To provide guidelines for contracting with individuals and firms. Additionally, this Policy clarifies the distinction between an employee and contractor.
A consultant or independent contractor is a firm or an individual offering professional or specialized services for a fixed rate or fee. A consultant or independent contractor 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.
The Institute only controls the direction of the consultant or independent contractors' work with respect to work objectives and desired results and not the methodology for achieving the results. 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).
Firms and corporations that are clearly in the business to offer and sell their services to the public are independent contractors.
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.
This policy applies to all Georgia Tech units.
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. Prior to engaging any individual for services as an independent contractor an assessment based on IRS guidelines must be made and documented. The department must complete the “Employee Contractor Classification Checklist”.
The prospective worker must also complete the “Employee - Independent Contractor Classification Checklist” as well as provide a vendor Statement of Work.
If additional review is required, a review committee which will include the Tax Compliance Manager, Procurement and Business Services, and Legal Affairs staff will make a determination.
If approved by Purchasing or Human Resources, the completed checklist must be attached to a requisition in Georgia Tech E-Procurement System 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".
Groups Usually Paid As Employees:
•Academic Activity – Instruction services provided to enrolled students and for Georgia Tech programs
•Former Georgia Tech Employees – Persons employed by Georgia Tech in any position within the last 36 months
•Graduate Research Assistant, Graduate Teaching Assistant, or Graduate Assistant – Graduate students providing teaching, research, and staff duties
•Individual who performs substantially similar services as those provided by Georgia Tech employees – All individuals, including student workers
•Office management and accounting services – individuals who perform substantially similar services to Georgia Tech employees not hired through an employment agency
•Retired Individuals from University System of Georgia who are receiving benefits – Retired-but-Working classification
•Short-term direct support staff supervised by Georgia Tech faculty or staff – duties often performed by Tech Temps
•Student providing non-skilled services – student assistants
•Support services for programs and activities – includes summer activities/camps, grading papers and other services
•Temporary help – includes event set-up, drivers, errands and various other services
A Pay Classification Matrix has been developed for your reference and the link can be found here and in the Related Information section of this policy.
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.
It is the responsibility of the department/unit to initially determine if an individual is an employee or independent contractor based on IRS guidelines.
It is the responsibility of the Georgia Tech Human Resources to review documentation related to the individual to determine if classification of individual is independent contractor or employee.
|12-2020||Purchasing and Procurement||Editorial updates|
|10-2014||Purchasing and Procurement||Updates to verbiage|