Guidelines for Hiring Independent Contractors
An independent contractor is an individual who contracts with the University to provide specified goods or services to the University in a self-determining manner. Generally speaking, independent contractors retain control over their schedule and number of hours worked, jobs accepted, and performance of their job. An individual cannot be considered an independent contractor if they are deemed to be an employee of the University.
- Determining Whether an Individual is an Independent Contractor
Examples of individuals who may be paid as independent contractors include:
- guest speakers;
- athletics officials;
- program reviewers; and
- cooperating teachers who supervise student teachers.
Examples of individuals who cannot be paid as independent contractors include:
- continuing education faculty;
- individuals who are considered employees of the University in another capacity;
- a former employee who is called back to train a new employee in their former position;
- a contractor who is performing the same tasks an employee would perform;
- an individual who was paid as a University employee within the current calendar year;
- students employed by the University (work-study, hourly, GA or TA);
- consultants who are contracted to work on state projects, specifically engineers, architects, landscape architects and land surveyors;
- individuals who will be paid in excess of $50,000;
Please contact Student Employment or Human Resources to determine the appropriate payment method for individuals who do not fit the criteria for being paid as an independent contractor.
- Completing a Personal Services Classification Analysis
The Personal Services Classification Analysis is a series of 20 questions (the IRS 20 Factor Test) designed to assist in determining whether the individual you will be paying will be acting in the capacity of an employee or as an independent contractor. This analysis is required for every independent contractor who will be paid via the Independent Contractor Agreement.
Human Resources will make the final determination as to whether an individual should be considered an employee or an independent contractor. A copy of the form and a detailed definition of each question is provided in the Instructions for Preparing the Personal Services Classification Analysis.
- Preparing an Independent Contractor Agreement (“IC”)
Download the Independent Contract Part 1.
- Complete all of the fields on the form. If all fields are not completed, the form will be returned to the originating department for completion.
- Have the individual for whom the form is being prepared complete Independent Contract Part 2 and a W-9 form.
- Send both completed parts of the completed Independent Contractor Agreement, the completed Personal Services Classification Analysis, and completed W-9 to Accounts Payable at least two weeks before the contractor begins work.
- Direct deposit is the fastest way for an individual to receive payment. If the contractor already has direct deposit information on file, please make sure that the bank account information is current, and update that information if needed to ensure a timely and accurate payment to the contractor.
- If travel reimbursements are being requested by the contractor, those costs must be rolled into the total payment amount on the Independent Contractor Agreement. Travel expenses cannot be prepaid by UNC on behalf of the contractor, nor can travel expenses be submitted as reimbursements on behalf of the contractor.
- Accounts Payable will forward the Independent Contractor Agreement and attachments to the Office of Sponsored Projects (for grants) and Human Resources departments for review/approval. The Office of Sponsored Projects makes the final determination as to whether an expenditure against a grant fund is appropriate, and Human Resources makes the final determination as to whether the individual is an independent contractor or an employee.
- After the contract is approved, Accounts Payable will process the payment to the individual if the payment is due; otherwise, it will be returned to the originating department to retain until the agreed-upon services are completed.
- If multiple payments to the contractor are indicated, Accounts Payable will provide a tracking form to the originating Department that will be completed and submitted back to Accounts Payable each time a payment is due.
NOTE: Contracts with individuals who are not U.S. citizens, will require additional IRS forms to be completed before payments can be made.
- Helpful Links
Fund Approver: The person or persons that have authority to approve an expenditure of UNC funds from a specified account string.