GAP NO. 200.129
Special Rules For Engaging And Paying Current And Former Employees As Independent Contractors

I.	General
II.	Procedures
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I. GENERAL

Determination of an individual’s status as an independent contractor or an employee is based on the relationship between that individual and Duke University/Duke University Health System. Once an individual has established an employment relationship, it is difficult to suggest that the employment relationship ceases to exist, even upon termination of employment. Accordingly, current and former employees should generally be paid through the Corporate Payroll system. In addition to IRS purposes, Fair Labor Standards Act and Worker’s Compensation are reasons to consistently treat an individual as employee.

However, there are a few situations where it may be more appropriate to treat such an individual as an independent contractor. In such as case, substantial facts must be present and well documented to support this position. Even past employment can taint the status of the individual for subsequent services provided to Duke. Therefore, to help establish an independent contractor relationship additional documentation is required.

II. PROCEDURES

Documentation must provide additional information that will be sufficient to support the exception of this individual from employee status. This additional documentation should be provided with the Employee Status Exception Request Form. Failure to provide adequate information may delay payment processing or may subject the University (and thereby the requesting department) to status reclassification of the individual and other individuals in similar situations. Such reclassification would result in additional costs, including but not limited to withholding, amounts under withheld, additional taxes, and penalties and interest on the under withheld or underpaid amounts.

It is the engaging department’s responsibility to research the employment history of the individual. The person completing this form should have ample knowledge of all the facts and circumstances surrounding the situation to provide detail on the individual’s situation as the basis of this request. The Employee Status Exception Request Form must be completed and approved (as necessary) prior to completing the Independent Contractor Checklist. The Employee Status Exception Request Form must accompany the AP check request form or Purchase Requisition Form.

It is relatively easy for the Internal Revenue Service to track such a change in status. In the event, the University/Health System may be request by the IRS to provide information to enable the IRS to make the classification determination. The IRS would request the University/Health System to complete Form SS-8 in this process. Upon such request, the approving department will be responsible for providing sufficient detail in order to respond. Please see the IRS website for Form SS-8.

 

GAP History
Issued:	November 2008