WVU-CO-7 Employee Versus Independent Contractor Classification Policy
West Virginia University Policy
Division of Administration and Finance
EMPLOYEE VERSUS INDEPENDENT CONTRACTOR CLASSIFICATION POLICY
The purpose of this policy is to ensure the proper classification of service providers as either employees or independent contractors for tax reporting purposes.
This policy applies to all service providers of the University, including those on the regional campuses.
The University’s Procurement Services Department is responsible for ensuring the proper classification of service providers as either employees or independent contractors. This Department is responsible for reviewing all proposed contracts with independent contractors to ensure proper classification.
The University will limit its exposure in this area by classifying all workers as employees unless specific requirements relating to the worker’s business relationship with the University are met as determined by a thorough review of each potential contract.
Although there is no bright line test for distinguishing an independent contractor from an employee, the Internal Revenue Service has issued what is commonly known as the “20 point Common Law Test” (for copy, call the Controller’s Office at 293-4002). This test provides guidance on proper classification of a worker based on many factors such as the degree of supervision, amount and method of payment, and general business relationship.
Because of the temporary and unique aspects of payments made to test subjects used for research projects, these individuals are determined to be appropriately classified as independent contractors.
Procedure development rests with the Controller’s Office – Tax Accounting.
RESPONSIBILITY FOR IMPLEMENTATION
The responsibility for implementation of this policy rests with Procurement Services. The Controller’s Office, at 293-4002 or P.O. Box 6001, is available to answer questions or provide additional information regarding this policy.
RESPONSIBILITY FOR INTERPRETATION
The responsibility for interpretation of this policy rests with the Controller, West Virginia University.
Effective Date: September 10, 1998
Approved By: Scott C. Kelley, Vice President