Payments to Independent Contractors
Does the term "independent contractor" only apply to individuals?
No, the term “independent contractor” encompasses individuals (includes sole proprietors doing business under a business name), partnerships, and incorporated or unincorporated companies. 
 
What documentation is required when submitting a payment request for an independent contractor?
 
NOTE: This payment reference chart only covers Independent Contractors that are U.S. citizens or U.S. Resident Aliens. It does NOT cover non-resident alien independent contractor payments.
 
What is the difference between an employee and an independent contractor?
According to the IRS, workers are considered employees if the employer they work for has the right to direct and control the way they work, including details such as when, where and how the job is completed.
 
According to the IRS, workers are considered independent contractors (IC) if the employer they work for has the right to direct and control only the results of the work they perform (e.g., accepting or rejecting final results) but not the means and methods of accomplishing the results. The general rule of thumb is that an IC should be a separate business entity with opportunity to experience a profit or loss; they should deliver the same type of services to multiple organizations, and be responsible for the payment of their own business expenses, general liability insurance and worker’s compensation insurance.
 
What are some examples of service providers who might meet the criteria of independent contractor status?
Individuals performing the following types of services meet the criteria of IC status, and therefore, will not need to be reviewed by Human Resources (via the Independent Contractor Questionnaire) provided the individual meets the following requirements:
  1. is NOT currently an employee of the University,
  2. is at least 18 years of age,
  3. is eligible to work in the U.S.,
  4. is eligible to be employed by CMU, and
  5. is NOT an on-campus student.
Examples of service providers who might meet the criteria of independent contractor status :
  • Sporting Officials for Intercollegiate Sporting Events
  • Announcers and Commentators for Athletic Events
  • Professional Athletes
  • Persons paid to provide Entertainment at an event (includes disc jockeys)
  • Guest Speakers (who are clearly NOT teaching a course and provide services for less than 5 consecutive days)
  • Academic Program Reviewers (including accreditation team members)
  • Interpreters
  • Caterers
  • Tailor/Seamstress

All other agreements with corporations, partnerships, and limited liability companies must be processed as contracts directly through Purchasing.

NOTE: The Independent Contractor Questionnaire is not required when hiring one of the service providers noted above. However, a contract, signed by both the independent contractor and a representative from CMU with the appropriate contracting authority, is required – regardless of the payment amount. A copy of the signed contract must be submitted along with the payment request to Payable Accounting for processing.
 
Our department would like an employee from another CMU department do some work for us. What is the process for getting this person paid?
 
Anyone currently employed by CMU (i.e., faculty, staff, student, grad assistant or temporary) who performs additional services for another department for compensation will be classified as an employee and should be paid Supplemental Assignment Pay. Work with the appropriate employment office (i.e., Human Resources or Faculty Personnel Services) to review/approve the request and process payment.
 
NOTE: Basic guidelines to follow when you are planning to compensate non-resident aliens for performing a service are available on the Payroll/Travel website.
 
We want to pay a student to assist us at a departmental event we have coming up. Can we process an invoice voucher to pay this student through Payable Accounting?
 
No. Since the individual is currently a CMU student, you would need to process paperwork to hire the student through the Student Employment Office, and the student would be paid through the Payroll Office. For further assistance, contact Student Employment at 3881.
 
For additional information, see  "Paying Individuals to Perform a Service" and the university policy concerning independent contractors.

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Phone: 989-774-4000

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