Financial Policies Training: Payments to Individuals for Services (2.3.1) Effective Date: January 1, 2009

1. Financial Policies Training:Payments to Individuals for Services (2.3.1)Effective Date: January 1, 2009

2. These PowerPoint slides are intended for training purposes. In the event of any discrepancy or interpretation difference between the policy and the slides, the policy dictates.

3. Agenda • Methods for Retaining Individuals for Services • Conditions for Each Method • Procedures for Each Method • Retaining Employees (Current/Former/Student) for Services • Payment to Independent Contractors

4. Methods for Retaining Individuals for Services Ways to engage individuals (other than volunteers) to provide services: • As an EMPLOYEE • Of the university • Of a payrolling/temp agency • As an INDEPENDENT CONTRACTOR • Under a Personal Services Contract • Under a Limited Services Engagement Form

5. Methods for Retaining Individuals for Services Who decides the proper method? • Policy 2.3.1 - guidelines for org units • Policy 2.3.1 – final authority are responsible offices (i.e., Tax Compliance, HR, Purchasing, Accounts Payable)

6. Conditions for Retaining an Individual as an EMPLOYEE of the University If ANY of the following conditions are met: • UC job description describes the work • UC provides supervision, equipment • Org unit controls work hours • Org unit is responsible for discipline • Services are (or would normally be) performed by a UC employee

7. Procedures for Retaining an Individual as an EMPLOYEE of the University • To hire an employee of the university • Consult Human Resources policies • Contact Human Resources for assistance

8. Conditions for Retaining an Individual as an EMPLOYEE of a Payrolling/Temp Agency If ALL of the following conditions are met: • University pays through the agency • Services are under UC supervision • Individual doesnotuse own methods in providing services • Services are (or could be) performed by UC employees • Services are interim while recruiting to fill a vacancy

9. Procedures for Retaining an Individual as an EMPLOYEEof a Payrolling/Temp Agency • To engage a payrolling or temporary agency • Contact UC’s Central Purchasing • A purchase order or term contract is required • Which type of agency should be used? • Payrolling agency: when UC chooses the individual • Temporary agency: for hourly-paid positions when the agency chooses the individual

10. Conditions for Retaining an Individual as an INDEPENDENT CONTRACTORUnder a Personal Services Contract If ALL of the following conditions are met: • University will pay the individual as an individual • Contractor determines own methods for providing the services • Services are not (or normally would not be) performed by a UC employee • Services are not interim while recruiting to fill a vacancy • Services • Over the duration of up to a year will not exceed the current university threshold ($20,000) • Note: a new contract with the same contractor in a second year is allowed (maximum of up to 5 consecutive contracts)

11. Procedures for Retaining an Individual as an INDEPENDENT CONTRACTORUnder a Personal Services Contract • Org unit completes forms; obtains independent contractor’s signature(s) and org unit approving signature(s) • Personal Services Contract • Contractor Status Questionnaire • Foreign Visitor Supplement (if needed) • Org unit forwards forms for additional signature, if required • VP or designee approval if over $5,000 • Some VP offices have lower dollar-amount thresholds • Org unit forwards all forms to Director, Tax Compliance (serves as Contracting Officer designee) • Signed contract is returned to originated org unit; copy to General Counsel • Note: contract must be fully executed by both parties before services are performed

12. Conditions for Retaining an Individual as an INDEPENDENT CONTRACTORUnder a Limited Services Engagement If ALL of the following conditions are met: • University will pay the individual as an individual • Contractor determines own methods for providing the services • Services are not (or normally would not be) performed by a UC employee • Services are not interim while recruiting to fill a vacancy • Service time • Limited to a specific eventor • One week or less within a year & within one org unit • Amount for services: $10,000 maximum

13. Procedures for Retaining an Individual as an INDEPENDENT CONTRACTORUnder a Limited Services Engagement • Org unit completes form and obtains independent contractor’s signature on the Limited Services Engagement Form • No additional signatures are required

14. Retaining Employees (Current/Former/Student) for Services • General Rule: org unit should not retain services of a current UC employee (including a student employee) or former employee through a • Personal Services Contract • Limited Services Engagement Form • Payrolling or temp agency However, there are exceptions (see next slide). • Use appropriate methods of additional compensation available through the UC payroll system for • Current UC employee when doing work • Beyond the scope of and not part of their regular appointment • Temporarily assigned for a vacant higher-level position • Current UC student worker when doing work • Similar to existing student employee position where org unit has supervision and control over the work

15. Retaining Employees (Current/Former/Student) for Services • Exceptions to the general rule • Must be approved; (start with Tax Compliance) • Require individual to • Be advised from General Counsel that services will not violate Ohio Ethics or other laws • Comply with UC’s outside activity requirements (including advance, written approval of the individual’s supervisor) • What is an exception or how do you obtain one? • Retaining services of a former employee to perform work similar to their former employee role or those of other employees should be through a payrolling or temp agency • Limited exceptions on a Personal Services Contract for a current employee or student worker performing work outside of existing position; contact Tax Compliance • Limited pre-approved exceptions on a Limited Services Engagement Form; contact Tax Compliance • Other exceptions – contact Tax Compliance

16. Payments to Individual Contractors • Org unit requesting payment • Completes A114, obtains appropriate signatures and submits A114 to Accounts Payable • Includes with A114 • Invoice or timesheet from independent contractor, indicating work already done • Copy of the fully executed Personal Services Contract or Limited Services Engagement Form • Note: org unit must not request payment for work prior to the completion of that portion of work.

17. Tax Reporting to Individual Contractors • Form 1099-MISC • UC issues form in January • As required by federal tax law (generally – non-employee receiving more than $600 in a calendar year) • Form 1042-S • Non-resident aliens for tax purposes may instead receive this form instead of 1099-MISC • UC issues by March 15

18. Payments to Individuals for Services (2.3.1) • The Policy (2.3.1): www.uc.edu/af/documents/policies/payindivsvc.pdf • Policy questions e-mail: policyquestions@uc.edu