5.6.2 Independent Contractors, Professionals, and ConsultantsCertain individuals who operate their own businesses
and who perform work for a location may qualify for classification
as independent contractors. Independent contractors should have a
written agreement (for example, a Professional Services/Consultant Agreement for individuals or an Independent Contractor Agreement for business entities such as a landscaping or janitorial service or security company) and must have a current Form W-9 on file before any
payment can be made for their services. Each location reports the
amounts paid to independent contractors to the taxing authorities on an
IRS Form 1099 and to the California Employment Development Department.
See New Hire Reporting.
Correctly classifying a worker as an independent contractor is
critically important; review the Independent Contractor Guidelines and contact the Human Resources Department for
guidance. Significant penalties are imposed by both federal and state
agencies if a location makes an improper classification.An independent contractor relationship exists only when all three of the following elements (this is known as the "ABC test") are met:
A: The individual is free from the location's control and direction, both under an agreement for performance of the work and in actually performing the work;B: The individual performs work that is outside the usual course of the location's regular activities; andC: The individual is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.
A: The individual is free from the location's control and direction, both under an agreement for performance of the work and in actually performing the work;
B: The individual performs work that is outside the usual course of the location's regular activities; and
C: The individual is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.
If any one of the ABC test elements is missing, the individual must be classified as an employee. Because musicians, wedding coordinators or parish event planners are engaged in regular parish activities, they may be considered independent contractors only if, aside from performing services for the parish, they have active careers as musicians, wedding coordinators or event planners and routinely serve multiple clients. If such employees are paid on a "piece rate" or "flat fee" basis, review the Flat Rate Guidelines and consult with the Human Resources Department on the proper manner of payment and timekeeping. Piece rate and flat fee employees are generally non-exempt and all wage and hour rules that apply to non-exempt workers apply to them, including providing paid rest and unpaid meal breaks, sick pay and overtime.