Independent Contractors are outside individuals, sole proprietorships or single-member
LLCs treated as disregarded entities for federal income tax purposes that provide
services to USF.
Prior to engaging with an individual ask yourself: "Are they acting as a supplier or as an employee?" Misclassification of an Independent Contractor carries tax and legal implications. One "red flag" is an individual being issued a 1099 form and a W2 in the same year from the same organization - meaning a current, former or pending employee, in most cases, should not be engaged as an Independent Contractor in the same calendar year!
JOB AID FOR THE NEW SUPPLIER REQUEST FORM CAN BE FOUND ON THE
SUPPLIER MANAGEMENT WEBSITE
**NOTE: Paying Independent Contractors through P-card is restricted. Classification and consequences of misclassification of IC's paid by P-card will be the responsibility of the P-Card holder. If you need to pay an IC with P-card, and are unsure of the classification, you may contact firstname.lastname@example.org before making the purchase for assistance.
5 STEPS TO DOING BUSINESS WITH AN INDEPENDENT CONTRACTOR
STEP 1: IDENTIFYING INDEPENDENT CONTRACTOR vs. EMPLOYEE
To determine whether or not an individual is defined as an Independent Contractor or a USF Employee, Apply the ABC test.
Absence of Control: Contractor is free from the control and direction of USF in connection with the performance of the work. Meaning the contractor is able to control how the work is done and their day to day schedule. They also do not supervise any USF employees or students.
Business of the worker: The contractor performs tasks that are outside the usual course of USF’s business. This is determined by comparing the work tasks the contractor will perform to work tasks regularly performed by employees at USF.
Customarily engaged: The contractor is routinely engaged in running an established trade, occupation or business. This is determined by the contractor providing "Proof of Business".
STEP 2: INDEPENDENT CONTRACTOR MATRIX
Once you have identified these key features of the relationship, compare your findings to the Independent Contractor Matrix to determine if the individual qualifies as an Independent Contractor.
STEP 3: SUPPLIER REGISTRATION REQUEST
If based on the matrix, you believe the individual qualifies as an Independent Contractor, and the individual does not already have a supplier record, submit a New Supplier Setup request in Bull Marketplace. Please note, you will need to have a Requestor or Approver role in BMP and have certain information on hand to complete the request (use this CHECKLIST to make sure you have all the required information):
- Company Full Legal Name
- Company Legal Structure
- Contact Information for Supplier
- If the supplier is a current or former student or employee of USF
- How you expect to pay the Supplier
- Nature of the relationship, proof of business and scope of work (results of your ABC test)
STEP 4: REGISTRATION COMPLETION
Once the supplier setup request is approved, the supplier is sent a link to register and provide business information. Once they have completed their profile, the registration process is considered complete.
STEP 5: ARRANGING PAYMENT
Registered suppliers can be selected when requesting a contract, or requisition (PO) in Bull Marketplace. Requestors can submit a contract or requisition request. Refer to FAQ's for additional information on when to use a contract and on the review process.
independent contractor faq's
How do I know if the contractor is an LLC, Sole Proprietor or other business structure?
Ask the contractor. They should be able to identify the correct business structure to assist in completing the new suppleir request form. Department's should NOT collect W9's from suppliers.
How do I know if the individual/entity qualifies as an Independent Contractor or an Employee?
USF Departments should refer to the Independent Contractor Matrix for examples of common engagements. Some quick rules of thumb:
- Entertainers and guest lecturers ARE generally defined as Independent Contractors. The department should attach the brochure or advertisement (containing the date, time, and nature of event).
- Current USF employees CANNOT be classified as Independent Contractors.
- Work that can be defined as clerical or secretarial CANNOT be classified as Independent Contractors.
- Contractors considered to have an "ongoing" relationship with USF are more likely
to be classified as an employee. Examples of ongoing relationships include:
- Receiving payment on a regular/pay-roll basis (weekly or monthly)
- Consultants who work exclusively with USF over an extended period must provide justification/documentation of reason to continue relationship as an independent contractor.
- If an ongoing relationship exists, the contractor must provide "proof of business" (business card, brochure, webpage, and/or client list) which shows he/she has a business that performs the services provided to USF for others.
USF Human Resources will work with Procurement Services and Tax Advisory Services to decide to approve or reject the Independent Contractor request. If denied, the department will be instructed to work with USF Human Resources to put the individual on payroll.
What competition requirements do I need to follow when sourcing an Independent Contractor?
What is Proof of Business?
Evidence the contractor provides the service for other customers must be provided. Brochures, business card, web page and/or list of clients/customers are examples of “proof of business”. As an alternative, the contractor may provide a statement attesting he/she has an active business (business card, customer list, etc. is helpful)
What information needs to be included in the Scope of Work?
At minimum, the scope of work should include: Dates of services, Cost of Service, Detailed description of the work to be performed, and/or expected deliverables.
When do I need to have a contract in place for an Independent Contractor?
In general, straightforward, single-service, low dollar services can be processed using a Requisition Request. For complex services, high dollar services, and/or multi-year services, a contract is recommended.
Is there a template Independent Contractor Agreement that I can use?
Yes, please visit the Purchasing Forms page. The changes to this template should be restricted to ONLY the fields indicated. All other Terms and Conditions MUST remain unchanged. This agreement should be submitted UNSIGNED through the Contracts + module in BMP.
THE USE OF THIS AGREEMENT IS OPTIONAL AND NOT REQUIRED
The Contractor I want to work with is not in BMP. How do I request a New Supplier Record?
Departments will submit a NEW Supplier Request Form through Bull Marketplace to have a Supplier Record created.
What if my Independent Contractor is a Non-Resident Alien?
Following the instructions on the A-Z Index page for Non-Resident Alien.