9.12 Independent Contractor Services

Policy Information

Purpose and Summary

To provide guidelines for distinguishing between employee and independent contractor status and to safeguard the University and its employees from potential liability related to incorrect classification.

Note: This policy does not apply to reimbursements to employees or individuals for recruiting expenses. Refer to policy 9.10 Requisitions/Reimbursements.

The Internal Revenue Code refers to three basic payment types: (1) scholarship/fellowship, (2) independent contractor, and (3) employee. Scholarship recipients are not expected to provide a service whereas employees and independent contractors are expected to provide a service. The Internal Revenue Service (IRS) presumes that all individuals who provide a service are employees unless there is evidence to support the classification of the individual as an independent contractor. Therefore, if a University department engages an individual as an independent contractor, the department must supply the necessary evidence to support this position.

Determining independent contractor status is driven by facts and circumstances. The facts and circumstances that make one individual an independent contractor may differ from those that make another individual an independent contractor. Court cases were used as a conceptual framework for the IRS to develop a list of the most common and significant independent contractor characteristics. Financial Services has summarized and simplified the IRS list of characteristics on the Independent Contractor Form (ICON form). This form is not required when contracting with a business entity that has a valid Employer Identification Number (EIN). A business entity should supply the IRS Form W-9 or a substitute W-9 to Accounts Payable prior to establishing a Requisition (REQS) or Disbursement Voucher (DV).

Source

IRS Guidelines, including but not limited to:

• IRS Publication 15-A
• Internal Revenue Code Title 26, § 31.3121(d)-1

State of Arizona Guidance, including but not limited to, State of Arizona Accounting Manual, Topic 90 Section 50 Employee vs. Independent Contractor.

Scope

This policy applies to all University locations and units, including all University extensions, satellite locations, and off-site campus units, both domestic and international.

Definitions

1. Business Entity: The structure in which a business is established, such as corporations, partnerships, limited liability companies, governmental agencies, and trusts.
2. Conflict of Interest: A conflict of interest exists when a personal influence might bear upon or appear to bear upon a decision made by a University employee in his or her capacity as a public employee. Any employee of the University, or relative of an employee, who has a substantial interest in any contract, sale, purchase, or service, including consulting, involving the University shall (a) make this fact known to the University Chief Procurement Officer and (b) refrain from participating in any manner in such contract, sale or purchase. Further definition and examples of conflicts of interest are provided in the Purchasing Policies Manual, section 1.4, the University Handbook for Appointed Personnel, section 2.06.08, and the Classified Staff Personnel Policy Manual, section 413.0.
3. Consultants: Independent contractors who specifically provide expert professional advice. The individual has a skill or expertise not available within the University and the need for their services usually does not extend beyond a limited period of time in which to complete a specifically defined project.
4. Employee: An individual providing services in exchange for wages or salary where the employer has the right to control and direct the individual with regard to the result to be accomplished (what will be done) and the process by which the result is accomplished (how it will be done).
5. Employer Identification Number (EIN): All business entities must have an employer identification number. This is a unique nine digit number assigned by the Internal Revenue Service (IRS) to identify a business entity. It is different than a social security number (SSN) which is used to identify an individual.
6. Entertainers: Persons engaged to perform, which includes musicians, actors, comedians or other performing artists. Professional speakers may be included in this category but are differentiated from guest speakers in that they generally perform for a broad or general audience and are often engaged by student organizations, cultural resource centers, or UA Presents as opposed to by an academic or research department.
7. Guest Speakers: Professionals usually engaged by departments to speak on academic and research topics to a specific audience. Examples include visiting professionals or specialists and seminar presenters. Speakers generally receive reimbursement of expenses and/or a nominal sum as payment for their services. This category does not include entertainers as defined above.
8. Honorarium: A nominal payment made in recognition or appreciation of acts or professional services provided where the fee is not determined by the person being paid. The individual paid does not bargain, set the cost, nor invoice for the cost of the fee for his or her services.
9. Independent Contractor (ICON): Individuals who render a service for the University and meet contractor conditions established by the IRS. They typically have a separate workplace, are not supervised, and have a particular set of skills not available elsewhere within the University. They are not entitled to employee benefits, are not covered by workers' compensation, and their pay is usually not subject to income tax withholding. The University controls and directs only the result of the work the individual must do in exchange for remuneration and not what will be done or how it will be done.
10. Independent Contractor Form: A required University form developed by the Financial Services Office to summarize and simplify the list of IRS characteristics to assist in determining if an individual should be classified as an independent contractor. This form is not required when contracting with a business entity that has a valid EIN.
11. Scholarship/fellowship: Payments allowed or paid to an individual at an educational institution for the purpose of study and/or research. Such payments do not require the recipient to provide a service in exchange for funds.
12. Subject Pay: Payment to an individual for voluntary participation as a subject in a research project.
13. Visiting Experts: These individuals, who are not current or former University employees, will serve in an advisory or consulting capacity with a University employee (for example, an individual working with a University employee in a "collaboration between equals" type arrangement) on a specific project. Visiting experts also include academic program reviewers. An academic program reviewer is selected based upon his or her stature in a particular field and is expected to review programs in his or her field of expertise for quality in relation to program mission.

Policy

1. The University must comply with all applicable Federal and State laws relative to the use of independent contractors and apply the use of an independent contractor as sound fiscal management of the institution.
2. A department intending to engage a service provider as a consultant or independent contractor must follow University approval and contracting procedures prior to the start of any work or performance of services.
3. An independent contractor shall not be used to direct a University program or be retained on an indefinite basis to perform tasks that would normally be assigned to an employee.
4. Individuals cannot pay independent contractors with personal funds and then request reimbursement from the University. Payments to an Independent Contractor must be made directly from the University to the independent contractor.

Procedures

General Information on Identifying Independent Contractors

1. Nonresident Aliens: Payments to nonresident aliens are governed by policy 9.16 Payments to Nonresident Aliens, which contains detailed information about payments allowed and documentation required. Refer to policy 9.16 before a nonresident alien is engaged to perform any service. Some visa types do not allow payments to nonresident aliens as independent contractors.
2. Scholarships/fellowships: An ICON form is not required for payments of scholarships and fellowships. Refer to policy 13.01 Introduction to Methods of Student Payments.
3. Current and Former University Employees: Individuals currently or formerly (within the calendar year) employed by the University generally may not provide services to the University as an independent contractor. A former University employee rehired as a consultant will rarely meet the IRS’s criteria for independent contractors, especially if the former employee is rehired during the same calendar year in which he/she terminated employment at the University and is requested to perform similar job duties. A department that engages a former employee as a consultant will almost always be required to use the employment process and make payments through payroll.
4. Due to the nature of the University’s business, the following individuals will always be classified as employees:
   1. Anyone who teaches, lectures, plans, or grades a course through which students may receive academic credit.
   2. Individuals performing trade type duties (for example: clerical, janitorial, grounds keeping services, farm attendants, and laboratory technicians). However, if the University engages a temporary agency with a valid EIN to provide these types of trade services, the agency will be considered a business entity and not an independent contractor (see #5 below).
5. Business Entities are not considered independent contractors if they provide the University with a valid EIN. Payments will be made directly to the order of the business entity, not an individual. The EIN must be provided via an IRS Form W-9 or a substitute W-9 form provided by the business entity.
6. The following restrictions apply to hiring certain persons as independent contractors:
   1. If an employee of one department is hired by another department to perform additional duties, complete a Supplemental Compensation Form to request the additional pay.
   2. Normally, students should be hired as employees in accordance with Human Resources policies, not as independent contractors. However, if it is deemed appropriate to engage a student as an independent contractor, the student cannot be paid from Federal Work Study funds due to Federal Regulations.
   3. Federal employees cannot be engaged as independent contractors on federally-sponsored contracts or grants.
   4. If conflict of interest is involved, specific competitive bid procedures are required prior to the independent contractor being engaged. Contact Financial Services Purchasing for additional information.
7. It is the department’s responsibility to assure that appropriate evidence has been documented to support the position that the University is engaging an independent contractor. If the department cannot provide sufficient evidence to support the classification of an individual as an independent contractor, the individual must be employed in accordance with Human Resources’ policies. The department should contact Tax Services if assistance is needed in making the independent contractor determination.

Completing an ICON Form

8. The department is responsible for reviewing each case and assessing whether or not the individual being engaged meets the independent contractor criteria, regardless of the form of payment, Requisition (REQS) or Disbursement Voucher (DV).
9. The ICON form is required to be completed by the individual prior to arranging for services. This form is not required when contracting with a business entity that has a valid EIN. There are some situations where an ICON form is not required for payments to an individual; refer to Requesting Payment with a Disbursement Voucher below.
10. The department sends the ICON form to the individual that will be performing services.
    1. The individual (potential independent contractor) completes the ICON form, signs it, and returns it to the department.
    2. The department reviews the ICON form for completeness and accuracy. The form is complete when all questions on the form have been answered. The form is accurate when the University employee most familiar with the potential independent contractor reviews the form and believes that its content is most likely factual.
    3. Based upon the information provided on the ICON form and any other relevant information available, the department determines if the individual meets the independent contractor criteria.
11. If the independent contractor criteria are met:
    1. The departmental University employee most familiar with the independent contractor signs the ICON form to indicate concurrence as to the form’s accuracy (Part III, signature number 1). This signature is required for payment.
    2. The departmental employee responsible for requesting funding either through the REQS or DV process is a second signer on the form (Part III, signature number 2). The second signature indicates that the form is complete and that the individual meets the independent contractor criteria. This signature is required for payment.
    3. The third signature in Part III identified as "College/Division Representative" is for a higher level of authorization at department discretion. It is not required for payment. This signature is optional based on departmental discretion.
    4. Upon completion of the ICON form with all signatures, a copy is provided by the department to the independent contractor.
    5. The original completed form, including the UAccess Financials eDoc number (when applicable), must be provided to Accounts Payable. The original completed ICON form will be maintained in Accounts Payable for record retention purposes.
12. If the independent contractor criteria are not met, the department is required to hire the individual as an employee through Human Resources.

Arranging for Independent Contractor Services Prior to the Engagement

13. In most circumstances, arrangements to engage an independent contractor must be made with a REQS prior to commencement of the work. When a REQS is required, a Purchase Order (PO) will be issued. In specific limited circumstances, a DV may be allowed. See Requesting Payment with a Disbursement Voucher.
14. Sponsored Projects: If the independent contractor is to be paid from a sponsored project grant or contract account (3XXXXXX through 4XXXXXX), prior written approval from the sponsor may be required depending on the contract or grant. Contact Sponsored Projects and Contracting Services (SPCS) to determine approval requirements.
15. The department clearly defines the scope of work to be completed.
16. The department determines the total cost for the services to be provided, including reimbursable expenses.
17. Bidding Process: When an individual's fees plus expenses will be:
    1. Equal to or less than $25,000 for a single engagement or project, the bidding process is not required. The department selects the independent contractor and provides Financial Services Purchasing with a statement outlining how and why the particular provider was chosen.
    2. Greater than $25,000 but no more than $100,000 for a single engagement or project, a competitive selection process is required. Contact Purchasing for an information packet and approval before the department starts the selection process. The department should solicit at least three (3) written responses from individuals or business entities.
    3. Greater than $100,000 for a single engagement or project requires Purchasing to solicit competitive sealed proposals and advertise the requested services.

Requesting Payment with a Purchase Order

18. If the total cost will be equal to or less than $25,000 for a single engagement or project:
    1. Contact the Contracting Office for approval prior to the start of services when the department and/or independent contractor desires a written contract. The University's contract form is preferred and is available from Financial Services Purchasing. Using the University's contract will result in a faster turnaround time. In the absence of other contracts, the PO will serve as the contractual agreement with the selected provider.
    2. Certificates of workers' compensation insurance will be required if the independent contractor has more than one employee. Sole proprietors are required to either provide evidence of workers' compensation insurance, or sign a Sole Proprietor Form waiving their rights of recovery for injury that happens in the course of University work. Contact Risk Management for assistance.
    3. Certificates of Insurance may be required depending on whether the work to be performed creates special risk for the University, for example: preparing drawings and specifications for construction, medical services, and transportation services.
19. If the total cost will be greater than $25,000 but no more than $100,000 for a single project or engagement (See # 21 for sole source):
    1. The department sends a description and scope of the work to be performed and an information packet which contains the "Outside Professional Services Agreement" and insurance requirements obtained from Purchasing to the entities solicited. The department sends an ICON form to the individual identified as a potential independent contractor.
    2. The Agreement (2 originals), certificates of insurance and proposal responses are provided to Purchasing with the REQS as an attachment.
    3. The department shall include a statement outlining why the particular independent contractor was chosen from those entities solicited.
    4. The Purchase Order and the signed agreement will be used as a contract with the selected entity.
20. If the total cost will be greater than $100,000 for a single engagement or project (See # 21 for sole source):
    1. Purchasing, in conjunction with the requesting department, will prepare a Request for Proposal (RFP) and advertise the requirements in a newspaper of general circulation. The Department should submit the following information to Financial Services Purchasing:
       1. Description and scope of the work to be performed
       2. Date work is to commence and be completed
       3. Evaluation criteria and their weights
       4. Include individuals and/or business entities recommended for solicitation
       Selection of the independent contractor must be based on the evaluation criteria stated in the proposal.
21. If the total cost will be greater than $25,000 for a single engagement or project AND the department believes that a sole source situation exists:
    1. The department should contact Financial Services Purchasing and provide written documentation to fully justify and support a sole source determination.
    2. If Purchasing does not concur with the request for sole source, the competitive selection procedures detailed in line 17 (b) or (c) above must be followed.
    3. If Purchasing concurs with the sole source request as a waiver for competitive bidding, proceed as outlined on step 19 and 20 depending on the amount.
22. To initiate a PO, prepare a REQS itemizing the following information:
    1. Description and scope of work to be performed.
    2. Date work is to commence and be completed.
    3. Description of contract price and the rates to be charged for the persons or professional classifications performing the work. This should include how and at what rate the service provided is to be paid. For example: hourly, daily, weekly, not to exceed a specified amount, or other restrictions.
    4. Specific persons or professional classifications of who are to perform the work.
    5. Descriptions and amounts of any other costs included (see Reimbursing Travel or Other Business Expenses to Independent Contractors).
    6. Method and schedule of payment.
23. Upon Financial Services Accounts Payable receiving the invoice, payment will be processed according to the terms outlined in the agreement.
    1. The independent contractor must submit an invoice with the PO number referenced on the invoice to Accounts Payable via email to invoices@fso.arizona.edu or via mail to:
       Accounts Payable
       888 N. Euclid Ave., Room 402
       Tucson, AZ 85721

Requesting Payment with a Disbursement Voucher

24. The University will not reimburse anyone who pays an independent contractor with his/her own funds. All requests for payments to independent contractors must be submitted in accordance with this policy and procedure and all payments must be made directly from the University to the independent contractor.
25. An independent contractor or consultant providing services to the University may be required to provide proof of liability insurance to the University's Chief Risk Officer before beginning to provide services.
26. Upon verification that an individual meets the ICON criteria, the following circumstances are situations under which the University will allow payment through the DV process instead of a REQS:
    1. Entertainers:
       1. Payments less than or equal to $1,000: A Performance Arrangement must be completed and signed by the authorized departmental signer and the entertainer prior to the engagement. The Contracting Officer does not need to approve Performance Arrangements. Performance Arrangements are available as PDF files from the Purchasing website. An ICON form is not required.
       2. Payments greater than $1,000: A Performance Contract must be completed, signed by the Entertainer and forwarded to the Contracting Office for approval prior to the engagement. Performance Contracts are available as PDF files from the Purchasing website. An ICON form is not required.
          1. If an Entertainer prefers to use his or her own contract, it must be approved by the Contracting Office prior to the engagement. Please allow two weeks additional processing time.
    2. Cooperating (Mentor) Teachers: Attach the original Cooperating Mentor Teacher form signed by the teacher. This form must list the teacher's home address and SSN. An ICON form is not required.
    3. Subject Pay: Complete the Accounts Payable Subject Payment Form or an internal department form approved by Accounts Payable and include the form with the DV.
       1. An ICON form is not required for payments to subject participants.
       2. If subject payments will be $50 or less, SSNs and a home address are not required from the payee.
       3. If the research project is a confidential study, it is not necessary to identify the human subjects by name or SSN. A better business practice is to develop a unique identifier for each subject. The total payment to any individual participating in a confidential study must be less than $600 in a calendar year. The principal investigator should maintain all disbursement records and make them available to Accounts Payable upon request.
       4. If payment to nonresident alien participants does not fall under category ii or iii above, then policy 9.16 Payment to Nonresident Aliens should be applied.
       5. Subject participants, including employees, will receive a 1099-MISC form at the end of the calendar year if payments received in the calendar year total $600 or more.
    4. Guest Speakers and Visiting Experts: Individuals who are expected to perform services for three days or less in the same calendar year and receive fees less than $600, not including expenses, shall follow the guidelines below:
       1. An ICON form is not required if the department attaches a brochure/flyer providing the details of the speaking engagement to the DV.
       2. To qualify as a guest speaker a fee cannot be charged to attend the speech.
       3. As an alternative to submitting a brochure/flyer, the department head may submit a signed letter which includes the following:
          1. Name of the guest speaker and the amount to be paid.
          2. A statement that no fee was charged to attend the speech.
          3. Topic discussed and group being addressed by the speaker.
          4. Date and location of the speech.
27. Guest Speakers and Visiting Experts who do not qualify above, are expected to receive fees and expenses equal to or less than $25,000 and who are expected to perform services for no more than 14 days in the same calendar year shall follow the guideline below:
    1. For expected payments equal to or less than $10,000, provide the completed ICON form with the DV.
    2. For expected payments greater than $10,000 and equal to or less than $25,000, provide the completed ICON form with the REQs.
    3. If reimbursing expenses, see Reimbursing Travel or Other Business Expenses to Independent Contractors.
28. Conference speakers: Speakers at conferences hosted by University departments could potentially be treated as independent contractors. The DV process may be used if all of the following conditions are met, otherwise, the REQS process should be utilized:
    1. The speaker receives an honorarium payment less than $600.
    2. The speaker gives a presentation, lecture, and/or workshop, not to exceed a total of 3 days during the conference.
    3. A speaker may, in addition to the above, serve as emcee or perform other insubstantial duties during a conference.
    4. The conference includes presentations by several speakers.
    5. The conference is not an instructional type course that is typically offered by the University, University Continuing and Professional Education, or any department within the University.
    6. The conference takes place off campus.
    7. The conference is publicized outside the University and the attendees are primarily non-UA faculty, students and staff.
    8. A copy of the conference program listing individual sessions and speakers must be included with the DV.
    9. An ICON form is not required. However, use of an ICON form is considered best practice and encouraged.
29. Royalty and Permission Fees: Royalties, sometimes called permission fees, include but are not limited to payments made to an owner for the production or reproduction of literary, dramatic, musical, or artistic works, as well as payments for the use of inventions, patents, and copyrighted material. Royalties often are connected with a specific, temporary or one-time right to use intangible property. An ICON form is not required.
    1. Provide one of the following on the DV:
       1. Contract
       2. Letter of agreement
       3. Invoice
       4. Statement of distribution
30. Agnese Haury Interpreters: Certified interpreters hired as instructors for the Agnese Haury Summer Institute may use the DV process. The DV must include a statement confirming that all services performed by the individual are solely in the capacity of Agnese Haury Institute instructor. No ICON form is required.
31. Manuscript Reviewers: Individuals paid less than $600 during a calendar year may use the DV process rather than the REQS process. A completed ICON form is required.
    1. If reimbursing expenses, (see Reimbursing Travel or Other Business Expenses to Independent Contractors).
32. Officials for NCAA sponsored events: Attach a copy of the NCAA's letter or form listing the designated officials for the event. An ICON form is not required.

Reimbursing Travel or Other Business Expenses to Independent Contractors

33. The University is allowed to reimburse independent contractors for reasonable expenses which are ordinary and necessary with relationship to the performance of the services, such as transportation, lodging and meal expenses.
34. Personal expenses such as dry cleaning, personal telephone calls, entertainment, alcoholic beverages and other expenses not related to the performance of the contract or specifically disallowed by University policy should be identified and excluded from the reimbursement.
35. Independent contractors may pay their own expenses, with no reimbursement by the University.
36. Independent contractors may be reimbursed for business expenses by providing original itemized receipts.
    1. Meals may be reimbursed based on actual costs or meal reimbursement rates, not to exceed the rates established for University employees on travel status. Refer to FSM section 14.13 Meal Reimbursement.
    2. Lodging and commercial travel may only be reimbursed at actual cost.
    3. Mileage may be reimbursed at the rate established in Travel Policy 14.15 Transportation.
37. Business expenses may be paid by the University directly to a third party.
    1. Hotel expenses include lodging, related sales tax and other approved allowable expenses only.
    2. The University can prepay airfare if the ticket is only for the independent contractor's travel to and from the University, and the ticket is written so that it is refundable only to the University. Payment in advance requires a REQS to a travel agency.
    3. Expenses to third parties may be submitted on a DV after the travel event occurs. A DV is required for each third party vendor along with original itemized invoices.
38. The independent contractor may be paid a specified amount to cover expenses by submitting an itemized invoice to the University. Payments to the independent contractor not supported by original itemized receipts will be reported to the IRS as part of the total payment to the independent contractor.
39. If unallowable expenses are charged to a third party vendor, the department is responsible for requesting that the independent contractor pay the vendor. A revised or corrected invoice should be requested from the vendor and submitted to Accounts Payable via the DV process.
40. Payment or expense reimbursements may be disbursed only after completion of the service unless there is a specified written agreement such as progress payments. Generally, these types of progress payments should be processed on a REQS.
41. Upon Accounts Payable receiving the invoice, payment will be processed according to the terms outlined in the agreement.
    1. Independent contractor must submit an invoice with the PO number referenced on the invoice(s) to Accounts Payable.
       1. Mail to Accounts Payable 888 N. Euclid Ave, Room 402, Tucson, AZ 85721
       2. Via fax 520-626-1243 or email invoices@fso.arizona.edu
    2. After checks are processed, they will be mailed directly to the payee.
42. All payments to or on behalf of an independent contractor who is a nonresident alien must meet the criteria established in this policy and the additional criteria established in policy 9.16 Payments to Nonresident Aliens.

Reporting Payment for Services

43. The University will issue forms 1099-MISC or 1042-S (for nonresident aliens) to all independent contractors at the end of each calendar year, as required by IRS regulations, indicating the amount of reportable fees paid to the independent contractor.
44. Reimbursement for business related expenses supported by original itemized receipts will not be included in the 1099-MISC or 1042-S.
    1. Expenses over $600 in a calendar year not supported by original itemized receipts will be reported on the 1099-MISC.
    2. Expenses not supported by original itemized receipts will be reported on a 1042-S for the services rendered regardless of the total amount.

Independent Contractor Payment Summary Chart

Frequently Asked Questions

1. Will an independent contractor receive a 1099-MISC or 1042-S for services provided?
   A 1099-MISc will be issued when the total amount for services reach the threshold of $600 or more. A 1042-S will be issued for the services rendered regardless of the total amount.
2. What are the risks of non-compliance?
   Failure to comply with the following may result in penalties for violation of State and Federal laws:
   • State Worker's Compensation Laws
   • Federal laws pertaining to employment, for example, I-9
   • Internal Revenue Code regarding payroll taxes, for example, Social Security, Medicare, and federal withholding obligations
   • Internal Revenue Code regarding qualification of pension plans
   • State Unemployment Insurance
   • University policies associated with hiring employees, for example, Classified Staff Personnel Policy Manual, University Handbook for Appointed Personnel (UHAP)
   Penalties include, but are not limited to, exposure to additional taxes, penalties and interest, additional wages and overtime obligations under the Fair Labor Standards Act, workers' compensation and unemployment liabilities, and potential wrongful termination suits. In addition, if audited, other similar situations are generally investigated, and any penalties assessed for the original case may be multiplied by the number of additional violations. The department and/or University will be held responsible for any penalties incurred.
3. Is there a general test used by the IRS to determine if someone meets the criteria for independent contractor?
   There is not a specific test or factor used to classify the individual as an employee or an independent contractor and no one factor stands alone in making this determination. The IRS generally looks at the following categories when making a determination:
   • Behavioral: Evidence supporting who has the right to control what work is done and how the work is done
   • Financial: Method of payment and who furnishes the tools/equipment/supplies
   • Relationship: The right to fire based on contracts and/or benefits paid
4. Do I have the right to expect that services be provided by the one individual who signs the independent contractor agreement?
   No. When an employer insists the services be provided “personally”, then the status of “employee” is inferred. Independent contractors retain the right to assign or delegate the work to another.
5. Does this mean an independent contractor cannot be fired if his or her performance is sub-standard?
   A better business practice is not to refer to "performance" of an independent contractor as that would pertain to employees. In order to terminate a contract with an independent contractor, language specifying who may terminate the contract for what purpose(s) and with what amount of notice should be included in the original agreement.
6. A project may involve gathering or verifying data from outside sources. Can the independent contractor identify with the University?
   Work performed under the University’s name implies "employee" status whereas work performed under the independent contractor name infers independent contractor status. In the scenario described, the independent contractor could say "My name is John Smith. I've been contracted by University to gather specific data.”
7. Can I still have some control over how the independent contractor performs this work?
   No. The University may only provide suggestions based on the contract requirements as established.
8. Wilma Wildcat worked in my department as a part-time instructor for four years, and has since left. She is available again and I would like to give her a teaching assignment, however she prefers to return as an independent contractor rather than as an employee. Can we do this?
   Based on the information provided, Wilma will be classified as an employee. When she worked here previously, the employer/employee relationship was established. In similar cases, the courts have ruled that an educational organization such as the University that classified a teacher as an employee one year is not allowed to treat the same worker, performing the same duties, as an independent contractor in subsequent years.
9. Can an independent contractor or an individual be reimbursed for travel expenses?
   Reimbursement can be processed if there is a provision in the contract establishing rates for travel reimbursement. Approved travel reimbursements must meet requirements of the University Travel Policy. Please see Reimbursing Travel or Other Business Expenses to Independent Contractors.
10. What is the stipulation for a sole source vendor?
    The ABOR Procurement Code states: "A contract may be awarded for a material, service or construction item without competition if the procurement officer determines in writing that there is only one source for the required material, service or construction item. Sole source procurement shall be avoided except when no reasonable alternative source exists. A written determination of the basis for the sole source procurement shall be included in the contract file."

Related Information

• Independent Contractor Form (ICON form)
• IRS Publication 15-A
• Purchasing Policies - Policy 4.5 Requests for Quotations (RFQ)/Proposal (RFP) and Policy 1.4 Conflict of Interest
• Classified Staff Human Resources Policy Manual - Policy 413 Conflict of Interest
• University Handbook for Appointed Personnel (UHAP) - Policy 2.06.08 Conflict of Interest
• Risk Management – Independent Contractor Agreement
• State of Arizona Accounting Manual, Topic 90 Section 50 Employee vs. Independent Contractor

* Please note that sections titled Frequently Asked Questions and Related Information are provided solely for the convenience of users and are not part of the official University policy.