Vendor Payments

In accordance with IRS Guidelines, payments will be reported to the IRS on Form 1099-MISC if the aggregate amount of the payment for the year exceeds $599.99. A form W-9 must be filled out by the recipient and put on file with the Accounts Payable Department before payment is issued.

Student Organizations

Student Organizations must follow the procedure described in Student Organization Fund Guidelines [PDF].

Independent Contractors

Refer below to University guidelines pertaining to Independent Contractors.

  • Definition of an Independent Contractor ("IC") Expand dropdown
    An Independent Contractor ("IC") is an individual or an LLC organization that meets the IC classification standards under the Department of Labor Fair Labor Standards Act (FLSA).  If a worker does not meet the IC classification standards, they should be classified as an Employee of the organization.
  • What factors determine if a worker should be classified as an IC vs an Employee? Expand dropdown

    Whether a worker is an employee or an independent contractor under the FLSA is determined by looking at the economic realities of the worker’s relationship with the employer.  

    The economic reality test uses multiple factors to see if an employment relationship exists under the FLSA. The goal of the test is to decide if the worker is economically dependent on the employer for work or is instead in business for themself. All factors should be considered. No single factor determines a worker’s status, and no one factor or combination of factors are more important than the other factors. Instead, the totality of the circumstances of the working relationship should be considered. The following are the factors that guide the assessment:

    1. Opportunity for profit or loss depending on managerial skill,
    2. Investments by the worker and the employer,
    3. Permanence of the work relationship,
    4. Nature and degree of control,
    5. Whether the work performed is integral to the employer’s business, and
    6. Skill and initiative.

    Refer to the DOL website for additional discussion and examples.

  • Why is it important to classify workers properly? Expand dropdown

    In addition to following the applicable laws under the Department of Labor, significant tax penalties and reputational risk may exist for incorrect classification of an employee as an independent contractor.  Therefore, it is important that common standards are applied in classification of workers and each case is fully documented and auditable.

  • Steps to Set Up an Independent Contractor Setup Expand dropdown
    1. BEFORE an individual performs services, send the Independent Contractor Approval Request (ICAR) to the Controller’s office and receive approval to classify this worker as an Independent Contractor.
     
    2. Once approval is received in Step 1, complete the Standard Agreement between Owner/Contractor and Statement of Work documents.  The Agreement should be executed following the Contract Signatory Authority policy.  If the Independent Contractor requests any changes to these documents, requests are to be sent to the Purchasing Department ([email protected]) for review by the Purchasing Director. 
     
    A)  If purchase or payments to vendor is $5,000 or more in one calendar year, a requisition for full contract amount must be completed.
    B)  if Step 2.A. was required, submit the executed Agreement and the ICAR to your Requisition Approver and to Purchasing by email.
     
    3. Have the vendor complete and send securely to you using Virtru the following documents:
     
    A) Form W-9 (US individual/entity) or Form W-BEN (foreign individual), and
     
    4. Send the items in Step 3 AND the Approved ICAR at the same time to Accounts Payable ([email protected]).  DO NOT SEND BY EMAIL unless utilizing Virtru. Note:  All three forms are necessary to set up the vendor and should be sent together.  Accounts Payable will send a confirmation email to you once the vendor is set up.
     
    5. For payment, send/submit the Approved Invoice using Concur.  The Statement of Work and Contract referencing the PO# (if applicable) should be attached to the Invoice Request via Concur.
  • Who CANNOT be classified as an Independent Contractor Expand dropdown

    Students
    Students should be paid for services as student employees.  

    Employees
    Current employees cannot also be classified as an IC for additional work/separate tasks.  If additional work is performed that is outside the role of the Employee, consider an Additional Compensation Form (approved and processed via HR).

    Entities in which an Employee or their Immediate Family Member has a financial in
    Refer to Conflict of Interest Policies

  • What are the tax implications of Employee vs IC classification? Expand dropdown

    An Employee receives a Form W-2 for each calendar year.  Applicable taxes are withheld each pay period and the University pays applicable employment taxes.

    An Independent Contractor receives a Form 1099 when payments from the University exceed $599.99 for each calendar year.  Taxes are not withheld from payments (foreign vendors may have different tax withholding requirements and are dependent on the facts and circumstances of the vendor and work performed).

    Vendors should consult with their personal tax advisor regarding their individual tax needs.

  • What is an Independent Contractor Approval Request? Expand dropdown

    An Independent Contractor Approval Request (ICAR) is to be completed BEFORE work commences by the EMU Requester (EMU employee who owns or is administering the vendor relationship) and is submitted to the Controllers Office for review.  

    The description of services  and answers to the questions in the ICAR help determine that the classification of the worker as an Independent Contractor (versus employee/EC) is appropriate, under Department of Labor rules.

  • What are some best practices when filling out an ICAR? Expand dropdown

    1.  Complete and submit an ICAR BEFORE services commence to ensure the worker is properly classified.
    2.  Provide as much detail as possible in the description of services to assist in the classification review.
    3.  Consult the Controllers Office for any questions.

  • Where can I find more Information? Expand dropdown

    Refer here for our [Decision Tree - COMING SOON] to help understand the general fact pattern of classifying a worker as an IC vs Employee.  


    Refer to the DOL website for additional detail and examples under the Department of Labor Fair Labor Standards Act (FLSA). 

Applicable Independent Contractor Forms and Resources (also referenced above)

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