The university is often approached by hiring officials to engage in an independent contractor relationship with a small organization or an individual. It is in the university's best interest to evaluate the proposed agreement to ensure compliance with university policy and federal tax guidelines. An independent contractor relationship cannot be entered into without approval from Human Resources. Engagements that have been entered into prematurely may not be in adherence with university policy, and therefore payment to the individual may be denied.
The definition of an independent contractor, according to administrative policy 3342-6-04.3, is “an individual who performs a service for the university, but is free from immediate control or direction in the performance of his or her work under a contract of service.” This type of employment relationship is determined by the key question, “ Who has control?” A worker is an employee if the person for whom he works has the right to direct and control him concerning when and where to do the work.
Individuals currently employed by the university may not be paid as an independent contractor. Individuals who have been employed by the university may not be paid as an independent contractor in the same calendar year that they were an employee holding the same position, with the same duties. The policy provides more detailed information on eligibility and definitions.
In addition, former university employees who have retired in the Ohio Public Employees Retirement System (OPERS) and are hired back as independent contractors are subject to the limitations imposed by section 145.38 of the Ohio Revised Code. If the retiree is retained as an independent contractor within two months of retiring, the retiree forfeits their OPERS retirement allowance for any portion of time worked at Kent State prior to the end of the two-month period.
There are also implications for the university since it is required by law to notify the retirement board when an OPERS retiree is hired as an independent contractor; the notification must be done no later than the end of the month in which the independent contract begins. Any OPERS overpayment of benefits to a retiree resulting from failure of the employer to give notice must be repaid to the retirement system by the employer.
To begin the process of entering into an independent contractor relationship, the requesting department representative must complete the HR Independent Contractor Determination form and forward all documentation to Human Resources for approval. The requesting department representative is responsible for obtaining any supporting documentation and attaching it to the form.
- Independent Contractor Determination Form
- Accounts Payable Information
- Additional Terms
- Invitation Speaker Letter
The Professional Services Agreement (linked below) should not be used if the contractor has its own form. Also, this form is updated periodically and should not be stored on your desktop. Even if using this form, you must still follow the review processes provided for in administrative policy 3342-5-04.1 (including but not limited to review by the Office of General Counsel). In addition, the Professional Services Agreement should only be used for individuals currently in the U.S. For engagement of individuals outside the U.S., please contact the Office of General Counsel directly for further guidance.
For questions, contact a member of the Compensation team at 330-672-2100.