Hiring Independent Contractors & Guests
- What is an Independent Contractor?
- Independent Contractor Policy
- Before you Hire an Independent Contractor
- New Independent Contractors
- An independent contractor is an individual, who is not treated as a Dartmouth employee, based on conditions established by the IRS or a foreign country.
- As such, the individual is paid through accounts payable and not the payroll system, is not entitled to employee benefits, is not covered by workers' compensation, and their pay is usually not subject to income tax withholding.
- An independent contractor runs their own business, separate from Dartmouth, as a single member LLC, individual, or sole proprietor. They typically have a separate workplace, are not managed by Dartmouth employees, and may have a particular set of skills not available elsewhere within the institution. Independent contractors are sometimes called consultants, freelancers, self-employed, individuals, sole proprietors and even entrepreneurs or business owners. An independent contract is not a Dartmouth employee.
Effective October 15, 2022, Dartmouth established the Independent Contractors & Guests Policy. The Independent Contractors & Guests Policy is designed to provide guidance to individuals, sole proprietors, or single member L.L.C. performing services for Dartmouth, business units, the Procurement Team and Finance Center staff to ensure appropriate processing of engagements with individuals.
The policy defines the criteria to qualify as an Independent Contractor and sets out how Independent Contractors must be engaged and paid for Dartmouth to comply with applicable state and federal laws and policies. This policy identifies the procedures and documentation necessary to ensure proper classification, appropriate contracting for services, and subsequent payment to individuals who are deemed Independent Contractors of Dartmouth.
Review the Independent Contractors & Guests Policy
Review Independent Contractor & Guests Decision Tree for guidance on how to engage and hire independent contractors and guests.
The following procedure are all the steps required to properly identify and engage an Independent Contractor.
Employee. For purposes of this policy, an employee is a worker who performs services for Dartmouth, where Dartmouth has the right to control the details of how the services are performed. Employees are hired through Human Resources and paid through Payroll. Dartmouth is generally required to report income and withhold and pay income taxes, Social Security and Medicare taxes, as well as unemployment taxes for employees.
Honoree. A non-Dartmouth employee who is providing services for an academic activity and for which fees are not traditionally required, nor invoiced.
Honoraria (plural) Honorarium (singular). A payment or payments made to an Honoree
Independent Contractor. For purposes of this policy, an Independent Contractor is a worker who provides services to Dartmouth and Dartmouth does not have the right to control the details of how the worker’s services are performed. Independent Contractors are hired through Procurement Services and paid through Accounts Payable. Dartmouth does not report income or withhold and pay income taxes, Social Security and Medicare taxes, or unemployment taxes for Independent Contractors.
Limited Engagement. A Limited Engagement is a category of services performed by an Independent Contractor in the U.S., for which there is low risk of personal injury or property damage and either:
- the fees paid do not exceed $5,000 per calendar year; and
- the engagement is either a one-time event or limited period engagement(s), such as guest lecture, guest speaker, presenter, or performer which would be executed with the Limited Engagement Agreement form or an artist, writer/editor, photographer, etc. which would be executed with the Limited 'Works for Hire' Agreement form.
Sole proprietor. Someone who owns an unincorporated business by themselves.
Single member LLC (Limited Liability Company). A business entity where there is no separation between the business and its owner for tax purposes and the owner is protected from business liabilities.
An honorarium is a payment made to a guest or other non-Dartmouth employee. An honorarium payment is a modest gesture of appreciation for the individual’s efforts of preparing and performing a service without expectation of payment. An honorarium payment may be of any amount and is taxable income to the recipient.
For a payment to qualify as an Honorarium all the following criteria must be met.
- The work by the Independent Contractor must relate to usual academic activity such as lecturing, teaching, conducting research, attending meetings, symposia or seminars, or otherwise sharing knowledge; and
- the Independent Contractor must provide the services as a volunteer (namely, no invoice is provided by the individual).
If any of the following are true, the payment cannot qualify as not an Honorarium.
- The work is being performed by a Dartmouth employee (including student employees) or an individual who was employed by Dartmouth during the current calendar year.
- The payment is a negotiated fee for services and Dartmouth will be invoiced.
- The payment is being made to someone other than the Independent Contractor (for example: a payment to the individual’s employer or agent).
If the Independent Contractor meets the criteria of an Honoree then:
A Limited Engagement is defined as an engagement between Dartmouth and an Independent Contractor, where:
- the independent contractor is performing a one-time service or services over a limited period of time, and the fee is $5,000 or less; or
- where multiple limited engagements with the same Independent Contractor over the course of the year may not exceed $5,000;
- the Independent Contractor is providing services primarily from within the U.S. (excluding U.S. territories); and
- where the engagement does not involve any high-risk services, as identified in the
Purchase Order (PO) Policy:
- Providing food for Dartmouth functions.
- Any design or construction work related to Dartmouth facilities.
- Travel and transportation for off-campus trips.
- Information technology and financial services, which typically involve access to personally identifiable information (PII), protected health information (PHI), financial data or other Dartmouth confidential and/or proprietary information.
- Environmental services involving radioactive or hazardous waste management.
- Any service in which Dartmouth will receive or convey copyrights or patents in the goods or services provided; except that Dartmouth has created a specific Limited Engagement Form for Artistic Work where copyright to the created work transfers to Dartmouth, such as photography, videography, illustration, and original writing. See "Limited 'Works Made for Hire' Agreement", below.
Below are common examples of services performed by Independent Contractors that may qualify as Limited Engagements, provided that the fee for the Limited Engagement (or all Limited Engagements over a year) is equal to $5,000 or less.
- Guest lecturer, speaker, presenter for a course or public or special event (provided that these engagements do not qualify as Honoraria)
- Entertainer, performer, musician, DJ, actor, or other performer
- Photographers, Videographers, Authors, Illustrators (see Limited 'Works Made for Hire' Agreement below)
Limited 'Works Made for Hire' Agreement for Artistic Services
If the limited engagement is for artistic services such as photography, videography, illustration, written work, or other freelance artistic creation, the Limited 'Works Made for Hire' Agreement Form is required which provides additional terms to protect Dartmouth’s copyrights to the creation. If alternative terms and conditions are requested by the independent contractor, then refer to the "Independent Contractor Services Agreement" section below.
The following forms are waived for qualifying limited engagements:
- Independent Contractor Questionnaire
- Independent Contractor Services Agreement
If the engagement qualifies as a Limited Engagement, then:
- The Limited Engagement Agreement Form or Limited ‘Works for Hire’ Agreement Form can be completed, signed by both the individual and a Dartmouth authorized approver (see Signature Authority Policy).
- The completed Limited Engagement Agreement Form or Limited ‘Works for Hire’ Agreement Form must be submitted into the Contract Management System.
- To submit a completed Limited Engagement Agreement Form or Limited ‘Works for Hire’ Agreement Form:
- Select “Create a New Contract Record” and then select “Limited Engagement” as the Contract Type. Complete the abbreviated contract record form and attach the required forms.
- Upon submission, contract record will be recorded and marked as Effective without any review by Procurement.
If the Independent Contractor is not an Honoree, and the engagement does qualify as a Limited Engagement, then the full process for classifying the individual as an Independent Contractor and contracting for services must be completed.
Services outside the United States: If the individual will be working outside of the United States or in a U.S. territory, the business Unit must submit a complete International Staffing Questionnaire to the the International Staffing Committee at least two weeks before work begins. The Committee will review the Questionnaire in accordance with the International Work & Staffing Policy, and will respond with guidance as appropriate. After the Committee responds, the business unit should follow the Contracting process below.
Services within the United States: If the individual will be working within the United States, the individual must submit a complete Independent Contractor Questionnaire (“Questionnaire”) to Procurement Services via email to firstname.lastname@example.org. Upon submission, Procurement Services will review the Questionnaire and then make a determination about the individual’s status. Procurement will return the Questionnaire (with an “approved” or “denied” mark) to the individual, with a copy to the department contacts identified on the Questionnaire. Approved individuals who are not yet registered in PaymentWorks will also receive an invitation to register in PaymentWorks.
Once the individual is approved as an Independent Contractor, if a Dartmouth business unit is ready to engage the individual for services, a contract request should be submitted via the Procurement Contract Management System. A Requester or Submitter (if you are submitting on behalf of another person) can select any Agreement Type under the Master Agreement or one-time Agreement Record Types.
Step-by-step instructions to submit a contract request for an Independent Contractor:
- Log into Agiloft Contract Management System
- Click the link to Create a Contract. A blank Contract Record should display in your browser.
- At the top of the Contract Record, select “Master Agreement,” “SOW” (only if there is an existing Master Agreement with the Independent Contractor in the Contract management System), or “Agreement” as the Record Type, as applicable.
- In the Vendor Information section, when prompted, "Is the Vendor an Individual?" select "Yes."
- Next the end user will be prompted "Is work being performed in another country?"
- If "Yes", then the approved International Staffing Questionnaire (with any guidance notes from the International Staffing Committee) must be attached to the Contract Record, in the indicated field, to demonstrate that the individual has be approved to perform services as an independent contractor outside the U.S.
- If "No", then the approved Independent Contractor Questionnaire must be attached to the Contract Record in the
indicated field to demonstrate that the individual has be approved to perform services
as an Independent Contractor.
**NOTE: If a contract request is submitted for an Individual without the applicable approved Questionnaire attached, the Preliminary Approver or the Contract Manager may require the approved Form or Questionnaire, as applicable, be submitted before proceeding with the contract request.
- If the Vendor has registered in PaymentWorks or has a recent history of working with Dartmouth, there company information will be available via Oracle in the Contract Management System. Check if the individual is an “Existing Vendor.” If you do not find the vendor’s name, you can submit complete the contract request by providing the vendor information as a New Vendor.
- Complete all required fields as indicated by blue text and an asterisk (*) and then
click the “Submit” button at the bottom of the Contract Record to submit the contract
**Note: If you need to save a draft of the Contract Record to collect required information, you can save the record in draft, by clicking the “Save Draft” button above the Record Type field, at the very top of the Contract Record.
- Once submitted, the contract request will follow a preset Preliminary Approval/Notification
workflow depending on the funding type, as follows:
- For contracts that are marked as GL funded, the end user will provide the Chart String Org in the Funding section of the Contract Record. The system will identify who the Responsible Person for that Chart String Org and will prompt the end user to indicate if they would like to send the Preliminary Approval Request to a different authorized approver. If the end-user picks a different approver, then the Preliminary Approval Request email will route to that person, otherwise the Preliminary Approval Request will route to the Responsible Person for the Chart String Org.
- For contracts that are marked as Grant/Sponsored Research funded, the end user will provide the OGA award number in the Funding section of the Contract Record. The system will identify the Department Grant Manager, the Primary Investigator and the OSP Sponsored Research Manager. The Department Grant Manager will receive a Preliminary Approval Request email, and a notification that a contract request has been submitted will be sent to the Primary Investigator (PI) and to the OSP Sponsored Research Manager.
- For contracts that are marked as GL and Grant/Sponsored Research funded, all approval and notification workflows described in (a) and (b) above will apply.
- Once the contract request is preliminarily approved, the Contract Manager will review the details on the Contract Record. If all the required information has been provided, the Contract Manager will generate the Agreement form (either the standard Independent Contractor Services Agreement, a standard Services Agreement if the services require additional specific terms, a Master Agreement, or SOW if a Master Agreement is already on file).
- Once the agreement terms are finalized, final approval of the contract is routed by the Contract Manager via the Contract Management System to Required Approvers based on the Dartmouth Signature and Requisition Authority Policy. All contracts with individuals, regardless of the contract value, that are funded with grant/sponsored research funds are routed to and require approval of the Office of Sponsored Projects prior to execution of the agreement.
- Once all required approvals are obtained, the agreement can be signed by both parties. The Contract Manager will ensure that the final terms of the agreement are reflected in the Contract Record details and that a copy of the fully executed agreement is saved on the Contract Record.
If the individual is not currently a Dartmouth Vendor, the individual will be contacted to create a profile and provide new vendor documentation through the Vendor Portal managed by PaymentWorks.
Vendors should no longer be providing tax forms or insurance documentation outside of the Vendor Portal.
As with everything, there are always unique circumstances that may require a discussion. Please address questions to Procurement.