The IRS considers individuals performing services to be employees, absent a reasonable basis for classification as an independent contractor. By default, the college will pay all employees and students (whether currently employed or not) through payroll based on their existing relationship with the college. If a strong case can be made that services provided are independent of the employee/student’s relationship with the college, and the employee/student provides similar services to the general public, then those individuals will be considered for classification as an independent contractor by completing the Employee vs. Independent Contractor Status Determination Form, which follows the 20 common law factors used by the Internal Revenue Service to classify individuals as either independent contractors or employees.
The Employee vs. Independent Contractor Status Determination Form must be completed before an individual can be paid for services. The Assistant Controller is responsible for ensuring the form has been properly completed and will work with departments to obtain an understanding of the facts and circumstances surrounding the services to be provided. The cashier’s office will notify the Assistant Controller before making a payment to an individual for services in order to ensure the payment is consistent with these guidelines.
Services do not include travel and related reimbursements, prizes and awards. Travel and related reimbursements are paid through accounts payable (or the cashier’s office if less than $100). Employment-related prizes are paid through payroll whereas prizes relating to academic or other accomplishments are paid through accounts payable. Other amounts awarded to individuals (e.g. gift cards) may be considered taxable fringe benefits and must be evaluated before they are provided to individuals to ensure proper treatment.
Employee/student stipends are not permitted for hourly (non-exempt) paid employees. Hourly paid employees working a second job at the college must be paid using the appropriate overtime calculation from the Department of Labor (based on the number of hours worked). All individuals providing services must be paid for their services unless they can be appropriately classified as a volunteer.