Brandeis University Consultant Policy

1. Brandeis University Consultant Policy Office of the Controller Training Seminar March/April 2005 www.brandeis.edu/controller

2. Agenda • Introduction • Why are we doing this? • What’s changed? • When is it effective? • Consultant/Honorarium Approvals and Other Requirements • What is an Independent Contractor? • What is a Consultant? • What is an Employee? • What is a Honorarium? • Independent Contractor v Employee • AP v Procurement Examples • Process Flow • Forms • Paying foreign consultants • Questions www.brandeis.edu/controller

3. Introduction Loretta Bemis – Associate Controller Ofer Ben-Gai – Assistant Controller Debbie McQuaid – AP Manager www.brandeis.edu/controller

4. Why are we doing this? • Internal Factors • In synch with University Procurement Policy. • Encumber services. • Use of approved contract template. • New forms to standardize hiring and payment of consultants. • External Factors • IRS regulations on employment classification. • Federal grantor requirements for standard policy regardless of funding source. www.brandeis.edu/controller

5. What’s Changed? • Contractual Agreement • Approval Amount • Forms • Independent Contractor Status • Other www.brandeis.edu/controller

6. When is it effective? • Effective July 1, 2005. • Transition period; now through end of fiscal year. • Evaluate forms and process. • Review existing long-term consulting arrangements. • Prepare contracts and encumbrances for next fiscal year. www.brandeis.edu/controller

7. Consultant/Honorarium Approvals and Other Requirements www.brandeis.edu/controller

8. What is an Independent Contractor? • An entity or individual not employed by the university who performs the required task or tasks according to the contractor’s own manner and method, outside the control of the university. • University has the “right to control or direct only the result of the work and not the means and methods of accomplishing the result.” (I.R.S.) www.brandeis.edu/controller

9. What is a consultant? • An entity or individual who provides expert or professional analysis, services or advice on a short term basis. In virtually all cases, a consultant is a form of independent contractor and consulting services are performed by independent contractors. • Normally possess specialized skills, knowledge or credentials not readily available among university faculty and staff. • An individual or firm that is retained to provide professional advice or services for a fee, but not an employee of the organization. (from NIH Grants Policy Statement 10/98 Part II: Terms and Conditions of NIH Grant Awards) • Federal, state and FICA taxes are not withheld. www.brandeis.edu/controller

10. What is an employee? • Every individual that performs services subject to the will and control of an employer, both as to what will be done and how it will be done is an employee. (I.R.S.) • An employee depends on an employer for income on a continuing basis and is subject in the assigned work to the supervision and control of the employer. • In most cases, cannot be a current or former employee and consultant in same calendar year even if independent contractor status is applicable. • A regular employee is hired by the University for an unspecified time period while a temporary employee is hired for sporadic or casual employment. www.brandeis.edu/controller

11. What is an Honorarium? • Academic term; form of independent contractor. • A one time payment to confer distinction or to symbolize respect, esteem or admiration for the recipient. • Given in addition to or in lieu of reimbursing for expenses. • Not contractual in nature. Not a legally required payment. Paid at the discretion of the University. • If payment has been negotiated with the recipient and is given in return for services provided, it should be considered a speaking fee or consultant payment under the guidelines of this policy if payment exceeds $5,000. www.brandeis.edu/controller

12. Independent Contractor v Employee • The “20 Common Law Factors” • Right to control what work will be done and how work will be done = employer-employee relationship = common law employee • “Categories of Evidence” created by IRS in 1996 to update factors that clearly indicate the degree of control or independence in the relationship of the worker and the business • Behavioral Controls • Financial Controls • Relationship of the Parties www.brandeis.edu/controller

13. Procurement Services P.O. or PCard Normal operational goods and related services Maintenance contracts Mail houses Printing services AP v Procurement Examples • Accounts Payable • Individual or firm engaged to: • Design mailing, website, forms • Prepare a special report or offer professional advice • Implement a new computer system • Assist management with a new business initiative www.brandeis.edu/controller

14. Process Flow Overview • Identify firm/individual to provide services. • Department completes Consultant Requisition Form and obtains W-9 ( W-8BEN if non-resident alien) from vendor. Sends both forms to Accounts Payable. • Accounts Payable reviews classification if applicable, encumbers amount using a “C” number and notifies department. • University approved contract is signed. • Work is done; consultant invoices department. • Department prepares Non-Employee Payment Form, and attaches signed template contract and invoice. • Send to AP for payment. www.brandeis.edu/controller

15. Forms • Consultant Requisition Form • University Approved Contract • Non-Employee Payment Form • Tax Forms • W-9 (U.S. citizen, or permanent resident) • W-8BEN (all non-resident aliens) • 9-5-6 Rule Certification Form if here on B-1, B-2, WB or WT visa www.brandeis.edu/controller

16. Consultant Requisition Form www.brandeis.edu/controller

17. Independent Consultant Agreement www.brandeis.edu/controller

18. Non-Employee Payment Form www.brandeis.edu/controller

19. Paying non-resident aliens for work done in the U.S.. Consider regulatory constraints. • Automatic withholding of 30% for compensation unless claiming treaty benefits. • Permanent residents (green card holder) must have US tax ID and complete W-9. No withholding required. • Identify the employment eligibility of the person in the US by inquiring about their entry visa. Most common visa’s are: • J-1, J-2, B-1, B-2, W-B, W-T (requires additional forms/authorizations) • H-1B and F-1 not eligible for consultant or honorarium payments but may receive expense reimbursements. H-1B is employer specific. • Form W-8BEN is required for all non-resident aliens. Identifies the person as a non-resident alien. • Must have a valid social security number or ITIN to claim treaty benefits. • Form 8233 must be completed to claim treaty benefits and must be confirmed by the I.R.S. before AP can grant a treaty benefit. May delay payment to individual. www.brandeis.edu/controller

20. Examples • Scorpio Sound • Tom Stone • Robert Campbell • David Walker • Lisa Bartoloni www.brandeis.edu/controller

21. Questions? Loretta Bemis – Associate Controller x6-8686 lbemis@brandeis.edu Ofer Ben-Gai – Assistant Controller x6-4471 obengai@brandeis.edu Debbie McQuaid – AP Manager x6-4484 mcquaid@brandeis.edu www.brandeis.edu/controller