Financial Policies Training:Payments to Individuals for Services (2.3.1)

Effective Date: January 1, 2009

These PowerPoint slides are intended

for training purposes. In the event

of any discrepancy or interpretation

difference between the policy and

the slides, the policy dictates.

Methods for Retaining Individuals for Services

Conditions for Each Method

Procedures for Each Method

Retaining Employees (Current/Former/Student) for Services

Payment to Independent Contractors

Agenda

Ways to engage individuals (other than volunteers) to provide services:

As an EMPLOYEE Of the university

Of a payrolling/temp agency

As an INDEPENDENT CONTRACTORUnder a Personal Services Contract

Under a Limited Services Engagement Form

Methods for Retaining Individuals for Services

Who decides the proper method?

Policy 2.3.1 - guidelines for org units

Policy 2.3.1 – final authority are responsible offices (i.e., Tax Compliance, HR, Purchasing, Accounts Payable)

Methods for Retaining Individuals for Services

If ANY of the following conditions are met:UC job description describes the work

UC provides supervision, equipment

Org unit controls work hours

Org unit is responsible for discipline

Services are (or would normally be) performed by a UC employee

Conditions for Retaining an Individual as an EMPLOYEE of the University

To hire an employee of the universityConsult Human Resources policies

Contact Human Resources for assistance

Procedures for Retaining an Individual as an EMPLOYEE of the University

If ALL of the following conditions are met:University pays through the agency

Services are under UC supervision

Individual does not use own methods in providing services

Services are (or could be) performed by UC employees

Services are interim while recruiting to fill a vacancy

Conditions for Retaining an Individual as an EMPLOYEE of a Payrolling/Temp Agency

To engage a payrolling or temporary agencyContact UC’s Central Purchasing

A purchase order or term contract is required

Which type of agency should be used?Payrolling agency: when UC chooses the individual

Temporary agency: for hourly-paid positions when the agency chooses the individual

Procedures for Retaining an Individual as an EMPLOYEE of a Payrolling/Temp Agency

If ALL of the following conditions are met:University will pay the individual as an individual

Contractor determines own methods for providing the services

Services are not (or normally would not be) performed by a UC employee

Services are not interim while recruiting to fill a vacancy

ServicesOver the duration of up to a year will not exceed the current university threshold ($20,000)

Note: a new contract with the same contractor in a second year is allowed (maximum of up to 5 consecutive contracts)

Conditions for Retaining an Individual as an INDEPENDENT CONTRACTOR Under a

Personal Services Contract

Org unit completes forms; obtains independent contractor’s signature(s) and org unit approving signature(s)

Personal Services ContractContractor Status QuestionnaireForeign Visitor Supplement (if needed)

Org unit forwards forms for additional signature, if requiredVP or designee approval if over $5,000Some VP offices have lower dollar-amount thresholds

Org unit forwards all forms to Director, Tax Compliance (serves as Contracting Officer designee)

Signed contract is returned to originated org unit; copy to General CounselNote: contract must be fully executed by both parties before services are performed

Procedures for Retaining an Individual as an INDEPENDENT CONTRACTOR Under a

Personal Services Contract

If ALL of the following conditions are met:University will pay the individual as an individual

Contractor determines own methods for providing the services

Services are not (or normally would not be) performed by a UC employee

Services are not interim while recruiting to fill a vacancy

Service timeLimited to a specific event or

One week or less within a year & within one org unit

Amount for services: $10,000 maximum

Conditions for Retaining an Individual as an INDEPENDENT CONTRACTOR Under a

Limited Services Engagement

Org unit completes form and obtains independent contractor’s signature on the Limited Services Engagement Form

No additional signatures are required

Procedures for Retaining an Individual as an INDEPENDENT CONTRACTOR Under a

Limited Services Engagement

General Rule: org unit should not retain services of a current UC employee (including a student employee) or former employee through a

Personal Services ContractLimited Services Engagement FormPayrolling or temp agency

However, there are exceptions (see next slide).

Use appropriate methods of additional compensation available through the UC payroll system for

Current UC employee when doing workBeyond the scope of and not part of their regular appointmentTemporarily assigned for a vacant higher-level position

Current UC student worker when doing workSimilar to existing student employee position where org unit has supervision and control over the work

Retaining Employees (Current/Former/Student) for Services

Exceptions to the general ruleMust be approved; (start with Tax Compliance)Require individual to

Be advised from General Counsel that services will not violate Ohio Ethics or other lawsComply with UC’s outside activity requirements (including advance, written approval of the individual’s supervisor)

What is an exception or how do you obtain one?Retaining services of a former employee to perform work similar to their former employee role or those of other employees should be through a payrolling or temp agencyLimited exceptions on a Personal Services Contract for a current employee or student worker performing work outside of existing position; contact Tax Compliance Limited pre-approved exceptions on a Limited Services Engagement Form; contact Tax ComplianceOther exceptions – contact Tax Compliance

Retaining Employees (Current/Former/Student) for Services

Org unit requesting paymentCompletes A114, obtains appropriate signatures and submits A114 to Accounts PayableIncludes with A114

Invoice or timesheet from independent contractor, indicating work already doneCopy of the fully executed Personal Services Contract or Limited Services Engagement Form

Note: org unit must not request payment for work prior to the completion of that portion of work.

Payments to Individual Contractors

Form 1099-MISC UC issues form in JanuaryAs required by federal tax law (generally – non-employee receiving more than $600 in a calendar year)

Form 1042-S Non-resident aliens for tax purposes may instead receive this form instead of 1099-MISCUC issues by March 15

Tax Reporting to Individual Contractors

Payments to Individuals for Services (2.3.1)

The Policy (2.3.1):

www.uc.edu/af/documents/policies/payindivsvc.pdf

Policy questions e-mail: policyquestions@uc.edu