FINANCIAL SERVICES BULLETIN #97/98-07

 

October 10, 1997

 

M E M O R A N D U M

 

To: Executive Committee, Department Chairpersons, Directors, Administrative Heads and C.A.P. Representatives
From: Anthony Ramirez
Director of Human Resources
Steve Lynch
Executive Director of Financial Services
Subject: Processing Payments to "Temporary Associates"

 

On March 25, 1997, Financial Services Bulletin #96/97-16 was issued (copy attached). This bulletin discussed the need to comply with new IRS and U.T. System directives related to payments made to individuals providing services to the institution. This bulletin introduced the "Employee/Independent Contractor Classification Checklist" which has been used for the past several months to determine whether individuals should be classified and paid as either employees or independent contractors.

The result of these IRS directives, and the implementation of the new checklist to aid our compliance with these requirements, has been an increase in the number of such payments handled as employee compensation. The Human Resources Department, along with the Budget and Payroll Office, has worked to develop a more expeditious means of setting up these payees as employees.

The Human Resources Office has set up a single new "Job Code" to which these individuals should be appointed. The new "job code" is #0490 and is titled "Temporary Associate".

As the checklist indicates that a person should be paid as an employee, the following process should take place:

Step #1:
The department should process a "PBS" document through the LYNX System appointing the individual to the "Temporary Associate" classification (Job Code 0490). This appointment should be "Without Salary". The appointment period should reflect the period (beginning and ending dates) the "Temporary Associate" will be providing their service to the institution. However, the appointment period may not exceed (4) months. A description of the work to be performed by the individual should be included in the "Comments" section of the PBS. This description should parallel the description of work performed which would normally be provided on the Prior Approval Form if the individual were an independent contractor.

Step #2:
After submitting the "PBS" electronically, the department must submit a completed W-4 and I-9 form for the "Temporary Associate" to Human Resources along with a completed "Cover Sheet for Temporary Associate Appointments" (attached). Federal mandates require the completion of both of these forms before payment may be issued. Therefore, Human Resources will not approve the "PBS" appointing the "Temporary Associate" until both the I-9 and W-4 are submitted with the cover sheet.

Step #3:
The department must now process a "Request for Approval of Payment to Employee for Additional Services" (form 7.7.18 in HOP). After routing for all appropriate approvals, the form will be submitted to the Budget and Payroll Office and the "Temporary Associate" will be paid on the next scheduled Supplemental Payroll. A completed "Employee / Independent Contractor Classification Checklist" must accompany the additional services payment request form for approval and must be submitted with the form to the Budget and Payroll Office for payment processing.

 

The above (3) step process will help expedite payments to "temporary associates" in compliance with IRS requirements and with a minimal effort on the part of both departmental administrative staff and Human Resources. The process will also guarantee proper compliance with employment policies at the minimum level allowable and within appropriate internal controls. The accompanying Employee / Independent Contractor Payment Processing Flowchart will help guide the proper processing of these transactions.

It should be noted that payments to "temporary associates" result in withholding both federal income tax and social security from the payee’s gross payment. Additionally, staff benefits, limited to social security matching, WCI and UCI, will be charged.

"Temporary Associate" payments should be charged to a "salary" account. Staff Benefits will be charged to a "staff benefits" account, with the exception of staff benefits costs for salaries paid from State Funds ("E") accounts. These staff benefits charges will be made to the institutional staff benefits account.

This new procedure will be effective October 20, 1997. Questions regarding this new Job Code classification and this new process should be directed to either Human Resources or the Budget and Payroll department.