Milwaukee Area Technical College Independent Contractor Review Checklist In recent years, additional clarification of the proper characterization of workers as independent contractors or employees has been provided as a result of the increased scrutiny by the Internal Revenue Service and other governmental agencies (both state and federal) with respect to whether individuals or entities are properly characterized as independent contractors or employees. This checklist is one aspect of MATC's response to such clarification as it strives to make proper internal characterizations of an individual or firm as an independent contractor or employee. Your completion of this checklist will help keep MATC in compliance with tax and employment laws, rules, and regulations. Name of Proposed Independent Contractor: _________________________________ Proposed Task:_______________________ Initiating Dept.:____________________ Initiator Completing by: _______________________________ Date: _______________ Budget Manager:______________________________________ Date: _______________ Result: Independent Contractor Further Review Required Employee Counsel: _______________________________________________ Date _______________ Special Circumstances If the proposed independent contractor is a current MATC employee or an MATC student, or if the proposed project would involve bargaining unit work, the Supervisor should consider the proposed independent contractor an employee regardless of the total above. Extent of Control Over Independent Contractor One of the most important factors in determining whether an individual or entity is an employee or an independent contractor is whether the hiring party has a significant degree of control over that individual or entity. The greater the degree of control, the more likely that employee classification is appropriate. 1. Will the proposed independent contractor be supervised in Yes No the day-to-day performance of its tasks? 2. Will the proposed independent contractor be trained by MATC? Yes No 3. Will MATC mandate that the subject tasks (or a portion Yes No thereof) be performed by a particular individual? 4. Will MATC require the proposed independent contractor to Yes No complete certain components of the contemplated task before others? 5. Will MATC require the proposed independent contractor to Yes No make or file periodic progress reports? Time Required of Independent Contractor Generally speaking, the greater demand MATC places on an individual's or an entity's time, the greater the likelihood that employee classification is appropriate. 1. Will the project require over one-third (1/3) of the Yes No proposed independent contractor's time? 2. Will the project require over two-thirds (2/3) of the Yes No proposed independent contractor's time? 3. Is MATC expected to retain the proposed independent Yes No contractor for more than two (2) weeks? 4. Is MATC expected to retain the proposed independent Yes No contractor for more than three (3) months? 5. Will the proposed independent contractor be paid by the Yes No hour, day, week or month? 6. Will proposed independent contractor be working only for Yes No MATC during the contemplated project? Established Independent Contractor The propriety of a classification as independent contractor may often turn on whether or not the individual or firm has an established business. For this reason, not only are your answers to the following questions important, but so too is the follow-up related to "building the file" with advertisements, business cards, and other evidence of the established nature of the individual or firm's business. 1. Does the proposed independent contractor maintain its own Yes No place of business? (For purposes of this question, please disregard an "office" maintained at the proposed independent contractor's personal residence) 2. Does the proposed independent contractor make its services Yes No available to the general public? (e.g., Yellow Pages ad, business cards, newspaper ads, etc.) 3. If the proposed independent contractor will employ its own Yes No workers on the project, will the proposed independent contractor obtain worker's compensation insurance and pay employment taxes for such workers? Independence of Independent Contractor The greater the extent to which an individual or firm will rely on MATC in the performance of its tasks, the greater the likelihood that employee classification is appropriate. 1. Will MATC supervise any of the proposed independent Yes No contractor's assistants? 2. Will MATC provide or hire assistants for the proposed Yes No independent contractor? 3. Will MATC be responsible for any of the proposed independent Yes No contractor's business expenses? 4. Will MATC be responsible for any of the proposed independent Yes No contractor's traveling expenses? 5. Will MATC be responsible for providing the proposed Yes No independent contractor with any of the tools and materials that the project requires? 6. Will MATC be responsible for the maintenance of any such Yes No tools or materials? 7. Has the proposed independent contractor made relatively Yes No little or no investment in its business? Nature of Agreement With Independent Contractor The language of an independent contractor agreement can have a significant impact on the proper characterization of the proposed independent contractor. If a nonstandard agreement is to be used, it must be approved by MATC General Counsel. 1. Will the proposed independent contractor enter into an Yes No approved written independent contractor agreement with MATC? Risk Assumed by Independent Contractor Independent contractors characteristically face some degree of risk -- their profits will depend on their efficiency or they may bear the burden of the failure of a certain contingency to occur. The absence of any such risks is indicative of employee status. 1.Will the proposed independent contractor be guaranteed a Yes No certain level of profit on the contemplated project? 2.Will both MATC and the proposed independent contractor be Yes No free from any restrictions on, or penalties related to, their ability to terminate the agreement? Scoring Section No. of "yes" answers ______ Extent of Control Over Independent No. of "yes" answers Contractor ______ Time Required of Independent Contractor No. of "yes" answers Established Independent Contractor ______ Independence of Independent Contractor No. of "yes" answers Nature of Agreement with Independent ______ Contractor No. of "yes" answers Risk Assumed by Independent Contractor ______ No. of "yes" answers ______ TOTAL ______ RESULT 0 - Supervisor may forward Independent Contractor packet (Checklist, 6 Contract, W9 form, other) to Procurement for approval 7 - Further review is required by MATC General Counsel before supervisor 15 may forward Independent Contractor packet to Procurement for approval (NOTE: If the proposed vendor/contractor is a full- or part-time MATC employee, s/he should be treated as an employee. Therefore, no MATC General Counsel review is required.) 16 Because evaluation points to an employment relationship, supervisor should enter proposed independent contractor into employment process in Human Resources or complete a new checklist for a different vendor/contractor.