compensation Office at email@example.com.
What is the average turn-around time for approval of the Checklist?
The Independent Contractor Checklist is reviewed by the Compensation Office and University Tax Department daily. Departments should allow for at least a two-day turnaround.
Can the Independent Contractor Checklist be submitted via email?
Yes. It is preferred that the Checklist be emailed to the Compensation Office at firstname.lastname@example.org.
Does an individual need to complete the Checklist every time work is being performed by the same independent contractor?
Is there any particular question on the Checklist that causes an individual to be considered an employee vs. independent contractor or vice versa?
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