Definitions
Independent Contractor: An individual who, under agreement, performs a service for another person or business and who is subject to the controls of the other only in regard to the result achieved.  The contractor is not controlled in regards to the manner or means by which their services are performed.  Services provided are typically task oriented, specific in nature, short in duration, or sought based on expertise.  Compensation is usually according to an agreed upon amount or rate, for a given task.

Employee:  Generally speaking, an employee is subject to the control of the employer as to what work must be done and how the work must be done. It is not necessary that the employer actually direct or control the manner in which the services are performed; it is enough that the employer has the right to do so.   Services performed are in the course of the general business of the employer, typically performed on-site for a long or indefinite period of time.  Compensation is usually made on a time or piece-work basis.

Classification
Classifying a worker as an independent contractor rather than as an employee may appear to result in financial savings and less paperwork. However, if the employee is misclassified as an independent contractor, these perceived advantages are offset by the potential penalties that could be assessed by the Internal Revenue Service (IRS) or New York State Department of Labor, by potential Workers' Compensation or unemployment claims, and by liability or malpractice suits.

Efforts should be taken to properly classify when reviewing application budgets, when hiring an employee, or when engaging an independent contractor. 

The RF is legally obligated to properly classify workers even if a sponsor provides funds for independent contractors in an award.

The IRS provides Twenty Factors of the "Common Law Test" to assist in the classification process.   

Approval for Engagement of Services
Requests for approval for Independent Contractors should be made prior to engaging the service of any individual. An Independent Contractor Services Form should be completed and submitted to Sponsored Programs. Requests for approval must also contain a detailed description of the services to be performed. A statement of work or list of deliverables should be attached as applicable.

It is essential to document that a process was employed in identifying the selected contractor.  Requests submitted should contain a description of such process as well as a justification of reasonable price to be paid.  For compensation of services over $20,000, three quotes should be obtained. In some instances, a single (sole) source procurement may be justified, despite the fact that competition exists, because of limiting circumstances, e.g., experience or service of the contractor. Determination of qualification as a sole source cannot be made until documentation is submitted and reviewed by Sponsored Programs.

In all cases, engagement of the contractor is not authorized until all required approvals from Sponsored Programs offices are obtained. 

SUNY and other NYS employees requesting to be compensated as an independent contractor must fill out and submit a SUNY Addendum Form and obtain their supervisor’s signature.

Payment for Services
In accordance with applicable federal regulations, payment for services should not be made until service has been completed.  Upon completion of services, an invoice should be submitted accompanied by other supporting documentation and in accordance with service as outlined in the Request for Approval.

Requests to reimburse contractors for related expenses, not accounted for in the established fee or rate, should be made in accordance with associated RF policies and procedures.

Forms

Independent Contractor Services Form