I.          PURPOSE:      To define the policy, guidelines and procedures for PAIRE support of independent contractors.

II.         POLICY:         It is the policy of PAIRE to comply with applicable state and federal requirements for the classification, appointment and reporting of independent contractors.

III.       DEFINITIONS:           As discussed in this policy, the following definitions apply:

A.                 Independent Contractor – An individual or organization that provides services that are generally technical, unique, and infrequent where no employer-employee relationship exists.  Examples of such personal services include word processing, technical editing, translation and technical reviews or appraisals. 

B.                 Consultant – A consultant is a category of independent contractor that provides highly specialized services, generally validated by submission of a curriculum vita documenting the individual’s professional qualifications. 

C.                 Employer-Employee Relationship – Such a relationship exists when PAIRE has the right, regardless of whether it exercises that right, to supervise and control the manner of work performance as well as the result of the service provided by an individual.

D.                 Independent Contractor Relationship – Such a relationship exists when PAIRE has the right to control only the result of the service provided and not the manner of performance of the service provided by the entity.

IV.       GUIDELINES: The following guidelines apply in securing the services of an independent contractor, including a consultant:

A.                 A person may not be engaged as an independent contractor in lieu of being hired when an employer-employee relationship exists.

B.                 Classification of status as an employee or independent contractor must be made prior to an engagement to perform personal or professional services. 

C.                 No payment will be made for services performed prior to execution of an Independent Contractor Agreement for independent contractor services.

D.                 To assure that an employee’s VA and private interests remain separated and to safeguard against charges of favoritism in the acquisition of goods and services, VA-paid employees may be consultants only in circumstances where the work to be done is clearly distinct from VA duties.

E.                  The following additional requirements apply to the appointment of a consultant:

1.                  The use of a consultant is expected to be infrequent and is to be used primarily to perform clearly delineated tasks.

2.                  For services of consultants supported from federal funds the following standards apply:

a.      Services are normally limited to 30 days in a 12-month period or that period of time approved in the cognizant contract or grant.

b.      There must be evidence that the services are essential and cannot be provided by persons receiving salary under a federally supported contract or grant.

c.      There must be evidence that the person selected is qualified; a curriculum vita or similar documentation must be submitted with the Independent Contractor Agreement.

d.      There must be evidence that the rate is appropriate considering the consultant’s qualifications, his/her normal rates and nature of services rendered.

3.      A consultant may not be used to carry out a major portion of a project or program.

F.                  PAIRE has no obligation to withhold income or FICA taxes on amounts paid to independent contractors. 

G.                 PAIRE does not provide tax indemnification and gross-up payments to independent contractors.

H.          If payments to an independent contractor accrue to $600 or more during a calendar year, payments will be reported on IRS Form 1099-MISC.

I.                 PAIRE will report to the California EDD at least monthly the anticipated earnings and dates of service of independent contractors, including consultants.

J.                    If the independent contractor will be performing any health care provider services, he/she must be currently licensed to practice in his/her profession in the state of California.  If the service will be performed on a VAPAHCS site the worker must, with rare exception, be engaged as an employee rather than an independent contractor or consultant; additionally, the worker must have a VA WOC appointment and be appropriately credentialed and privileged in accordance with VAPAHCS policy.

K.                    No family member of a Principal Investigator may be engaged as an Independent Contractor by that Principal Investigator.

V.        PROCEDURES:          To engage an independent contractor or consultant the following procedures apply:

A.        The proposed independent contractor must complete the Independent Contractor Agreement.  The Principal Investigator must review the document for accuracy.  If the information provided indicates that Independent Contractor status is appropriate, the Principal Investigator should sign the Independent Contractor Agreement and submit it to PAIRE Administration.

B.         Submit the original of both document as well as an IRS Form W-9 completed by the independent contractor to PAIRE.  If approved, an executed copy of the Independent Contractor Agreement will be sent to both the contractor and the Principal Investigator.  If not approved, the request will be returned to the Principal Investigator with written notification of reason for disapproval.