- An independent contractor is an individual who is not treated as an employee of the College, based on conditions established by the IRS.
- As such, the individual is paid through that 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 his or her own business, separate from the College, 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 College. Independent contractors are sometimes called consultants, freelancers, self-employed, individuals, sole proprietors and even entrepreneurs or business owners. An independent contract is not an employee of the College.
- It is the College's policy that individuals will be considered independent contractors
if they meet the IRS criteria for classifying an individual as an independent contractor:
- The worker has a principal place of business other than the College premises.
- The worker is free from control over the way he/she works both as to the final results and the details of when, where, and how the work is to be done.
- The worker makes his or her services available to the general public and such services are the worker's recognized trade or profession.
- The worker bears the risk of profit or loss.
- The worker is not an employee of Dartmouth College performing services that are related to their regular work assignment.
- Although most workers can be properly classified based on the above prerequisites, there are some situations in which all of these conditions are not met, or the correct classification is not readily apparent. In these cases it will be necessary to further review the nature of the arrangement. This review involves evaluating many different aspects of both the worker and the work to be performed, which when taken as a whole, will determine the correct classification of the worker.
- All Dartmouth representatives involved in retaining services for the benefit of the College are responsible for ensuring that there is a reasonable basis for the classification, before services are rendered, and are encouraged to contact Procurement Services with specific questions.
- The penalties for incorrectly classifying employees as independent contractors are significant If the IRS reclassifies the individual as an employee, the College will be liable for the amount of the federal income taxes it failed to withhold, together with both the employer's and employee's share of FICA taxes associated with that employee's compensation.
- The hiring of outside legal counsel for any College assignment, e.g., professional advice, lobbying, court appearances, litigation, etc., must be approved in advance by the Office of General Counsel.
- Full-time, salaried employees of the College who may be asked to consult for other College departments are not entitled to receive additional compensation for performing such services when those extra duties fall within their area of professional expertise. This is true even when the work is conducted during outside of normal business hours. Such assignments are considered part of the job for which the employee is already compensated.
- College employees who incorporate, and who in turn provide services to the College that are related to their primary job assignment, will not be classified as independent contractors solely because they have incorporated.
- In the case of contractors who perform services funded from a sponsored project account, departments must also comply with any limitations imposed by the sponsoring agency on either the rate that may be paid to consultants or the amount of travel and related expense reimbursement. It is advisable to discuss each situation with the Office of Sponsored Projects and to carefully review the sponsor's program literature when preparing a grant proposal or hiring a contractor or consultant.
Before services are rendered, it is important that the individual and the services being performed are vetted to ensure the individual is eligible to be hired as an Independent Consultant or Independent Contractor.
Before services are rendered submit the completed Independent Consultant/Independent Contractor Service Agreement to your Finance Center via the Purchase Request eForm (not to be confused with the Payment Request eForm, which is to be used to process invoices, once received).
- The Independent Consultant/Independent Contractor Service Agreement is a form document that is available online.
- The Purchase Request eForm is available online.
- The completed Independent Consultant/Independent Contractor Service Agreement will be reviewed by the Finance Center as well as Procurement Services. Additional information may be required during this process.
- Procurement Services will make the final decision and inform the submitter via email.
- If the Independent Consultant/Independent Contractor is working outside of the U.S., the International Staffing Questionnaire must be completed and approved by the Controller’s Office.
- Once the Agreement is approved and work has been performed, the Independent Consultant/Independent Contractor should submit invoices to Dartmouth. Invoices are processed via the Payment Request eForm.
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 the button on the digital form, or via email to email@example.com. 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 Contact” 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 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 in another country.
- 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 International Staffing Form or 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.