GAP 200.128, Guidance on the Independent Contractor Checklist (ICC)

Contents

1. General
2. Procedures

I. General

When is the form Required?

This form is to be used only in those cases where payment will be made to an individual (or sole proprietor company) who will provide services to the University/Health System in accordance with General Accounting Procedures ("GAP") 200.133, Engaging and Paying Instructors and Lecturers (Non-Faculty) and 200.134, All Other Payments To Individuals For Services.

When is this form not required?

This form is not required for payments to individuals providing services as Guest Speakers and Conference Participants (GAP 200.130), Architects, Engineers, Attorneys or Auditors (GAP 200.131), or Instructors and Lecturers (non-faculty) (GAP 200.133). Further this form is not required for payments to employees.  The University has determined that teachers, lecturers, instructors, or where the individual is the primary instructor in a course for credit offered at Duke, are considered employees. Additionally, individuals providing services as a researcher under the direction and supervision of a University professor/physician will likewise be considered employees.

What determines Independent Contractor Status?

Control determines whether an individual is classified as an Independent Contractor or an Employee.  The IRS has concluded after much litigation that the control resides with the individual, in order for the individual to be classified as an Independent Contractor.

An evaluation of the relationship between an individual and Duke University/Duke University Health System must be examined before determining who holds the control. No single fact provides that answer.  All the facts and circumstances in each situation will define the relationship. For example, the mere statement in a contract that this is not an employment relationship is not enough. The individual’s actions should also support this statement.

To assist with this determination first review the Employee vs. Independent Contractor Determination Matrix. This matrix will determine when it is appropriate to complete the Independent Contractor Checklist (ICC). These forms were developed as  tools for departmental use to evaluate this relationship and assist with reaching the correct determination.

Why Is Determining the Independent Contractor Status Important?

Incorrect classification of an individual as an independent contractor can have significant implications on not only the University/Health System, but also for the individual. This is a list of only a few potential pitfalls for incorrectly classifying an individual as an independent contractor:

• Budget overruns to cover additional expenses associated gross up of income or fringe benefit rate
• Incorrect VISA classification issued
• Payment denial due to VISA restrictions
• Fair Labor Standards Law
• Affordable Care Act health care coverage requirement for employees – fines associated with not providing coverage

II. Procedures

How do I complete the ICC

The person using this tool should have a thorough understanding of the individual’s existing and historical relationship with the University/Health System, including proposed services the individual intends to provide in the future.  Furthermore, the relationship is with the employer as a whole. In other words, departments cannot view their relationship with the individual in isolation of other departments within the University/Health System. 

This form should be completed prior to commencement of services. Complete the form without a preconceived idea of the outcome.  Do not complete the form with the end result in mind. Each question should be considered thoughtfully and realistically. Each question should be answered with a Yes or No response in the space provided. When all the questions are answered, the total of Yes responses should exceed the total of No responses in order to conclude this individual should be treated as an independent contractor.

There are very limited occasions where all the responses will be Yes. Accounts Payable reserves the right to reject a form that is obviously completed with lack of consideration to the actual facts.  Additionally, Accounts Payable may reject a form that has responses indicated in contradiction to other documentation provided.

The person signing the form must provide contact information in the event of a question. They must also have the authority over the indicated cost object and acknowledge their responsibility in any potential disagreement with the classification. The form must also be signed by the individual providing the services, as an attestation to the forms accuracy and an acknowledgement of the relationship.

This document should be included with the supporting documentation attached to either an Accounts Payable Check Request (copies of previous forms will not be permitted) or a Procurement Purchase Requisition Form (as noted in the information contained herein, and other relevant General Accounting Procedures as listed).

It is important that a new review of the engagement takes place upon renewal of a purchase order, adding funds to an existing purchase order, or extending an existing purchase order. To document that the review has taken place, both the departmental and vendor signatures should be submitted on a new ICC form and attached to the purchase requisition requesting the renewal, addition of funds, or extension of the purchase order.

Any questions on completion of this checklist should be directed to Corporate Accounts Payable Customer Service team at (919) 684-3112 or you may email Accounts Payable.