Independent Contractors
There are special financial parameters for involving independent contractors in research as they are paid through contractual agreements.
About
Consultants are assumed to be Independent Contractors with defined tasks and benchmarks.
- They may not have a continuing involvement in a project and should not require significant supervision.
- Consultants are neither employees nor Fellows.
- They are paid through contractual agreements in which the services they provide are detailed.
- Since their relationship to a project is contractual, the selection of specific consultants is governed by processes more like the purchase of goods and services than the process by which employees are hired, or Fellows appointed.
Relationship with the RF
Consultants understand the following conditions describing their relationship with The Research Foundation of the State University of New York:
- Not eligible to file for, or collect unemployment benefits,
- Not eligible for Worker’s Compensation coverage,
- Solely responsible for complying with all federal, state and local requirements regarding reporting and paying taxes,
- Required to assign all right, title, and interest in the data or material produced as a result of project activities to The Research Foundation of the State of New York, and prohibited from publishing, permitting to be published, or distributing any information concerning the results or conclusions of the data or material produced during or towards project activities. These are considered “works for hire” and as such are the property of The Research Foundation of the State of New York.
- Able to retain ownership of intellectual property included in the deliverables to the extent that s/he will have independently developed the intellectual property without Research Foundation financial support. With respect to such property, s/he agrees to grant The Research Foundation of the State of New York a royalty fee, non-exclusive license to use such intellectual property for purposes consistent with The Research Foundation’s obligations under the grant or contract that funds this project.
- His/her engagement as an Independent Contractor with The Research Foundation may be canceled by the Foundation upon 30-days written notice.
The IRS uses a series of 20 Factors of the “Common Law Test”to determine whether an individual or group of individuals meets the legal requirement to be considered a consultant. Campus Independent Contractor Guide
What can happen if an independent contractor is misclassified?
If the employer, The Research Foundation for SUNY, unintentionally fails to withhold income taxes for the independent contractor who should have been classified as an employee, the employer’s liability for those taxes will be determined along with penalties.
If someone, or an entity, is misclassified as an independent contractor, charges will be moved from the independent contractor category to salary & wage category on the grant; the grant will be charged for the fringe benefit rate relating to the salary & wages; and The Research Foundation, and in turn, the principal investigator/project director (PI/PD), will be responsible for any penalties resulting from misclassification.
How will a misclassification be detected?
- IRS or NYS income tax audit
- Individual applies for Unemployment
- Individual applies for Disability or Worker’s Compensation
- Individual completes and submits form SS-8 to IRS
- Research Foundation Internal Audit