GAP NO. 200.134
All Other Payments to Individuals for Services

I.	General
II.	Process Overview
III.	Detailed Responsibilities for Engaging and Paying Individuals
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I. GENERAL

This procedure is to be used when engaging and paying individuals for a specified time period to give professional advice or to render professional service for a fee. Examples include technical specialists, photographers, graphic artists, and software designers.

Services listed below are covered in a separate procedure:

• GAP 200.130, Guest Speakers and Conference Participants
  
  
• GAP 200.131, Architects, Engineers, Attorneys or Auditors
  
  
• GAP 200.133, Instructors and Lecturers (Non-faculty)
  

This procedure will provide you with the information to determine what forms you need to complete, and what the process is for engaging and paying individuals, based on your circumstance. The GAPs referenced and linked will provide you with the specific process and approval procedures.

If an individual is hired to perform services, you must first determine if the relationship is that of an independent contractor or an employee-employer. The Independent Contractor Checklist (ICC) is the established tool to make this determination.

If the person hired is already a Duke employee, he or she must be treated as an employee for these services also and paid through the payroll system. Otherwise, whether an employer-employee relationship exists generally depends on a single factor: the degree to which the University or Health System has a right to direct and control the worker, not only as to the result to be accomplished, but also as to the details and means by which that result is to be achieved. The ICC is designed to include the IRS defined characteristics to help determine whether the individual can be classified as an independent contractor.

Payments to individuals who are U.S. citizens and permanent residents, other than for reimbursement of properly substantiated travel and other expenses, are reportable to the Internal Revenue Service. Thus, the payee's name, permanent address and social security number are required, on whatever form you complete, in order to pay the individual.

If the payee is a non-resident alien (not an U.S. citizen or not possessing a green card) the document Required Documentation for Payments Issued to Foreign Nationals through Accounts Payable will assist you in determining what documentation is required.

The G/L account used for payments to individuals classified as independent contractors is generally 622000, Professional Services.

 

II. PROCESS OVERVIEW

Complete the Independent Contractor Checklist (ICC). Based on the results of the checklist:

• If the individual is determined to be an employee, he or she must be paid through the payroll system. GAP 101.9, Paying Individuals Who Do Not Qualify as Independent Contractors will assist you with this process.
  
  
• If the individual is determined to be an Independent Contractor; who is performing consulting services where the total cost of the engagement is less than or equal to$2,500, and the service is not involving patient care or access to patient information, then submit an Accounts Payable Check Request, completed ICC, and invoice or documentation to Accounts Payable. (DUHS departments must first route the forms to the appropriate Health System Finance Office for approval.) GAP 200.136, Accounts Payable Check Request details the specific procedures and approvals required for the Accounts Payable Check Request.
  
  
• If the individual is determined to be an Independent Contractor: who is performing consulting services where the total cost of the engagement is greater than $2,500, or the service is involving patient care or access to patient information, then select one of the following options.
  
  
  • If the cost object charged is a restricted grant or contract WBS element (30x to 35x, and 38x): Complete the Outside Services Agreement (OSA) and a Purchase Requisition. Send all forms (including the ICC) to the appropriate Pre-Award Office.
    

    When the Cost Object charged is not a restricted grant or contract:
    

  • If the services provided involve patient care or access to patient information, complete an Outside Services Agreement (OSA), and Purchase Requisition, Submit to Procurement Services.
    
    
  • Services provided such that Procurement Services needs to review or negotiate contractual issues such as, but not limited to, copyrights or ownership of final product are considered Category 1 Services. For Category 1 Services, complete an Outside Services Agreement (OSA), and Purchase Requisition, submit to Procurement Services along with the completed ICC.

    Some examples of Category 1 Services are:

    • Technical Specialists
    • Graphic Designers
    • Transcriptionists
    • Computer Programmers
    • Photographers.
      
      
  • Services provided such that the department may prepare the contract with the service provider are considered Category 2 Services. For Category 2 Services, submit an Accounts Payable Check Request, completed ICC, copy of the contract, and an invoice or documentation to Accounts Payable. (DUHS departments must first route the forms to the appropriate Health System Finance Office for approval.) GAP 200.136, Accounts Payable Check Request details the specific procedures and approvals required for the Accounts Payable Check Request.
    

    Category 2 Services include the following:

    • Adjunct Professors (non-employee)
    • Architects
    • Attorneys
    • Auditors
    • Catering Services
    • Fitness/Health Instructors
    • Guest Speakers
    • Instructors
    • Lecturers
    • Musical or Theater Production Groups
    • Musicians
    • PDC Payments
    • Performing Artists
    • Play Production Design
    • Referees
    • Umpires

III. DETAILED RESPONSIBILITIES FOR ENGAGING AND PAYING INDIVIDUALS

This section provides you a step by step listing of the responsible party and the action to be taken for the process of engaging and paying individuals. It will repeat some items that are included in the general and overview sections. In addition you can link here for: Reference Chart for Obtaining and Paying for Outside Services, Independent Contractor Checklist (ICC) and the Outside Services Agreement (OSA).

RESPONSIBLE PARTY	ACTION
Department Initiator	Before the individual begins work:
	1.	Fill out the Independent Contractor Checklist (ICC).
	2.	If the ICC questions have more No answers than Yes answers (ignoring NAs and Unknowns), the individual is considered an employee, per IRS guidelines, and must be paid through the Payroll system. GAP 101.9, Paying Individuals Who Do Not Qualify As Independent Contractors will guide you in this process. If the ICC questions have more Yes answers than No answers, proceed to step 3.
	3a.	If the total cost of the engagement will be less than or equal to $2,500 and the service is not involving patient care or access to patient information or temporary staffing, you do not need to follow the rest of this procedure. After the services are performed, complete an Accounts Payable Check Request, providing information regarding the nature and scope of work performed, rates, etc. Submit the Check Request, completed ICC, and invoice or documentation to Accounts Payable. DUHS departments must first route the forms to the appropriate Health System Finance Office for approval. GAP 200.136, Accounts Payable Check Request details the specific procedures and approvals required for the Accounts Payable Check Request
	3b.	If the total cost of the engagement will be greater than $2,500 or the service is involving patient care or access to patient information or temporary staffing review options i, ii, or iii and determine which best matches your situation. If you determine options i or ii are appropriate read the caution note below and proceed to step 4.
		i. For Restricted grant/contract WBS elements (30x to 35x, or 38x): complete an OSA. When informed early in the process, Procurement Services will assist in completing the OSA form (call 681-5900 for assistance). Proceed to step 4. ii. For all other cost objects if services are Category 1 type services (refer to section II) or involves patient care or access to patient information: complete an OSA. When informed early in the process, Procurement Services will assist in completing the OSA form (call 681-5900 for assistance). Proceed to step 4. iii. For all other cost objects if the services are Category 2 type services (refer to section II): You do not need to follow the rest of this procedure. After the services are performed, submit an Accounts Payable Check Request, completed ICC, copy of the contract, and invoice or documentation to Accounts Payable. DUHS departments must first route the forms to the appropriate Health System Finance Office for approval. GAP 200.136, Accounts Payable Check Request details the specific procedures and approvals required for the Accounts Payable Check Request.
CAUTION:		Individuals who meet the criteria in i, or ii, may begin to work only upon receipt of a Purchase Order or an OSA approved by Procurement Services. Payment for outside services performed prior to the issuance of the approved form will be significantly delayed and the funding source may be altered.
Department Initiator	4.	Complete a Purchase Requisition
	5.	Obtain departmental approval on the Purchase Requisition and OSA from Department Chair/Director.
	6a.	For Restricted grant/contract WBS elements (30x to 35x, or 38x) forward all forms to the appropriate Pre-Award Office for approval. Office of Research Support or Medical Center Grants and Contracts
	6b.	If the cost object charged is not a restricted grant or contract, forward all forms to Procurement Services and skip to step 11.
	If there are other review/approval requirements for your department or school, this procedure does not exempt those approvals.
STEPS 7 THROUGH 10 ARE FOR RESTRICTED WBS ELEMENTS ONLY.
Pre-Award Office	7.	Ensure that intended purchase of service is in compliance with the provisions of the grant or contract before a Purchase Order is issued.
	8.	Ensure that sponsor guidelines for the rate of compensation for consultants are observed.
	9.	Obtain agency/sponsor approval if necessary.
	10.	Forward approved package to Procurement Services.
Procurement Services
	11.	Review forms (ICC and OSA) for completeness, accuracy and for compliance with established Policies.
	12.	Process forms, provide final approval and sign the OSA on behalf of Duke.
	13.	Issue a bona fide contract (either Purchase Order and attachments or OSA) to the independent contractor.
	14.	Distribute a copy of the approved OSA to the department, along with the Purchase Order.
DURING AND AFTER THE SERVICES HAVE BEEN PERFORMED
Departmental Initiator
	15.	Monitor performance, evaluate quality of the work, and review progress made against the project time schedule.
	16.	Ensure that the work is being done according to the terms and conditions of the contract.
	17.	Review and approve expenditures and billing, ensuring that billings are current and reasonable compared to progress reports, effort expended and travel incurred.
	18.	Approve the invoice for payment. Note the Purchase Order number on the invoice and forward it to Accounts Payable.
MODIFICATIONS
Pre-Award/Procurement Services
	19.	Any revision or modification to the signed contract must be in writing. The Department, Pre-award Office, and Procurement Services must approve changes to restricted WBS elements. The Department and Procurement Services must approve changes to non-restricted cost objects. Upon agreement, if a Purchase Order was issued, Procurement Services will issue a change order to document the contract revisions.

 

GAP History
Issued:	April 1997
Revised:	April 2002