Procurement Services

A Part of Finance



UNCG is required to comply with provisions of the Internal Revenue Service regulations regarding personal service arrangements that create an employer/employee or an independent contractor relationship.

The Internal Revenue Service (IRS) and other government agencies can assess employers with penalties for misclassifying employees as independent contractors. UNCG must apply common standards in order to reduce the financial and political risks of such misclassifications. The information on this site will assist in determining the appropriate worker classification of individuals engaged to perform services for the University.


The characterization of individuals as independent contractors or employees has important tax and non-tax consequences to both the Institution and the individual. It is generally more advantageous to federal and state governments to have an individual classified as an employee. When faced with a characterization issue during the course of an employment tax audit, the Internal Revenue Service (IRS) will almost always treat individuals as employees, absent a reasonable basis for classification as an independent contractor on the part of the employer. Misclassification of an individual can be very expensive to the Institution (or to persons in positions of responsibility), so it is essential that proper characterization of an individual be determined before any payments are made to an individual for services performed.

When a person performing services for an Institution meets the criteria established by the IRS for status as an independent contractor, he/she shall not be subject to income tax withholding through the Institution’s payroll. When a person performing services for the Institution does not meet the criteria to be considered an independent contractor, he/she shall be treated as an employee, hired through the normal Institutional process subject to all applicable policies and requirements, and subject to income tax withholding through the Institution’s payroll. Retirees of the UNC System are not eligible for re-employment as independent contractors, or as employees of independent contractors working on projects benefiting the state, within six months of retirement during which time they are subject to the University System policy on Employment Beyond Retirement. (This eligibility clause is not applicable to S-Corporations.)


The primary responsibility for determining the classification of an individual as an employee or an independent contractor rests with the department obtaining the personal services. The department must make the initial determination by review and application of the factors associated with Determination of Status – Employee vs. Independent Contractor.

Procurement Services
Responsible for reviewing the completed form and obtaining necessary approvals.


An individual who performs personal services for the Institution where the Institution has the right to control and direct the individual who performs the services, not only as to the result to be accomplished, but also as to the details and means by which that result is to be accomplished. It is not necessary that the Institution direct or control the manner in which the services are performed; it is sufficient to establish an employee-employer relationship that the Institution has the right to do so.

The Institution, when it has a relationship with an individual performing services for its benefit, and where the Institution has the right to subject the individual to its will and control - not only what work shall be done but how the work shall be done.

Independent Contractor
An individual who performs personal services for the Institution where the Institution has the right to specify the result to be accomplished by the work, but not the means and methods by which the result is to be accomplished.


Those not eligible to be classified as an Independent Contractor are as follows:

  • 1. Any individual that is a current UNCG, UNC System or State of NC employee;
  • 2. Any individual who has been employed by UNCG, UNC System, or State of NC in the same calendar year;
    (January 1, 20XX - December 31, 20XX)
  • 3. Any current UNCG student (including those that are current employees); or
  • 4. Any former student who was employed by the University in the same calendar year;
    (January 1, 20XX - December 31, 20XX)

  • • The University preference is to not issue a 1099 and W-2 in the same tax (calendar) year in order to adhere to IRS best practice
  • • State of NC employee excludes K-12 NC Public School system and NC Community Colleges
  • • Exceptions will be reviewed on a case by case basis and must have approval of the AVC of HR, Director of Procurement Services, and Controller. Such review may require consultation with the Office of General Counsel.

General Rule

The general rule is that an individual is an independent contractor if the University has the right to control or direct only the result of the work and not what work will be done and how the work will be done.

An individual is not an independent contractor if they perform services that can be controlled by the University (what work will be done and how the work will be done). This applies even if the individual is given freedom of action. What matters is that the University has the right to control the details of how the services are performed.

Common Reasons for Denail

  • ❖ Currently a UNCG employee
  • ❖ Providing services substantially similar to a current UNCG employee
  • ❖ The University is exerting control or is able to control the services being provided


In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered. Facts that provide evidence of the degree of control and independence fall into three categories:

  • ❖ Behavioral
  • ❖ Financial
  • ❖ Type of Relationship

The IRS link below provides valuable guidance to assist in the independent contractor vs employee decision process. See Common Law Rules section.

Individuals Generally Classified as Employees
The examples below are not all-inclusive. Departments should determine an individual’s classification by using the Employee Versus Independent Contractor Classification Checklist as a guide whenever doubt exists as to the proper classification of an individual providing service to the Institution.

Employee examples include:

  • ❖ Contract-Classified Staff
  • ❖ Credit or Noncredit Primary Course Instructors
  • ❖ Faculty
  • ❖ Hourly Employees
  • ❖ Medical Residents
  • ❖ Professional Staff
  • ❖ Research Assistants
  • ❖ Student Helpers
  • ❖ Teaching Assistants

Independent Contractor
The examples below are not all-inclusive and may not be suitable depending upon circumstances and the amount of control the Institution has over the individual performing the services. Departments must complete the Employee Versus Independent Contractor Classification Checklist form to support any determination that an individual is to be classified as an independent contractor.

Independent contractor examples include the following:

  • ❖ Artists (musicians, performers, sculptor, poet, filmmaker, novelist, etc.)
  • ❖ Consultants (Work or task performed by individuals possessing specialized knowledge, experience, expertise, and professional qualifications to investigate assigned problems or projects and to provide counsel, review, analysis, or advice in formulating or implementing improvements in programs or services. This includes, but is not limited to, the organization, planning, directing, control, evaluation, and operation of a program, agency, or department)
  • ❖ Guest Lecturers and Seminar Leaders (occasional service and not Primary Course Instructors)
  • ❖ Lawyers (a person who practices or studies law, an attorney, or a counselor)
  • ❖ Musicians (anyone who composes, conducts, or performs music)
  • ❖ Public Stenographers (a person whose job is to transcribe speech; to take and transcribe dictation)
  • ❖ Veterinarians ( a person who is trained and qualified to give medical care and treatment to animals)

The following services will not require the Independent Contractor determination form to be filled out and approved by Procurement Services. The University has evaluated and classified the following general classes of service providers as independent contractors:

  • ❖ Sporting officials for intercollegiate athletic events
  • ❖ Announcers and commentators for athletic events
  • ❖ Academic program review consultants (including accreditation team members)
  • ❖ Performers, entertainers, professional athletes, i.e. non-employees who provide entertainment services to the University, for a fee. Examples: DJs, singers, bands, comedians, magicians, motivational speakers, etc.
  • ❖ Guest Speakers, i.e., non-employees who provide services to the University for a fee (or honorarium) in which one-time lectures, discourses or presentations are given before classes or audiences


Please complete the UNCG Independent Contractor vs. Employee Determination Form to demonstrate the relevant facts for classifying the individual as an independent contractor. Submit the form to the Procurement Services office for review and approval. The form can be found on the Contract Services page.

Reference Finance Policy 7.4 Independent Contractor Services -