Item IV. B.2.c.
Proposed Policy on the Use of Independent Contractor Agreements
(Independent Contractors paid $5,000 or more)
A: PURPOSE
To establish a policy and to guide project directors and others in the use of Independent
Contractors that are paid $5,000 or more on projects and accounts administered by the
Research Foundation.
B: DEFINITION
An Independent Contractor is an individual or firm providing specific, personal services
free from the direction and control of performance, including the means and methods
used to accomplish the work. The general test is one of control, i.e. that an individual is
an Independent Contractor if the entity for which the services are performed has the right
to direct only the result of the work and not control the means or method of
accomplishing that result.
C: APPLICABILITY
This policy applies to all projects and Research Foundation accounts that will engage the
services of an Independent Contractor to be paid $5,000 or more for its services.
D: BACKGROUND
Grants and contracts are awarded to the Research Foundation with the assumption that
there is the staff and technical expertise to carry out the project without extensive outside
assistance. Occasionally, Independent Contractors supplement a project’s technical needs
and provide specific services to the Research Foundation.
Independent Contractors fall into two categories:
1. A company or firm providing service to the public or to a broad clientele. This includes
organizations supplying temporary office services.
2. Individuals who are clearly in business for themselves and offer their services to the
general public, and as such are self-employed, e.g. accountants, lawyers, physicians,
photographers, artists, and other professionals as well as those in an independent trade or
business. This includes one-time professional lecturers. As a rule, if the determination is
unclear, the prospective individual/consultant should be classified as an employee.
The IRS employs a number of factors to appropriately classify Independent Contractors.
Determinations are made on a case by case basis. Some of the IRS factors are listed
herein but for further guidance the project director may access the IRS website at
IRS.gov and read Publication No.
Note: the final determination as to the
appropriate classification of the Independent Contractor will be made by the Research
Foundation.
Factors supporting employee classification:
1. The work to be performed is substantially similar to the work of other employees.
2. The services to be provided are generally performed by or incorporated into the
operations of the college or the Research Foundation.
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Item IV. B.2.c.
3. The individual will require on-going training and direction regarding how to complete
the task, or the individual will receive more than simple general directions and statement
of objectives.
4. The individual will report to a Research Foundation or CUNY employee who has the
right (even if such right is not exercised) to direct how, when, and where the individual
does the work.
5. Space, equipment or supplies will be provided.
6. Work is to be done on a regular schedule (i.e., from 9:00 a.m. to 5:00 p.m.).
7. The time period for payment is on a weekly or monthly basis.
8. The individual, similar to an employee, can terminate his services without creating a
liability.
9. There is a continuing relationship or prior relationship between the individual and the
Research Foundation or the college, either as an employee or independent contractor.
Factors supporting an Independent Contractor classification:
1. Independent Contractor maintains a separate business with its own premises, materials
and equipment.
2. Independent Contractor offers its services to the general public and can provide
documentation of other clients.
3. Independent Contractor has obtained or has applied for a federal employer
identification number (EIN). Independent Contractor’s often have employees working for
them.
4. Independent Contractor agrees to specific work for a specific amount of money (i.e., a
fixed fee, hourly/daily rate) and controls the means of performing the work.
5. Independent Contractor may realize a profit or suffer a loss in connection with
performing the work or services. Independent Contractors may suffer a liability for
failure to complete the scope of work.
6. Independent Contractor has right to control how, when and where the services are to
be performed.
7. Independent Contractor is NOT an employee of CUNY or the Research Foundation.
8. Independent Contractor does not have a continuing relationship with the college or the
Research Foundation.
E. POLICY
1. Project directors must be aware of the requirements for Independent Contractors and
indicate their proposed use in grant applications or contract proposals.
2. Unless the budget is flexible, a specific budget category with sufficient funds must
exist before engaging any consultant or other Independent Contractor. Even in awards
with flexible budgets, using consultants may be prohibited by the sponsoring agency if
they were not specified in the project proposal. Approval of the individual (or firm) by
the funding agency may be required by the terms of the award or agency regulations.
3. In addition to providing a budget for Independent Contractor services, the Research
Foundation must receive adequate documentation justifying the need for the services of
an Independent Contractor. The PI must provide a written justification for selecting a
particular Independent Contractor to provide personal services without obtaining
competitive bids for such services. This justification should include detail regarding the
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Item IV. B.2.c.
process used to select the particular contractor, the unique area of expertise of the
contractor, the reasonableness of the contractor’s fee in relation to the qualifications of
the contractor, his/her normal charges, and the specific nature of the contractor's services.
4. Subject to the foregoing and any funding agency restrictions, Independent Contractors
who participate in a project may be paid fees consistent with the usual rates for such
services. Payment in these cases is a fee for service and not salary. No income taxes,
social security or other insurance contributions will be withheld or deducted.
5. The classification of an individual as an Independent Contractor or an employee is
determined by the Research Foundation. An Independent Contractor Request Form (RF
803) must be submitted with the appropriate accompanying documents. It must be signed
by the Project Director.
6. A written agreement (Independent Contractor Agreement) establishes the basis for
payment to an Independent Contractor. The services to be provided, period of
performance, rate of pay and amount to be paid should be specified. Note that:
a. Services may commence only after an agreement has been signed by all parties.
b. Reimbursement to contractors depends on satisfactory performance.
7. Except in unique circumstances, the Research Foundation will not advance payment to
Independent Contractors.
8. Use of both outside and intra-university consultants, including CUNY faculty is
subject to IRS regulations, government regulations, in addition to CUNY and sponsor
restrictions.
F. PROCEDURES
Before contacting an Independent Contractor, the project director should determine that
the expense is allowable under funding agency restrictions and Research Foundation
policies. Any prior approvals required by award or agency regulations must be obtained.
1. Request for Approval of an Independent Contractor Agreement (RF 803)
This request is submitted to the Research Foundation’s Office of Legal Affairs for review
and confirmation of the following items:
compliance with all applicable regulations and policies;
acceptability of determination of Independent Contractor status;
availability and encumbrance of funds.
The following supporting documentation should be submitted with the request:
a. A written work statement outlining the work to be accomplished (a “Scope of
Work.”) The Scope of Work should outline what will be accomplished, the dates by
which tasks are to be completed, who will perform the work and where it will be
performed, if applicable and the method(s) by which the work will be performed,
including a list of deliverables, if required.
b. A written justification why the particular personal services of the Independent
Contractor are needed. The specific reference to the need for such services in the
proposal to the sponsor should be noted, if it was necessary to identify the independent
contractor to the sponsor.
c. contractor's current curriculum vitae or descriptive literature, in the case of a
firm. (A brief statement describing the contractor's qualifications and the basis for
selection may be substituted.)
d. List of Clients, Reporting Schedule for work to be performed
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Item IV. B.2.c.
e. approval by the college or CUNY, if applicable
2. Independent Contract Agreement
For amounts of $5,000.00 or more, the Research Foundation will enter into an
Independent Contractor Agreement (ICA) with the approved Independent Contractor.
The Independent Contractor Agreement will be issued by the Research Foundation’s
Office of Legal Affairs directly to the Independent Contractor and it will be signed by
both parties.
3. Payments.
The project director authorizes the Research Foundation to make payments to contractors.
a. For each payment, submit a signed Payment Request with an invoice
reflecting services rendered to date to the Research Foundation’s Department of
Procurement and Payables. Indicate "Final" on the last claim for payment
b. Invoices should include: billing rate, amount due, dates and type of service;
contractor's original signature, the Project Director’s certification that deliverables
have been received.
G. IMPLEMENTATION
The provisions of this policy are effective January 1, 2007.
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