WHAT IS AN INDEPENDENT CONTRACTOR?

A person hired to perform services for pay is presumed by law to be an employee unless he/she meets the definition of an independent contractor or qualifies under a specific exemption provided by federal and state law. An employer classifying a service provider as an “independent contractor” must be able to prove that he/she meets the legal definition of “independent contractor.”

Two broad principles apply for qualification as an “independent contractor”:

  1. The independent contractor must be free from the District’s control and direction over how the service is performed.
  2. The independent contractor must be customarily engaged in an independent trade, occupation, profession, or business related to the service being performed.

If a contractor is hired who has employees, the District must also verify that the contractor has workers’ compensation insurance for those employees. DPS may verify insurance coverage by requesting a certificate of insurance from the contractor’s insurance company. If the contractor does not have workers’ compensation insurance for its employees, DPS can be held responsible for the workers’ compensation insurance for the contractor’s employees.

POTENTIAL RAMIFICATIONS

Improper classification of independent contractors is potentially quite serious, as it can result in back payment of payroll taxes to the State of Colorado, along with fines and penalties per C.R.S. 8-72.

MAKING THE DETERMINATION

So, what does “independent contractor” status look like at a DPS workplace? The DPS Human Resources and Purchasing Departments have prepared an ICA Checklist to provide some guidance. Consider the following factors, none of which are dispositive, but many of which carry some weight in the ultimate determination. A person is more likely an independent contractor if the following factors apply to his/her proposed working relationship with DPS.

  • No DPS employee benefits or participation in DPSL or EPMP
  • No DPS reimbursement of individual’s business expenses
  • No indicia of DPS employment, such as DPS business cards or issuance of DPS employee identification
  • No DPS-issued smart phone
  • No DPS-issued computer
  • No DPS email domain assignment
  • No micromanagement of work assignment
  • Individual has his/her own business card (i.e., not a DPS business card) and advertises services / business in the broader community
  • Individual has customers / clients other than DPS
  • Individual maintains and can produce proof of business insurance of any kind
  • Individual is not performing core DPS business function normally performed by DPS employees

Independent Contractor Request Checklist

To request an Independent Contractor, please complete this form and submit it to ______prior to authorizing the IC to begin work.

  1. YesNoWill the contractor perform functions that are “substantially similar” tofunctions performed by current district employees?
  • If the answer to question 1 is yes, it is not appropriate to hire a contractor for this work.Contact your HR partner for support in posting it as a DPS position.
  • If the answer to question 1 is no, then respond to the following questions.
  1. YesNoWill the district exercise little or no control over the contractor or his/hermethodology for performing delegated job functions?
  2. YesNoDoes the contractor possess unique skills that require an ability or degree of independent judgment to be exercised?
  3. YesNoWill the contractor determine where services are to be performed and hours necessary to complete the job function, not the district?
  4. YesNoIs the contractor’s employment considered to be temporary and for a defined period and/or the completion of a specific job function?
  5. YesNoDoes the contractor have the sole authority to determine whether or not to employ other individuals to aid in the completion of work for which the contractor was hired?
  6. YesNoDoes the contractor have a limited liability company (LLC)?

If you answered yes to all these questions, then it may be appropriate to hire a contractor.

Printed Name of RequestorProject Title

Signature of Requestor Date