Independent Contractor Payment to State of Florida Employees
John P. Kruczek, University Controller
Please be advised of the following revision to Controller Memorandum Number 95-019, issued June 16, 1995:
Employees of state agencies other than the University of Florida, including other State of Florida universities, may be paid as independent contractors if the facts and circumstances meet the criteria for classification of those individuals as an independent contractor. If an individual is a current employee of the University of Florida they must, without exception, be paid as an employee. Any request for payment to an independent contractor must be accompanied by a Consulting and Professional Services Worksheet. The Worksheet, attached for your reference, has been revised to reflect the policy regarding non-University of Florida state employees. The worksheet may also be downloaded from the University Finance and Accounting web site.
The rules and procedures for Extra State Compensation, in the case of State University System (SUS) employees, and Dual Compensation, in the case of non-SUS State of Florida employees, must be complied with when a State of Florida employee is paid for services that are in addition to their primary employment. For information regarding these requirements please contact Academic Personnel at 392-1251 or University Personnel Services, Classification and Compensation, at 392-1213.
It is important to note that a thorough review should be conducted before classifying a person as an independent contractor. The questions on the Consulting and Professional Services Worksheet should be considered carefully by the payee as well as the University department that is making the payment. The following are some of the common criteria the Internal Revenue Service examines in determining whether a worker is an employee or an independent contractor:
- Must comply with instructions about when, where, and how to work
- Renders services personally
- Has a continuing relationship with the employer
- Normally is furnished significant tools, materials, equipment and an assigned workplace by the employer
- Can be fired by the employer
- Makes his/her services available to a single employer
An independent contractor:
- Can hire, supervise, and pay assistants
- Generally can set his or her own hours
- Usually is paid by the job or on straight commission
- Can make a profit or suffer a loss
- Generally is free to provide services to two or more unrelated persons or firms at the same time
- Makes his or her services available to the public
The classification for all individuals who are not currently University of Florida employees should be consistent. When circumstances and services performed are essentially the same, the type of payment should be the same, whether paid as contractor or employee. Incorrect or inconsistent classification of payments may subject the University to significant tax liabilities, as well as penalties and interest.
As noted previously, a current employee of the University of Florida must be paid as an employee, whatever the circumstances or services. Current employment with the University constitutes a difference between University of Florida employees and all other persons paid for services even if other circumstances and services are the same.
Thank you for your cooperation. If you have any questions regarding this information, please call Bonnie Cauthon or me at 392-1321.