Contracts cannot be used to create an employee-employer relationship. Employees must be placed on the university’s payroll in appropriate classifications. Failure to do so leads to serious legal problems regarding such matters as withholding state, federal and local income taxes, workers compensation, unemployment compensation, the Commonwealth’s obligation to defend suits brought against employees, etc. Also, there may be compliance issues in regards to collective bargaining agreements.
Several factors are considered to determine when an employer-employee relationship exists. The presence of the following factors, in one combination or another, tends to indicate an employee-employer relationship:
- The individual is paid on a per diem basis, rather than being paid a flat fee.
- Work is performed during regularly scheduled work hours.
- Work is performed under supervision of a university employee who controls the manner in which the work is done.
- The university furnishes the individual’s equipment or supplies.
- The individual performs duties as assigned by the university on a task-by-task basis.
- The individual contracts regularly throughout the fiscal year with the university to provide the same services over and over again.
- The duties are performed on university-owned or university-leased premises.
- The university has the right to discharge the person by giving advance written notice.
- The individual performs the same duties as one holding a position in university service.
Each contract for services to be performed must be reviewed and a determination made as to the status of the individual to be engaged or services to be performed under a contract. These individuals under contract must be deemed independent contractors for the contract to be approved.
Re: State System of Higher Education Contract Manual, 2003, Office of Chief Legal Counsel Section III, Prohibited Contracts