Independent Contractor Payments (ICPs)

The Controller’s Office staff is responsible for payments to Independent Contractors as well as assistance in overall process.  Please note, students are typically not ICP’s.  Please apply the same criteria when assessing if a student is an employee or ICP.

An independent contractor is a person or entity that provides services under the terms of a contract and is not considered an employee.  It is important to make the determination between an employee vs an independent contractor to ensure compliance with appropriate labor laws.

Employee vs Independent Contractor:

Determining whether a person or a company is an independent contractor involves considering various factors related to their working relationship with the hiring entity. The criteria can vary by jurisdiction, but generally, several key aspects regarding control and independence are examined to make this determination:

1. Behavioral Control:  Does the hiring entity control or have the right to control what the worker does and how the work does their job?

2. Financial Control:  Are the business aspects of the worker's job controlled by the hiring entity?  This includes how the worker is paid, whether the expenses are reimbursed, who provides the tools/supplies, etc.

3. Type of Relationship: Are there written contracts or employee-type benefits (e.g., pension plan, insurance, vacation pay)? Will the relationship continue, and is the work performed a key aspect of the business?

Click here for a summary table of key differences between employees and ICPs

1. Sole Proprietorship:

o    An individual who owns an unincorporated business by themselves. The individual reports income on their personal tax return.

2. Partnership:

o    A business owned by two or more individuals. The partnership itself does not pay income taxes but passes income, deductions, and credits to the partners.

3. Limited Liability Company (LLC):

o    An LLC can be a single-member LLC (treated as a sole proprietorship for tax purposes) or a multi-member LLC (treated as a partnership for tax purposes unless it elects to be taxed as a corporation).

4. Corporation:

o    Includes both S-Corporations and C-Corporations. Corporations are separate legal entities from their owners. S-Corporations pass income to shareholders to be reported on their personal tax returns, while C-Corporations are taxed separately from their owners.

5. Trust/Estate:

o    In some cases, trusts and estates may also be considered independent contractors if they are providing services in exchange for payment.

 

Once correct determination is made regarding employee vs independent contractor use the appropriate Memorandum of Agreement:

o   Employee MOA:                              https://www.lcsc.edu/hr/forms

o   Independent Contractor MOA:  https://www.lcsc.edu/purchasing/employees/forms

ICPs are treated like other vendors and must be set up in PaymentWorks and processed through Jaggaer.  The links below will walk you through vendor and processing set up.

Vendor set up:  https://www.lcsc.edu/purchasing/paymentworks

Jaggaer processing:  https://www.lcsc.edu/purchasing/jaggaer-resources.

ICPs can’t be paid until:

·         Requisition (REQ) has been submitted and approved by proper                approvers

·         Purchase Order (PO) is created (after REQ is completed)                                                                                                                                                *The requisition should be fully approved and PO created before               work commences.

·          Once the work has been completed, PO is receipted (by person                 who entered REQ)

o   Please see Purchasing Website for questions on REQ and PO’s https://www.lcsc.edu/purchasing/jaggaer-resources

·         All required documents are attached including but not limited to the          invoice and/or contract agreement.

·         Once all above steps have been completed Controller’s Office will             process invoice for payment

·         Payment will be on AP’s Wednesday check run.

·         https://business.idaho.gov/employer-issues/employee-or-independent-contractor/

·         https://esd.wa.gov/employer-taxes/independent-contractors

Questions regarding payments please contact COAP (coap@lcsc.edu or EXT 2327)

Questions regarding PaymentWorks or Jaggaer contact Purchasing (purch@lcsc.edu or Ext 2288)