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 Definition
of Independent Contractor
 Types of Contracts
 Completing the Contracts
 Requesting Payment
 Other issues:




Risk Assessment
Payments to PERA Service Retirees
Payments to non-US Citizens
Contract Violations 
 Contacts
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 What
is an Independent Contractor?
An individual operating under a SS#,
performing a service for payment but is not
subject to UNC’s controls to accomplish the
results of the contract.
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 Employers
are legally required to pay
employment taxes and withhold income tax
on the wages of workers classified as
employees.
 If the worker is legitimately characterized as
an independent contractor, the employer is
not responsible for employment-related
taxes.
 Determining the correct employment
relationship is often an ambiguous task.
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
To determine if employee or independent
contractor, the IRS looks at:
Who controls the process: work place,
hours
worked, reporting time,
paperwork, etc.

This is important because….
~UNC could lose delegated authority to
write
contracts;
~Contracts would have to go to the
State for
approval, causing delays;
~UNC could be responsible for
paying
back taxes for the
person being paid
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 Subject
to the will
and control of the
employer
 In what must be
done
 And how it must be
done
 An employee can be
given considerable
discretion and
freedom of action,
however…
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 The
employer has
the legal right to
control both the
method and the
result of the
services.
 Not
subject to the
will and control of
the employer.
 The employer can
only control the
result of the work,
not the means and
methods of
accomplishing the
result.
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 Independent
contractors are
hired for their
expertise and
receive no training
from the
institution that
purchases their
services.
Employee vs. Independent Contractor (person cannot be
both in same calendar year)
 Review 20/10 questions to determine status
 If answer “Yes” to “A” or “B”, person MUST be paid as
employee

A. Does UNC pay others to do same duties?
 B. Has individual been paid as employee previously for
performing the same duties he/she will be performing?

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1. Are there instructions?
 2. Is there training or direction?
 3. Services integrated into business operation?
 4. Services rendered personally?
 5. Do they work with other employees?
 6. Continuing relationship?
 7. Are there set hours?
 8. Is it considered full-time?
 9. Is work completed on employer’s premises?
 10. Is the sequence of work set by employer?

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11.
 12.
 13.
 14.
 15.
 16.
 17.
 18.
 19.
 20.

Regular reports?
Regularly scheduled payments?
Payment for business/travel expenses?
Employer furnishes tools and materials?
Works for one employer at a time?
Quit without incurring liability?
Can person be fired?
Profit/loss from services rendered?
Major investment by employee?
Do they offer same services to public?
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 Independent
contractor operating under a
SSN to be paid less than $25,000……
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 Standard
Services Invoice – SSI
 Independent Contractor Agreement
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Must meet the following criteria:
 Under
$5,000 for entire project
 Under 6 months to perform service
 Payment will be made in a lump sum when
work is completed
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Simple and easy:
 SSI
Contract (revised version 07/10)
 Colorado Special Provisions (terms and
conditions)
 10 questions
 W-9
 Check Request
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 Prepare
SSI and W-9
 Signed by all parties
 Remember to include Disclosure Statement if
contractor is a PERA retiree collecting
benefits
 Attach to Check Request
 Send to Accounts Payable

Remember: Payment can only be made in
advance if department will hold check and
present upon completion of service
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Must be used when ANY one of the following
apply:
 $5,000

or more for entire project
~ but under $25,000
6
months or more to perform service
 Multiple payments to be made during service
period
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
The independent Contractor Agreement MUST be
filled out and signed by all parties before the
contractor starts work.

What is a complete contract?






Signed by contractor
Signed by authorized signer for FOAP being charged
Signed by Human Resources Director
Signed by Grants Administrator (SPARC), if
applicable
Signed by UNC Controller
Reviewed by Accounts Payable
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 Independent

Contractor Agreement
~ Revised version 07/10
 Colorado
Special Provisions (terms and
conditions)
 20 questions (Personal Services Classification Analysis)
 W-9
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
Send all documents to Accounts Payable. We will
route for HR, grant, purchasing if over $5000 and
controller’s signatures.

A/P will return completed contract to originating
department once contract is signed in full.

To request payment, attach contract to check request
and submit to Accounts Payable.
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 Single

Original signature at bottom section of Page 4
authorizing payment:


•
payment:
Left side for payment after services complete
Right side for check to be held and presented upon
completion of services
Attach original contract to check request and
submit to Accounts Payable
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Make copies of contract
 Submit original contract with first payment
request. Attach to check request.
 For subsequent payments, use copy of contract
with check request. However:
 Needs original signature in bottom section of
Page 4 authorizing partial payment


Complete section for multiple payments
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 How
do I pay people: What about…
 Employees
 Former employees
 Businesses
 Sole Proprietors
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
Active faculty member - use PSA

Active GA/TA – most likely can pay as temporary or
technical/professional, hourly or salaried


Contact Human Resources for assistance
Active student employee – pay using EPAF

Contact Financial Aid if student receives work study
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
Remember – an individual cannot be paid as an employee
and as an independent contractor in the same calendar
year

Faculty member – temporary or technical/professional

GA/TA – temporary or technical/professional


Contact Human Resources for assistance
Former student employee – pay using EPAF
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 Independent
contractor doing business as a
sole proprietor, operating under a FEIN
(Federal Employer Identification Number):

Use DPO for payments under $2,000

Use purchase requisition (PO) for payments of
$2,000 or more
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 Independent
contractor doing business under a SSN
(Social Security Number) to be paid more than
$25,000:


Competitive bidding applies
Contact Purchasing department for assistance
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Fully executed contract consists of:
 Independent Contract with all signatures







FOAP authorization & date
Contractor signature & date
HR signature & date
SPARC signature & date (if grant funds)
Purchasing signature if over $5,000 (encumbered)
UNC Controller & date
A/P review and initialed
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Advantages of SSI?



Fewer signatures required
No pre-approvals
10 questions instead of 20 (no signature required)
Processing Timeframes:



Allow 1-2 weeks for Independent Contracts
Allow 1-2 days for SSI
Get all paperwork and signatures to avoid delays in
processing
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
Avoid vague wording:
“Fall/Spring semester” (need specific dates)
 “Various” or “Approximately”
 “Contractor’s Choice”


If don’t know exact $ amount them put in
maximum $


Don’t say “amount plus expenses”
Don’t make travel arrangements or try to
reimburse for expenses

These items must be included in contract amount
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 When
we contract with an individual who is
retired under Colorado Public Employees
Retirement Association (PERA)




We must send pay PERA contributions on their
payments
UNC Payroll calculates amount due and sends
monies to PERA
Effective January 1, 2011 PERA will be
withholding an amount equal to 10.5% of the
amount paid to the retiree by the University
from their benefit.
Contact PERA for question regarding this issue
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 Check
status at time contract is being
discussed
 Could be tax/treaty requirements
 Contact Lacey Snyder, Tax Accountant, 3511828
 Lacey.Snyder@unco.edu
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 When
completing the Independent
Contractor Agreement, all signatures must be
acquired and dated prior to the service
beginning
 If
contractor starts work prior to fully
executed contract, then requires State of
Colorado approval (long delays)
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
Terri Thomas, AP Manager, Carter Hall 1002, 351-1836
Fax 351-1142, terri.thomas@unco.edu

Mary Jantz, UNC Purchasing Department, Carter Hall 1002, 351-2287,
Fax 351-1142, mary.jantz@unco.edu

Sandi Coleman, UNC Contract Coordinator, Carter Hall 4th Floor,
351-2040, sandi.coleman@unco.edu

Lacey Snyder, Payments to non-US citizens, General Accounting,
Carter Hall 1002, 351-1928, lacey.snyder@unco.edu
•
Sue Stone, PSA and Temporary Employment, Human Resources,
Carter Hall 2002, 351-2631, sue.stone@unco.edu
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