Securing and Paying for Consultant and Independent Contractor Services

Effective Date: January 1, 1995

Purpose of Policy and Procedures

This manual sets forth a number of requirements, definitions, and procedures to be used when the need arises to retain the services of independent contractors (1) (including consultants).

The Internal Revenue Service and various Government granting agencies have increased their level of attention in the areas of consulting, independent contracting, and employee-employer relationships. The Government's exception is that Vanderbilt have policies and procedures in place to ensure that:

• all payments for services performed by individuals who would be classified as employees under Internal Revenue Service guidelines are processed through Vanderbilt's payroll system, recording the appropriate FICA taxes and Federal income tax withholding amounts;

• all agreements to retain services of independent contractors and external consultants are planned to allow for sufficient competition in pricing with written documentation retained for those of $10,000 or more;

• Vanderbilt faculty and exempt staff are not paid amounts in excess of stated annual salary for work performed on Government grants and contracts other than approved summer pay for faculty on academic year appointments, except in certain unusual circumstances that may require the Government's approval in advance;

• there is no conflict of interest for the independent contractor/external consultant or members of their family or those with whom the consultant has business or other ties for purposes of financial gain beyond that received directly for consulting services;

• payments made to independent contractors or external consultants are supported by sufficient documentation, including information regarding the work performed by each consultant and independent contractor and on what basis the fee was calculated and paid; and

• procurement of services is conducted according to Vanderbilt University's Affirmative Action policies and procedures and applicable Government procurement regulations.

(1) An Independent Contractor is an individual or firm hired to provide services over which the University has the right to control or direct only the result of the work and not the means and methods of accomplishing the result. For purposes of this policy, and external consultant (firm or individual) is a specific type of independent contractor often used, for example, to evaluate a project. An internal consultant is a faculty or staff member of Vanderbilt University and engaged to provide consulting services that are in addition to his/her normal workload and across departmental lines or that involve a separate or remote operation.