Answers to questions about Independent Contractor payments
Find answers to common questions about paying independent contractors who do work for Central Michigan University.
In addition to the FAQ answers below, please reference this document with additional, related information:
Does the term "independent contractor" only apply to individuals?
No, the term “independent contractor” encompasses individuals (including 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?
Please refer to the Independent Contractor Payment Reference Chart linked below.
NOTE: This payment reference chart only covers Independent Contractors who are U.S. citizens or U.S. resident aliens. It does NOT cover nonresident 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.
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 the opportunity to experience a profit or loss; they should deliver the same type of services to multiple organizations. They should 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 meet the criteria of IC status, and therefore do not need Human Resources review via the Independent Contractor Questionnaire (ICQ), if the individual:
• is NOT currently an employee of the University
• is at least 18 years of age
• is eligible to work in the U.S.
• is eligible to be employed by CMU
• is NOT an on-campus student
Service provider examples include:
• Academic program reviewers (including accreditation team members)
• Event entertainers
• Guest speakers
• Sports officials
Agreements with corporations, partnerships, and limited liability companies must be processed as contracts through Purchasing Services.
NOTE: An ICQ is not required when hiring one of the service providers above.However, a contract, signed by the IC and a CMU representative with appropriate contracting authority, is required regardless of the payment amount.
Our department would like an employee from another CMU department do some work for us. What is the process for paying this person?
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 nonresident aliens are available on the Payroll website.
We want to pay a student to assist us at a departmental event. 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 Services.