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Independent Contractors & Consultants Guide

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The purpose of the Independent Contractors and Consultants Guide is to provide the University community with an understanding of the University's policy regarding payments for personal services rendered to the University by individuals. It provides guidelines to assist departments in identifying the appropriate classification (employee or independent contractor) for such individuals.

There are four sections to this Guide. The first section, Definitions, explains how the IRS defines the Independent Contractor and Employer/Employee relationship. The resolution of the question of whether a person providing services is an employee or an independent contractor revolves around the facts and circumstances of each case. In most cases, an employer/employee relationship exists and the individual must be paid for the services rendered through the University’s payroll system. However, if an individual meets most of the independent contractor criteria established by Internal Revenue Service (IRS), and all of the criteria established by the University, he or she may be treated as an independent contractor.

The second section, Form C-12 (Independent Contractor Determination and Certification) explains the purpose of the Form C-12, used by the Comptroller’s Office to determine whether independent contractor status exists for a particular individual. All requests to treat an individual as an independent contractor must be made on Form C-12.

The third section, Consequences of Determination that Independent Contractor Status Exists, sets forth the effect of the determination on the Independent Contractor and the University.

The fourth section, Contract for Personal Services Rendered by a Consultant/Independent Contractor, sets forth the University policy requiring a written contact for all Independent Contractor arrangements.


What is an Independent Contractor?

Independent Contractors are individuals who render a service and meet independent contractor conditions as established by IRS criteria. They generally have a separate work place, are not supervised when they are working within the organization, and have a set of skills generally not available within the organization. An Independent Contractor generally will offer his/her services to other organizations and may advertise in the local newspaper or telephone directory. They are usually paid a flat fee by the job or project and are generally not paid by an hourly, daily, weekly, or monthly rate.

What is an Employer/Employee relationship?

Based on IRS regulations, the relationship of employer and employee will exist when the University has the right to control and direct the individual who performs the services, not only as to the results to be accomplished by the work, but also as to the details and means by which the result is accomplished. That is, an employee is subject to the will and control of the University not only as to what shall be done, but also as to how it shall be done. In this connection, it is not necessary that the University actually direct or control the manner in which services are performed; it is sufficient if the University has the right to do so.

The IRS will generally apply the twenty "common law factors" to determine whether an individual is an employee or independent contractor.

What are the twenty "common law factors"?

The common law factors are a set of criteria used by the IRS to determine whether sufficient control is present to establish an employer-employee relationship. The degree of importance of each factor varies depending on the occupation and the factual context in which services are performed. The 20 common law factors used by the IRS to determine whether an employer-employee relationship exists, as they apply in the University setting, are as follows:

  1. Instructions:

    A worker who is required to comply with the University’s instructions about when, where, and how he or she is to work is ordinarily an employee. This control factor is present if the University has the right to require compliance with instructions.

  2. Training:

    Training a worker by requiring an experienced employee to work with the worker, by corresponding with the worker, by requiring the worker to attend meetings, or by using other methods, indicates that the University wants the services performed in a particular manner.

  3. Integration:

    Integration of the worker’s services into University operations generally shows that the worker is subject to direction and control. When the success or continuation of an enterprise depends to an appreciable degree upon the performance of certain services, the workers who perform those services must be subject to certain amount of control by the employer.

  4. Services Rendered Personally:

    If the services must be rendered personally, presumably the University is interested in the methods used to accomplish the work as well as in the results.

  5. Hiring, Supervising, and Paying Assistants:

    If the University hires, supervises, and pays assistants, that factor generally shows control over the workers on the job. However, if one worker hires, supervises, and pays the other assistants pursuant to a contract under which the worker agrees to provide materials and labor and under which the worker is responsible only for the attainment of a result, this factor indicates an independent contractor status.

  6. Continuing Relationship:

    A continuing relationship between the worker and the University indicates that an employer-employee relationship exists. A continuing relationship may exist where work is performed at frequently recurring although irregular intervals.

  7. Set Hours of Work:

    The establishment of set hours of work by the University is a factor indicating control.

  8. Full-time Work:

    If the worker must devote substantially full time to the business of the University, the University has control over the amount of time the worker spends working and impliedly restricts the worker from doing other gainful work. An independent contractor, on the other hand, is free to work when and for whom he or she chooses.

  9. Doing Work on Employer’s Premises:

    If the work is performed on the premises of the University, that factor suggests control over the worker, especially if the work could be done elsewhere. Work done off the premises of the University, such as at the office of the worker, indicates some freedom from control. However, this fact by itself does not mean that the worker is not an employee. The importance of this factor depends on the nature of the service involved and the extent to which the University generally would require that employees perform such services on the University’s premises. Control over the place of work is indicated when the University has the right to compel the worker to travel a designated route, to canvass a territory within a certain time, or to work at specific places as required.

  10. Order or Sequence Set:

    If a worker must perform services in the order or sequence set by the University, that factor shows that the worker is not free to follow the worker’s own pattern of work but must follow the established routines and schedules of the University. Often, because of the nature of an occupation, the University does not set the order of the services or set the order infrequently. It is sufficient to show control, however, if the University retains the right to do so.

  11. Oral or Written Reports:

    A requirement that the worker submit regular or written reports to the University indicates a degree of control.

  12. Payment by Hour, Week, Month:

    Payment by the hour, week, or month generally points to an employer-employee relationship, provided that this method of payment is not just a convenient way of paying a lump sum agreed upon as the cost of a job. Payment made by the job or on a straight commission generally indicates that the worker is an independent contractor .

  13. Payment of Business and/or Traveling Expenses:

    If the University ordinarily pay the worker’s business and/or traveling expenses, the worker is ordinarily an employee. An employer, to be able to control expenses, generally retains the right to regulate and direct the worker’s business activity.

  14. Furnishing of Tools and Materials:

    The fact that the University furnishes significant tools, materials, and other equipment tends to show the existence of an employer-employee relationship.

  15. Significant Investment:

    If the worker invests in facilities that are used by the worker in performing services and are not typically maintained by employees, such as the maintenance of an office rented at fair value from an unrelated party, that factor tends to indicate that the worker is an independent contractor. On the other hand, lack of investment in facilities indicates dependence on the University for such facilities and, accordingly, the existence of an employer-employee relationship. Special scrutiny is required with respect to certain types of facilities, such as home offices.

  16. Realization of Profit or Loss:

    A worker who can realize a profit or suffer a loss as a result of the worker’s services (in addition to the profit or loss ordinarily realized by employees) is generally an independent contractor, but the worker who cannot is an employee. For example, if the worker is subject to a real risk of economic loss due to significant investments or a bona fide liability for expenses, such as salary payments to unrelated employees, that factor indicates that the worker is an independent contractor. The risk that a worker will not receive payment for his or her services, however, is common to both independent contractors and employees and thus does not constitute a sufficient economic risk to support treatment as an independent contractor.

  17. Working for More than One Firm at a Time:

    If a worker performs more than de minimis services for a multiple of unrelated entities at the same time, that factor generally indicates that the worker is an independent contractor. However, a worker who performs services for more than one entity may be an employee of each.

  18. Making Services Available to the General Public:

    The fact that a worker makes his or her services available to the general public on a regular and consistent basis indicates an independent contractor relationship.

  19. Right to Discharge:

    The right to discharge a worker is a factor indicating that the worker is an employee and the University is an employer. An employer exercises control through the threat of dismissal, which causes the worker to obey the employer's instructions. An independent contractor, on the other hand, cannot be fired so long as the independent contractor produces a result that meets the contract specifications.

  20. Right to Terminate:

    If the worker has the right to end his or her relationship with the University at any time he or she wishes without incurring liability, that factor indicates an employer-employee relationship.


The purpose of Form C-12 is to help the Comptroller's Office determine whether an employer/employee relationship exists between the University and the individual performing the services. Form C-12 is required documentation, and must be attached to all Request For Payment (Form C-368) submitted to Accounts Payable.

The only blanket exception to this requirement is for Honoraria payments. The Comptroller’s Office will not require a C-12 if there is sufficient documentation to indicate that the payment is an Honoraria. The Comptroller’s Office will also allow one-time payments for lecture fees when the lecture has been publicized and a notice is available as documentation. However, a W-9 form must be submitted to the Comptroller’s Office for all payments to individuals for activities of this nature.

Instructions for Completing Form C-12

Line 1: The independent contractor must provide his/her Social Security Number (SSN) or Employer Identification Number (EIN) and submit an IRS Form W-9 (Request for Taxpayer Identification Number and Certification). An individual may have an EIN if he/she employs others or has domestic help. The full name of the business and address for tax purposes is required. If the individual is not a U.S. citizen he/she should provide his/her address in his/her home country.
Line 2: The independent contractor should check yes, if a U.S. citizen or resident alien. If the individual is a nonresident alien he/she should check no and indicate his/her country of residence in the space provided. An individual from a non-treaty country is subject to a flat 30% federal income tax withholding rate and must be paid on a C-368 Form. (Please see Financial Policy No. 2319.2 for a further discussion of payments to nonresident aliens).
Lines 3 - 5l: These questions require a yes or no answer. If the question is answered N/A it is assumed to be no.
Line 5m: Any additional information relevant to the independent contractor determination should be supplied here. Such additional information could be copies of newspaper advertisements soliciting business, advertisements in the yellow pages, business cards, etc.
Line 6: The independent contractor should sign and date this certification where indicated. He/she is also required to supply his/her Philadelphia Business Privilege license/tax account number. If the individual is not a resident of Philadelphia and all of the services are performed outside the city, then a Philadelphia Business license is not required.
Line 7: The Business Administrator processing the request for payment should review the Form C-12, once it has been completed by the individual for whom payment is requested. The Business Administrator must attest that he/she believes the information is accurate. This Business Administrator should have a TAC Card, and Form C-12 should be embossed with it prior to sending it to Accounts Payable.
Line 8: Once a status determination has been made, Accounts Payable will sign the Form and return a copy for the Business Administrator’s records.

The Comptroller’s Office does not require a new Form C-12 for each subsequent payment to an individual for whom a Form C-12 has been approved. On each succeeding C-368 Form, the Business Administrator should indicate that there is an approved Form C-12 on file in Accounts Payable.

Accounts Payable will require that a Form C-12 be completed every calendar year. The forms will be filed by year, and will be used as documentation for annual Form 1099-MISC submissions to the Internal Revenue Service.


Effect on Independent Contractor


By law, individuals who are paid as Independent Contractors are responsible for reporting all income earned and for paying the appropriate federal, state and city taxes, as well as self-employment taxes.

Individuals who are paid $600 or more during a calendar year through the University’s Accounts Payable system will be issued a Form 1099-MISC (Miscellaneous Income) after the end of each calendar year.

Independent Contractors must make estimated tax payments, and are required to obtain a Business Privilege license from the City of Philadelphia for services performed within the city. In addition, independent contractors are subject to an annual Philadelphia Business Privilege tax and Net Profits tax for services rendered within the city.


Independent Contractors are not employees of the University and are not entitled to University employee benefits while rendering services.

Effect on University


When a valid Independent Contractor relationship does not exist between the University and an individual who provides advice or renders a service, and the individual is paid through the University’s Accounts Payable section, the University may become liable for the payment of employment taxes on such payments.

Workers Compensation and Unemployment Compensation

Because Independent Contractors are not employees, they are not covered by the University's Workers Compensation Insurance in the event of injury while working at the University. In addition, Independent Contractors are not eligible for Unemployment Compensation when their contract terminates.

IV. Contract for Personal Services Rendered by a Consultant/Independent Contractor

In addition to the C-12 Form and IRS Form W-9 all departments engaging Independent Contractors must submit evidence that a contract exists between the department and the Independent Contractor. The Contract for Personal Services Rendered by a Consultant/Independent Contractor may be used for this purpose. This form is available on the Comptroller’s Office website in the Document/Forms Library.

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