Independent Contractors

An employee is an individual who renders a service at the will and under the control of an employer, both in terms of what must be done and how it must be done. The employer can allow the employee considerable discretion and freedom of action, so long as the employer has the legal right to control both the method and the result of the services.

An independent contractor is an individual or business over whom the university has the right to control or direct only the result of the work and not the means by which the results are accomplished. Independent contractors are sole proprietorships, limited liability companies (LLCs), and partnerships (corporations are exempted from the independent contractor process) that render services to the general public and meet additional criteria in IRS guidelines. They usually have a separate workplace and are not supervised when they are working within the organization. They often provide a one-time or periodic service that fulfills a special need of the university and cannot be provided within the organization. Independent contractors are frequently individuals or businesses who provide professional advice.

All workers performing services should be designated employees unless there is sufficient evidence, as determined by independent contractor compliance, to treat the worker as an independent contractor.

As a general matter, the IRS identifies the level of independence and control as the main factor that differentiates an employee from an independent contractor. 

Sole proprietorships, partnerships, and LLCs potentially qualify for independent contractor status if the services they will provide are outside the scope of the university’s core business and they bring a level of expertise or specialization that cannot otherwise be found within the university. independent contractors should have legitimate businesses that provide services to the general public. The potential independent contractor engagement should be short-term and project focused and the independent contractor designation based on the degree of independence and control across three main categories (behavioral, financial, and relationship type), as defined by the IRS guidance.

The New School has an independent contractor compliance policy and procedure in place because worker classification is strictly regulated by the IRS and DOL. Noncompliance with the university’s independent contractor policy and procedures may result in worker misclassification, which could lead to the following:

• IRS audit
• Recoupment of unpaid wages
• Additional tax payments and penalties: federal and state, Social Security, Medicare, unemployment, and workers compensation
• Reimbursement of employee benefits: health insurance, retirement, etc.

No. Independent contractor requests are just for the provision of services.

No. Corporations must go through the standard vendor process in MyNewSource.com. Only individuals and sole proprietorships, partnerships, and LLCs are potentially eligible for independent contractor status. Payments to corporations of $10,000 or more require a vendor contract developed in conjunction with Legal.

Before an independent contractor is hired or starts any work, an independent contractor request must be submitted to [email protected] for review and approval. Independent contractor requests consist of two sets of forms:

• Set No. 1: to be completed by the independent contractor; includes SPQ, SOW, and the PSA
• Set No. 2: to be completed by the hiring manager and the departmental signatory; includes WCQ and the independent contractor compliance

Follow these steps to submit an independent contractor request:

1. Do not make any commitment, verbal or otherwise, to the individual until you have received an official approval from independent contractor compliance.
2. Request that independent contractors complete a SPQ/W-9 and a SOW. Provide the independent contractor with a PSA to sign (with the understanding that no official agreement can be entered into until independent contractor compliance has officially given approval).
3. Upon receipt of the signed and completed SPQ/W-9, SOW, and signed PSA, hiring managers should review paperwork and complete the WCQ
4. After review of the independent contractor package (SPQ/W-9, SOW, PSA, and WCQ), provide the departmental signatory with the PSA and independent contractor compliance for review and sign-off.
5. Submit the complete package to independent contractor compliance at [email protected].

If a package is incomplete or inaccurate, the issue will be indicated on the bottom of the independent contractor compliance and returned to submitter by email. If independent contractor status is granted, approval will be noted on the bottom of the independent contractor compliance and returned to submitter by email.

Yes. In addition to the standard independent contractor forms, a W8BEN is required for all foreign national independent contractors. If the foreign independent contractor will be in the United States at any time during the engagement, an FNIC with backup documentation is also required. Not all foreign nationals are authorized to receive payments in the United States, due to restrictions on certain visa types. Therefore, it is critical to submit all foreign national independent contractor requests as early as possible. Tax withholding rates may vary depending on the country of origin and the tax treaties in place. Foreign nationals may be subject to tax withholding of up to 30 percent.

After you receive your independent contractor approval, you can begin the payment process. Direct all independent contractors to submit valid invoices to the MyNewSource Digital Mailroom. There are three modes of submission:

SciQuest — The New School
PO Box 3087, Scranton, PA 18505
[email protected]
855.669.6651

If the facts and circumstances of your request do not support an independent contractor designation, contact your HR partner or the appropriate administrator to determine if the individual may be hired as an employee.

Independent contractor Compliance should be contacted immediately and made aware of any possible changes to the terms of an approved independent contractor request. If the change is not significant, a one-page modification can be submitted. If there is a significant change, new independent contractor forms will be required.

Independent contractor compliance should be contacted, at [email protected].

No. An employee cannot also be an independent contractor and is not eligible for independent contractor status within the same calendar year.

No. The independent contractor must be independent of the university. Also, an independent contractor should be able to make profits or losses under the arrangement. A loss is not possible if the university covers all the independent contractor expenses by providing training, supplies, equipment, or a university email.

No. An independent contractor should be engaged only for short-term project-focused assignments.

No. All independent contractor forms are electronic, are enterable, and allow for electronic signatures. Forms should be emailed to [email protected].

All independent contractor requests are reviewed and the independent contractor determination is indicated at the bottom of the independent contractor compliance form, which is emailed back to the submitter.