The purpose of this policy is to provide the criteria for classifying Independent Contractors herein defined as External Service Providers who provide Professional Services and General Services (including consulting services) to the University in a manner that complies with federal, state, and University regulations.

This policy applies to anyone engaging with External Service Providers for services on behalf of the University regardless of the source of funds.

The University must retain External Service Providers only when the skills required are not available or able to be provided by University faculty or staff. External Service Providers normally possess specialized skills, knowledge, or credentials that are not readily available among the University’s faculty and staff, and the expertise is provided on a temporary basis.

Fees charged for services must be appropriate for the services rendered and the External Service Provider’s qualifications. External Service Providers must be selected in accordance with the University’s competitive bid policies and the Competitive Bid/Quote Requirements and Sole Source Purchases Policy. Contracts with External Service Providers for Professional Services or General Services must be signed by an authorized officer before the commencement of work in accordance with the Delegations of Signature Authority for Contracts. A department intending to engage an External Service Provider as a consultant must follow University contracting procedures prior to the start of any work or performance of services.

Individuals currently or formerly (within the calendar year) employed by the University may not provide services to the University as an External Service Provider.

If the service is being provided by an External Service Provider acting as an individual or an Independent Contractor and is the same as or similar to that of a current employee, the External Service Provider must be paid as an employee via University Human Resource’s temporary employment process (i.e., the Season/Intermittent process) and not as an Independent Contractor. Exceptions to this provision are to be reviewed and approved during the appropriate contract review process.

For the purpose of this policy, the terms below have the following definitions:

All individuals to whom this policy applies are responsible for becoming familiar with and following this policy. University supervisors and employees with student oversight duties are responsible for promoting the understanding of this policy and for taking appropriate steps to help ensure and enforce compliance with it.

University representative/department engaging an External Service Provider:

• Review the Strategic Procurement and Contracts’ Doing Business with Brown webpage.
• Follow University policies for obtaining competitive quotes/bids and the Competitive Bid/Quote Requirements and Sole Source Purchases Policy.
• Ensure the supplier is registered in Workday in accordance with the Supplier Registration Policy.
• If the supplier is acting on an individual basis, determine appropriate status (Independent Contractor vs. Employee) by completing the Employee Versus Independent Contractor Checklist.  In instances where a purchase order is not required or a contract review request will not be entered into BCM, the initiating department has primary responsibility for ensuring that this step is completed. 
• Ensure that an approved contract is in place before service begins. 
• Follow the University’s Delegations of Signature Authority for Contracts policy.
• Ensure that any services contracted comply with University policies and/or any applicable external funding source guidelines.
• When a purchase requisition is created for a contract that has been through BCM, follow appropriate procedures for payment.

Sponsored Projects

For engagement of External Service Providers being paid with external funding sources or sponsored grants or contracts:

• Provide assistance to the principal investigator and/or the departmental business office when preparing funding requests (i.e., proposals) to ensure entities represented in the proposal are appropriately reflected as either a supplier/vendor/consultant or as a subrecipient. 
• Assist departments in verifying the allowability of charging Professional Services or Professional Research Services to a sponsored award as well as assessing whether the relationship should be that of a supplier or a subaward (i.e. subrecipient).  
• Review Requisitions and/or requests for Professional Research Services Agreements (PRSA) for individuals and companies charged to grants/sponsored contracts. 

Office of the General Counsel:

• Create standard agreement templates (Note: Only the Office of the General Counsel is authorized to draft or approve contract templates).
• Draft specialized agreements for any service where standard templates do not meet the needs of the department or for services that require specialized contract language (e.g., construction, fundraising, investment services, computer programming/software development, advertising/marketing, performance or visual arts, social media/web services).
• Review and approve changes to OGC drafted templates.
• Provide support to SPC on classification of worker issues.

Strategic Purchasing & Contracts (SPC):

• Provide guidance regarding supplier selection and contract negotiations.
• Review and approve all agreements related to the acquisition of goods and services.
• Issue purchase orders upon submission, review, and approval of a purchase requisition and with supporting documentation.
• Review and approve contract requests submitted through the Brown Contract Management System (BCM).
• Create and maintain the contract record in BCM, including use of approved contract templates and facilitating the signature process to finalize the contract.
• Process standard contracts that are for payments over $3,000.

Supplier Management:

• Manage supplier registration process for External Service Providers and perform related supplier set-up and maintenance activities.

Tax Office:

• Provide guidance on the tax classification of payments to Independent Contractors.

Accounts Payable:

• Process contracts under $3,000 in total value that are for a single payment.
• Review documentation submitted and use of spend category for transactions.
• Issue payments according to the payment terms associated with the supplier record.

Independent Contractor Responsibilities:

• Provide detailed and accurate information for determination of status and contract formulation.
• Complete Brown University Supplier and Individual Payee Registration process. This step is required for set up in the University’s procurement system and to provide the information needed for compliance with IRS requirements.
• Register with the State of Rhode Island Department of Labor and Training prior to the start of work for the University.
• Be in receipt of a signed agreement or purchase order prior to providing services.
• Provide appropriate documentation (e.g., an invoice) for payment of services.
• For foreign nationals, complete additional tax forms in order to receive payments.

Failure to comply with this and related policies is subject to disciplinary action, up to and including suspension without pay, or termination of employment or association with the University, in accordance with applicable (e.g., staff, faculty, student) disciplinary procedures, or for non-employees may result in the suspension or revocation of the user’s relationship with Brown University.

Federal and state enforcement agencies have made worker misclassification a top priority, and the consequences for misclassification can be significant. In addition to owing back pay, overtime, and benefits to a misclassified worker, the employer may be ordered to pay back taxes, interest, and fines. If departmental misclassifications result in fines and/or penalties to the University, departments will be billed for their proportional taxes, interests, and penalties. Signing a contract that has not been properly reviewed or one that you do not have appropriate signature authority to sign is a violation of the University’s Code of Conduct.

Brown University is a community in which individuals are encouraged to share concerns with University leadership. Additionally, Brown’s Anonymous Reporting Hotline allows anonymous and confidential reporting on matters of concern online or by phone (877-318-9184).

The following information complements and supplements this document. The information is intended to help explain this policy and is not an all-inclusive list of policies, procedures, laws and requirements.