I:Forms/Payroll/OnTheWeb/Independent Contractor Guidelines.doc
Guidelines for Determining Employee vs. Independent Contractor
It is the responsibility of the person initiating the requisition or payment request to determine initially whether an employee/employer
relationship exists. The Controllers Office has the final authority for the determination of the appropriate method of payment (via Payroll or
Accounts Payable for the disbursement to individuals)
The following guidelines are provided to assist you in determining whether an individual should be paid as an employee or as an
independent contractor. Use Confirmation of Independent Contractor Status form to document the determination.
The determination of employee versus independent contractor status is subject to close scrutiny by the IRS. If the IRS should determine
that an independent contract should have been classified as an employee, the University would be subject to substantial assessments,
potential interest and penalties, and all the taxes owed as well as the taxes that should have been withheld.
IRS regulations provide a common law rule that generally an employee relationship exists when the University has the right to control
and direct both what work is to be done and how it is to be done. In contrast, individuals who are subject to the control and direction of
another merely as to the result and who are engaged in the pursuit of an independent trade, business, or profession, in which they offer
their services to the general public, are considered independent contractors.
If the relationship is determined to be one of employee Lehigh must:
• Obtain Form I-9
• Obtain IRS Form W-4
• Withhold income tax
• Pay and withhold FICA tax
• File employment tax returns
• File tax information returns (W-2)
Several factors need to be considered in deciding whether the individual is an independent contractor or an employee. No one factor, in
itself, may be conclusive.
I:Forms/Payroll/OnTheWeb/Independent Contractor Guidelines