It is critical that Hamilton College correctly determine whether the individuals providing services to the College are employees or independent contractors. Generally, the College must withhold income taxes, withhold and pay Social Security and Medicare taxes on wages paid to an employee. No taxes on payments are withheld for independent contractor services. The IRS and other government agencies assess significant penalties for misclassification of employees as independent contractors.
Service provider classification is based on facts and circumstances; no one fact determines service provider classification. The IRS currently emphasizes three broad based categories: behavioral control, financial control, and the overall relationship.
Independent contractors determine how they will accomplish the task. If Hamilton provides training and/or instructions about how to complete the task, the service provider should generally be classified as an employee.
Independent contractors have significant investments in their businesses. A service provider who works at home generally does not have a significant investment in the business.
Independent contractors have a broad customer base. If the service provider works primarily for Hamilton, the service provider should generally be classified as an employee.
The department head or supervisor is responsible for completing the following steps when procuring an individual's services.
The table below provides information on a limited number of payments exempt from independent contract review.
IC Review Required?
Written Contract Required
|W-9 Required On File|
|Low Dollar (currently < $500)||
|Human Subject Fee||No||No||Yes|
|Translator: Foreign Language||No||Yes||Yes|
Writer-Scholarly publications or Hamilton Magazines