The Internal Revenue Service requires Delta College to properly classify independent contractors. These guidelines and processes identify the steps, documents and processes used to ensure proper classification and subsequent payment to independent contractors.
For guidance purposes, an independent contractor of Delta College is an individual who:
- Is not on Delta College payroll.
- Receives payment from Delta College documented by issuance of an IRS Form 1099.
- Offers similar services to the general public on a consistent basis.
- Provides services through a written contract, i.e., Delta College's Independent Contractor Agreement and Addendum.
- Renders service to Delta College for a specified amount of compensation for a specified result.
- Performs services for which Delta College doesn't control the methods used to obtain the results.
An employer must generally withhold income taxes, withhold and pay social security and Medicare taxes, and pay unemployment tax on wages paid to an employee. An employer does not generally have to withhold or pay any taxes on payments to independent contractors. If you classify an employee as an independent contractor and you have no reasonable basis for doing so, the college may be held liable for employment taxes for that worker.
Determine who is an independent contractor
To determine whether an individual is an independent contractor or an employee, please complete the Determination Worksheet (PDF) and forward to Business Services. There is no specific number of questions that must be answered as a yes or no to qualify for independent contractor status, and Business Services will make the final determination when you submit the determination worksheet.
Once the determination worksheet has been reviewed, and a determination made, the department will be notified. If the individual may truly be classified as an independent contractor, the department must complete the Independent Contractor Agreement (PDF), Independent Contractor Addendum (PDF) and IRS W9 form (PDF).
Independent contractors and the MPSERS retirement system regulations
Individuals who retired from any Michigan Public School Employees Retirement System (MPSERS) employer after June 30, 2010 will not be allowed to be hired as an independent contractor at Delta College and concurrently receive retirement benefits from MPSERS. Delta is responsible for reporting all such independent contract arrangements to MPSERS. Retirement information must be certified by the independent contractor and reported to MPSERS prior to the independent contractor performing any services for Delta.
The same rules also apply to staff retained through a contracted employment services company or temporary agency. All staff brought on through a third-party business or agency must be coordinated through HR/Business Services prior to starting any assignment.