Policy for an independent contractor
A person who is engaged by the company to offer services could be regarded as an independent contractor. The contractor is subject to control or direction of the company only with regard to the result and not as to the means used to achieve that end result. Determination of the status of the person as an independent contractor is to be established prior to that individual’s execution of the service. Departments are to seek authentication of the status of the independent contractor from disbursement services prior to initiating any service commitment or drafting any payment request form(s). Independent contractors will be issued with a Federal tax Form 1099-MISC in the first month the year prior to their services if they are paid at least $1000 in the previous calendar year. In some cases, the independent contractor payment might be subjected to tax withholding.
For an individual to be determined as an independent contractor, the employer/employee relationship must be deemed not to exist in reference to the Internal Revenue Service guiding principles. They outline three main categories of behavioral and financial management and the correlation of the parties:
Financial control: Facts that provide the degree of direction or control on how the trading attributes of the worker’s activities are conducted (major investment, unreimbursed costs such as rent and utilities, marketing, wages of assistants, licensing, insurance, supplies, etc.)
Behavioral control: Facts that provide the degree of direction or control on how the worker executes the precise task for which he/she is employed (providing directions or guidance.)
Relationship of parties: Facts that provide how the parties perceive their relationship (employee’s benefits, objectives of the parties, written agreements, permanency, discharge)
