Employee Contractor Policy

Policy No: 
5.3.3
Type of Policy: 
Administrative
Effective Date: 
February 2011
Last Revised: 
October 2014
Review Date: 
October 2017
Policy Owner: 
Purchasing and Procurement
Contact Name: 
Ajay Patel
Contact Title: 
Director of Purchasing
Contact Email: 
ajay.patel@business.gatech.edu
Policy Statement: 

A consultant or independent contractor is a firm or an individual offering professional or specialized services for a fixed rate or fee. The Institute only controls the direction of the consultant's work with respect to work objectives and desired results and not the methodology for achieving the results.

This policy provides guidelines for contracting with individuals (non-employees) and firms. Firms and corporations that are clearly in the business to offer and sell their services to the public are independent contractors.

When the Institute is required to make payments to individuals, the rules and regulations of a number of governmental regulatory bodies must be considered. A determination must be made to ensure that payments to individuals for services (instructors or consultants) clearly meet the Internal Revenue Service (IRS) definition of Independent Contractor and that the regulations of the IRS and Immigration and Naturalization Service/US Department of State with respect to non-US citizens/resident aliens have been followed. Any individual who performs services for the Institute is presumed to be an employee unless the relationship satisfies the IRS standards for Independent Contractor (see Classification of Independent Contractors versus Employees below). A consultant should be used only when the services are not readily available from existing employees or where the services cannot be performed more economically or satisfactorily through the Institute employment process.

Procedures: 

Classification of Independent Contractors Versus Employees
The department/unit makes the initial determination whether an individual is an employee or independent contractor because of the familiarity of the relationship. The Checklist for Determining Independent Contractor or Employee has been developed to aid the department in making the determination on whether the individual is an employee or a contractor. The checklist is based on standard guidance that the IRS has provided on this subject and is available on the Georgia Tech Purchasing Website. Prior to engaging any individual for services as an independent contractor, an assessment must be made by the unit/ department and documented using the checklist. This checklist must be also be approved by the department’s human resources representative. If the determination is that the individual is an employee, the department must work with Human Resources to determine the appropriate next steps. If the determination is that the individual is a consultant, the completed form must be sent to Purchasing for final approval.

If approved by Purchasing, the completed checklist must be attached to a requisition in BuzzMart for processing. If the consultant is a teaming partner and will be paid from sponsored funds, the agreement must be executed through the Office of Sponsored Programs on a "Request for Sub-Agreement Form".

A retiree or ex-employee that returns to Georgia Tech to perform the same type of service that was performed while employed by the Institute will be classified as an employee and all payments will be processed through Payroll.

Travel Expenses
The method for reimbursements made directly to the service provider (consultant, etc.) must be specified in the consultant's contract for services. Travel reimbursements may be made based on state travel regulations. The administrative unit is responsible for determining if charges for reimbursable expenses are proper and reasonable and the amount agreed to cover those travel expenses should be entered as a separate line item on the requisition. Specific requirements for documenting and itemizing those travel expenses will be detailed in the service agreement, but original receipts are not required. All payments to the consultant or firm will be reported on IRS Form 1099-misc or 1042-S, as appropriate. Tax withholding, where required, will apply at time of payment. . Direct billing of airfare or hotel is not permitted.

Policy History: 
Revision DateAuthorDescription
10-2014Purchasing and Procurement Updates to verbiage
Map of Georgia Tech

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