An Independent Contractor (IC) is an individual who contracts to do work for another business entity according to the individual’s own processes and methods. An IC is not subject to the entity’s control over his or her work except for what is specified in a mutually binding agreement for a specific piece of work.
Proper classification of an IC ensures that FAS is in compliance with various federal laws, state and local laws and regulations. Granting this status should not be taken lightly since there are significant tax penalties for incorrect classification of an individual as an IC. The decision to classify someone as an IC should be weighed carefully since consequences for misclassification are costly.
No showing of a willful or knowing violation is necessary – treble damages are automatic. For example, on a $50,000 contract, the settlement amount can be $150,000 plus three times the fringe rate. Given this, it is essential that each request is fully documented.
Please follow the step-by-step instructions to help you understand processes for engaging ICs:
- IC Request Process Flow Chart (includes hyperlinks to required documents)
- Guest Speaker and Lecturer Process Flow Chart