Policy Manual

Determination of Status: Employee vs. Independent Contractor

The characterization of individuals as independent contractors or employees has important tax and non-tax consequences to both Georgia College 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 GC meets the criteria established by the IRS for status as an independent contractor, he/she shall not be subject to income tax withholding through payroll. When a person performing services for GC does not meet the criteria to be considered an independent contractor, he/she shall be treated as an employee, hired through the normal hiring process subject to all applicable policies and requirements, and subject to income tax withholding through payroll. Retirees of the University System of Georgia are not eligible for re-employment as independent contractors but are subject to the University System policy on Employment Beyond Retirement. (This eligibility clause is not applicable to S-Corporations.)

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