Independent Contractor Management

The University of North Carolina at Chapel Hill often requests services from individuals who are not employed by the University but are necessary for the success of University projects and programs. Campus Units may utilize in-house and campus unit support centers for help, but when specialist help is needed, campus units can submit an Independent Contractor agreement accompanied by a proper letter of justification on department letterhead to create a working relationship with an individual and enable payment. These agreements must be made prior to the individual’s performance of service.

Independent Contractors differ from approved University Suppliers in the fact that their work is short-term (less than one year), written for a specific intent and includes a total pay amount pre-determined by the campus unit. Independent Contractors are not required to go through a bidding process but are required to do a background check (unless the contract is for a one-day speaker). See HR policy.

Types of Contracts

There are two basic independent contracts for campus work:

• 708.1 – Independent Contractor Predetermination Process, for most all independent contractors.
• 708.3 – Procedure on Requesting and Paying a Speaker, for speakers whose engagement lasts no more than one week, will earn less than $5,000 and can sign IRS W-9 as a U.S. person (see the procedure for complete details).
• 708.4 – Procedure on Requesting and Paying a Community Collaborator, for community collaborators whose engagements last no more than a year and will earn no more than $5,000 and can sign IRS W-9 as a U.S. person (see the procedure for complete details).

Process

Campus Units should thoroughly read Policy 708 and follow Procedure 708.1 or 708.3, depending on the appropriate circumstance. Forms required for the IC approval process are linked below or included in the following policies and procedures:

• 708 — Independent Contractor
• 708.1 – Independent Contractor Predetermination Process
• 708.2 – Paying an Independent Contractor
• 708.3 – Procedure on Requesting and Paying a Speaker
• 708.4 – Procedure on Requesting and Paying a Community Collaborator
• W-9: IRS form for vendors
• IRS W-8BEN form
• Letter of justification for sole source on department letterhead

Once the agreement is signed, the independent contractor is subject to the direction or control of the University only as to the end result, not as to the methods and means used to accomplish that result. Originating departments are to seek confirmation of independent contractor status from Accounts Payable prior to making any employment commitment or preparing any payment request form(s).

AMENDING APPROVED CONTRACTS.  If you have an approved contract that needs amending, (e.g., extending service date or increasing service fee), submit changes through ConnectCarolina via a new Independent Contractor request.  Attach the original form 708.1.1f- Employee/Independent Contractor Determination Checklist along with your revised version of this form and enter a description of your amendment in the description field (e.g., change service date from 12/31/2022 to 2/28/2023). You will need to provide only these two forms unless the service fee is increasing above $10,000.  If the service fee increases above this, attach the original and revised versions of the Employee/Independent Contractor Determination form along with 708.1.2f – Independent Contractor Services Agreement and 1232.1.1f – Customer Request for a Waiver of Competition and Sole Source Justification form.

Tax Information

Independent contractors will be issued a Federal tax Form 1099-NEC by January 31 of the year following their service if they were paid at least $600 in the prior calendar year. In some instances, the independent contractor payment might be subject to tax withholding (see Policy 707 – NC Income Tax Withholding Requirements for Non-Wage Compensation Paid to Nonresidents).

Independent Contractors Who Are Not US Citizens

Foreign IC requests and questions should be sent to IC_Review@unc.edu, and should follow the appropriate procedures above. Relevant forms include:

• Policy 709 – Federal and State Tax Withholding Requirements for Payments to Non-Resident Aliens Performing Services in the United States
• 709.1 – Completing Tax Withholding Forms as a Non-Resident Alien Performing Services Within the United States
• Foreign Vendor Creation Form
• Vendor documentation guidelines

If you need any additional assistance, please review the FAQs on the Domestic Vendors page. If you are still have questions, please contact IC_Review@unc.edu.