Consultant: An individual or group who gives expert or professional advice to a University department that relates to the University’s mission. Also known as an independent contractor.

Contract: A contract is an agreement between the University and one or more other parties, creating obligations that are legally recognizable or enforceable. A contract may or may not require the transfer of funds, the transfer of tangible property, and/or the issuance of a purchase order.

Employee: An employee is any individual presently employed by the University.

Employer-Employee Relationship: An employer-employee relationship exists when an employer has the right to direct and control the work of an individual who performs the services, including not only the results to be accomplished but also the methods and means by which the results are accomplished. Even if the employer does not exercise the right to direct or control the manner in which the worker performs the services, the fact that the employer retains the right to do so is sufficient to create an employer-employee relationship.

Independent Contractor: An independent contractor or an individual (who is not a University employee) is a business firm or an individual that contracts with the University to provide services for which the University controls or directs at most the result of the service, not the means and methods of accomplishing the result.

Payment to Individual Report (PIR): A form used to pay any non-employee who performs a service for the University or pay scholarships or human subjects.

Service Agreement: A written contract prepared by Purchasing Services, signed by the service provider, and signed and executed by an authorized signatory in Business Services. The agreement lays out a payment schedule and describes the deliverables the service provider is expected to complete within the defined time period.

Sole Source: An assertion that the individual or business firm is the only provider capable of performing the service in question. A sole source justification is required to waive bidding requirements on contracts over $5,000.

Statement of Work / Scope of Work: An outline of what the supplier is expected to accomplish or deliver to the University for the price stated in the contract.

Subaward: An award provided by a pass‐through (prime recipient) entity to a subrecipient for the subrecipient to carry out part of an award received by the pass‐through entity. Sometimes referred to as “consortium.” In other words, a prime sponsor provides the prime recipient with an award to do a project, and the prime recipient in turn provides a subaward to the subrecipient to do a portion of the work on the project. A subrecipient is responsible for a portion of the research results.

Subaward portal: A UW tool for requesting new outgoing subawards, requesting modifications to existing subawards and viewing subrecipient monitoring information. (Link)

Pre-Award Guidance: Preparing your proposal

When a sponsored award proposal includes external services, a preliminary assessment of the nature of that external service is needed to build the budget accordingly. While that assessment will need to be revisited if the proposal is awarded, making a sound preliminary assessment at the proposal stage on what type of arrangements may be required will likely save time and avoid significant delays later in the process.

You may choose to use the Service Contracting Wizard on the main page of this website to assist you, you may prefer to work through the material below to make an assessment, or you may prefer use both resources to make that assessment. Note that this assessment is non-binding, and the final decision will be made by the appropriate UW officials when the time comes.

Pre-Award Guidance: Subaward vs. Contractor / Employee Assessment

The first assessment to be made is whether the relationship with the external entity will require a subaward or an independent contractor agreement.

The document linked below will assist you in making that assessment. Note that the document refers to Federal awards, but the determination is the same for Federal and non-Federal sponsors.

Checklist to Determine Sub-recipient or Contractor Classification

If it is a subcontract, then you will budget an outgoing subaward as part of your proposal and click the outgoing subaward checkbox on the general page of the proposal's RAMP record. If the proposal is awarded, your department research administrator will create the subaward for you using the Subaward Portal.

If it is not a subcontract situation, then you will need to assess whether the individual will be an independent contractor or an employee.

Pre-Award Guidance: Independent Contractor or Employee Assessment

The second assessment is to see whether we should treat the individual performing services as an independent contractor or hire the individual as an employee. Please review the material in the Advantages of Employment section of this website to familiarize yourself with some of the features of employment in this context.

Use the tools on this website's main page to guide your preliminary assessment. Furthermore, the following linked documents describe some of the key factors in making the employer vs. independent contractor assessment. Review these documents in light of what you plan to do. Keep in mind that your particulars will change somewhat between time of proposal and time of award. Your assessment will need to be revisited when the award arrives, and the appropriate UW officials will make the final determination when they are presented with an service agreement request from your department. However, going through this assessment process at the proposal stage will give you an idea of what that final determination might be, and thereby assist you in building an accurate budget and in making your plans.

SYS 236: Utilization of Independent Contractors/Determination of Employee vs. Independent Contractor Status

Use the worksheet linked below or the Employee/Independent Contractor Assessment Tool on the main page to make a preliminary independent contractor or employment assessment. Again, this assessment will be revisited after the award is made and appropriate UW officials will make the final determination when reviewing the service agreement request from your department.

Employee/Independent Contractor Determination Questionnaire

If preliminary assessment indicates that you will need to hire the individual, prepare your proposal budget with salary and fringe for that individual, and work with your HR group to make a hire when the time comes.

If preliminary assessment indicates that you will need to work with the individual as an independent contractor, prepare your budget with a contractor agreement in mind, and plan to use a service agreement. Please be aware that if your payment to an independent contractor is over $5,000, you will need to collect competitive bids or justify the contractor as sole source. See section 2 of the Purchases for Services Justification Form.

Finally, another reminder that this preliminary assessment is not binding. UW officials responsible for contracting and employment decisions will make a determination between employment and independent contractor when they review the service agreement request and related documents. This assessment, whether using this guidance, the Service Contracting Wizard, or the Employee/Independent Contractor Assessment Tool on the main page, is preliminary and informational, and will be of help for budgeting and planning purposes.

Pre-Award Guidance: Budgeting Considerations

To assist with your proposal budgeting, here are some budget comparisons between subawards, independent contractor agreements, and employment:

Making assessments about service agreements vs. employment and approving the documentation is a Divisional Office concern. The better the decision-making is at the department level, the clearer the situation will be when the paperwork arrives at the Divisional Office. Divisions vary in their approach, so this material is presented here for your reference. Of course, you will follow your individual division’s protocol for handling these agreements.

When the service agreement paperwork arrives at the divisional office, a determination has already been made that a subcontract is not the correct mechanism to retain the external support in this case. If you have questions or concerns about that determination, you may review the Checklist to Determine Sub-recipient or Contractor Classification. Note that the form refers to Federal awards, but it applies equally to non-Federal sponsored funding. You may also wish to use this website’s Service Contracting Wizard as a double check.

If you are satisfied with the determination that it is not a subaward, then review whether it is an independent contractor or employment situation.

Review the Employee/Independent Contractor Determination Questionnaire submitted by the department. Feel free to use this website's electronic Employee/Independent Contractor Assessement Tool as a double check.

The following linked documents describe some of the key factors in making the employee vs. independent contractor determination. Review these documents in light of the decision that was made and consult with Human Resources as needed. Additionally, the Office of Human Resources Compensation and Titling staff is available to assist Divisional Office Human Resources staff as needed.

SYS 236: Utilization of Independent Contractors/Determination of Employee vs. Independent Contractor Status

If the decision to use an service agreement seems appropriate, then you will need to review the requisition and other service agreement forms ( Purchases for Services Justification Form and Contract Details Form).

For reference:

Entertainers/Speakers/Instructors and Consultant Contracts Policy

When a proposal is awarded, it is a challenge to make an assessment of how to collaborate with external partners. The assessment must be based on actual current circumstances, not on what was expected at time of proposal. Will it result in a subcontract, employment, or the use of an independent contractor?

You will need to start from the beginning with what to the external collaborator will do, then move toward the conclusion. Getting this assessment right will save time and trouble for everyone involved in the approval process.

Take note that assessments using the guidance below, the Service Contracting Wizard, or the Employee/Independent Contractor Assessment Tool are not final. They are provisional, but help build the case and provide documentation for one approach or another. Appropriate UW officials will make the actual determination when the time comes.

Post-Award Guidance: Subaward vs. Contractor/Employee Assessment

The first assessment to be made is whether this is a subaward with an external institution or an agreement with an individual. Utilize the following checklist to make that determination. Note that the document refers to Federal awards, but the determination is the same for Federal and non-Federal sponsors.

Checklist to Determine Sub-recipient or Contractor Classification

If it is a sub-contract, then the department will need to initiate a new subaward in the Subaward Portal. Instructions for creating a new outgoing subaward are linked on the Subaward Portal main page, and here: Instructions for Creating New Outgoing Subaward. For more information regarding subawards, visit the RSP Outgoing Subaward page.

If it is not a subcontract situation, then you will need to determine whether the individual will be an independent contractor or an employee.

Post-Award Guidance: Independent Contractor or Employee

This is the second assessment, determining whether we should treat the individual performing services as an independent contractor, or hire the individual as an employee. Refer to the Advantages of Employment document to familiarize yourself with features of employment.

Keep in mind that particulars may have changed between time of proposal and time of award. The decision will be made according to current conditions with the award in place. Things may have changed since time of proposal, so you may find that this assessment is different than what was expected. Unfortunately, a change in what was expected can have an impact on your budget, but we must make the assessment based on the key factors, no matter what the budget situation is, or what we thought was appropriate at time of proposal.

The following linked documents describe some of the key factors in making the employee vs. independent contractor assessment. Review these documents in light of what the PI plans to do.

SYS 236: Utilization of Independent Contractors/Determination of Employee vs. Independent Contractor Status

Use the Employee/Independent Contractor Assessment Tool on the main page of this website to perform this assessment. If you prefer paper, the questionnaire linked below can be used to make an independent contractor or employment assessment. If this document was filled out at time of proposal, you may use that earlier version for reference, but be sure to make changes in keeping with the current situation.

Please keep in mind Purchasing Services will make the final determination when reviewing the service agreement request from your department.

Employee/Independent Contractor Determination Questionnaire

Review the material and fill out the employee/independent contractor determination questionnaire.

If preliminary assessment indicates that you will need to hire the individual, work with your HR group to hire the individual. Review your award budget, taking salary, fringe, tuition remission (if applicable) and F&A costs in mind.

If preliminary assessment indicates that you will need to work with the individual as an independent contractor, you will prepare a service agreement contractor agreement. Before moving ahead with the paperwork, review your budget with the independent contractor costs in mind. For more budgeting information refer to Pre-Award Guidance: Budgeting Considerations on this webpage.

PLEASE NOTE: If this employee vs. independent contractor assessment makes a significant change in your award budget, you may need to consult the sponsor before making the necessary budget changes and going through with hiring the employee or retaining the individual contractor. Review your award terms and conditions (these can be found in summary on the requirements tab of WISDM, and in detail in the attached award document in the associated docs tab in WISDM). Work with your RSP post-award accountant if prior approval is required to make a change to the award budget.

If the assessment is that this will be an independent contractor relationship, and you have no budget changes (or have received sponsor approval to make the necessary budget changes), you will need to IMMEDIATELY contact purchasing services to start the procurement process. Purchasing will determine if the procurement process requires bidding or if your request meets the standards for an Academic Support Services Agreement.

The following documentation is required by Purchasing for making this determination:

• Purchases for Services Justification Form
• Contract Details Form
• Requisition
• Employee/Independent Contractor Determination Questionnaire

UW-Madison

• Purchasing
• UW-3067 Entertainers/Speakers/Instructors and Consultant Contracts Policy (Formerly PPP 30)
• UW-3069 Academic Support Services Orders and Agreements Policy (Formerly PPP 33)
• Checklist to Determine Sub-recipient or Contractor Classification
• Purchases for Services Justification Form
• Contract Details
• APIR (Academic Planning and Institutional Research)
• Approval of Contractual Arrangements for Delivery of Credit Instruction
• Office of Human Resources (OHR)
• HR Policy 2.03 - Employee/Independent Contractor Assessment
• Research and Sponsored Programs (RSP)
• Subaward Portal
• Instructions for Creating New Outgoing Subaward

UW-System

• SYS 236: Utilization of Independent Contractors/Determination of Employee vs. Independent Contractor Status

External

• IRS Guidance: Independent Contractor, Self-employed, or Employee

If you have questions...

Purchasing: purch@bussvc.wisc.edu
Describe your situation, the agent will direct you to the correct Purchasing contact.

RSP: rsp-admin@rsp.wisc.edu
Describe your problem and RSP-Admin will direct your request to the correct RSP contact person.

Human Resources:
Contact your local Human Resources group