Part 2 - Brigham Young University

Report
© 2014 Brigham Young University–Idaho
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© 2008 Brigham Young University–Idaho
Key Points from FLSA Part 1
Underlying Purpose of the FLSA
• Overtime and Recordkeeping Requirements
• Suffered or Permitted to Work
• Duty of Management - The mere promulgation of a
rule is not enough
• Comp Time is not permissible in the private sector
• Trainings – 4 part compensability test
• University Travel
•
© 2014 Brigham Young University–Idaho
EMPLOYEE OR
INDEPENDENT CONTRACTOR
March 2014
© 2014 Brigham Young University–Idaho
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Independent Contractor Policy
Significant legal consequences and penalty
assessments may result if an individual who meets
the legal definition of an employee is erroneously
hired as an independent contractor.
Generally most individuals hired by the University are
employees. However, those that meet certain
requirements might be classified as independent
contractors.
© 2014 Brigham Young University–Idaho
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Independent Contractor
Normally the reasons for contracting work out are to achieve
something ordinarily not within the usual capabilities of the
University’s regular employees.
Employees of the University including students are not
eligible to be independent contractors of the University.
Pub 15-A – Internal Revenue Service
“The general rule is that an individual is an independent
contractor if you, the person for whom the services are
performed, have the right to control or direct only the result
of the work and not the means and methods of
accomplishing the result.”
© 2014 Brigham Young University–Idaho
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Independent Contractor Classification
Three elements the IRS uses to determine worker
classification:
1. Behavioral control
2. Financial control
3. Type of relationship
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Behavioral Control
Behavioral Control
Anyone who performs services for you is your
employee if you can control what will be done
and how it will be done. What matters is that
the employer has the right to control the details:
• When and where work is done
• What tools and equipment are used
• Where supplies and services are purchased
• Who trains individuals
© 2014 Brigham Young University–Idaho
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Financial Control
Financial Control
Does the worker have a significant investment in
assets or tools?
• Are there unreimbursed expenses that the worker has
to bear themselves?
• Are the worker’s services available to the public?
• Do they get paid only if they finish the job?
• Independent contractors can realize a profit or loss
on a job.
•
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Type of Relationship
Relationship of the Parties
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Whether the worker gets any type of benefits –
vacation and sick pay, pension plan, and health or
life insurance.
The permanency of the relationship such as
continuing indefinitely or only for a specific project
or period.
Does the worker have his own business, which he
markets to others?
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Employee or Contractor
The IRS has developed a twenty question test for Independent Contractors to help determine classification
as an employee or contractor.
For the following questions, a 'yes' answer (except #16 and #18) is indicative of an employer/employee relationship.
1.
Is the worker required to comply with instructions about when, where and how the work is done?
2.
Is the worker provided training that would enable him/her to perform a job in a particular method or manner?
3.
Are the services provided by the worker an integral part of the business' operations?
4.
Must the services be rendered personally?
5.
Does the business hire, supervise, or pay assistants to help the worker on the job?
6.
Is there a continuing relationship between the worker and the person for whom the services are performed?
7.
Does the recipient of the services set the work schedule?
8.
Is the worker required to devote his/her full time to the person he/she performs services for?
9.
Is the work performed at the place of business of the company or at specific places set by the company?
10.
Does the recipient of the services direct the sequence in which the work must be done?
11.
Are regular oral or written reports required to be submitted by the worker?
12.
Is the method of payment hourly, weekly, monthly (as opposed to commission or by the job)?
13.
Are business and/or traveling expenses reimbursed?
14.
Does the company furnish tools and materials used by the worker?
15.
Has the worker failed to invest in equipment or facilities used to provide the services?
16.
Does the arrangement put the person in a position of realizing either a profit or loss on the work?
17.
Does the worker perform services exclusively for the company rather than working for a number of companies at the same time?
18.
Does the worker in fact make his/her services regularly available to the general public?
19.
Is the worker subject to dismissal for reasons other than non-performance of the contract specifications?
20.
Can the worker terminate his/her relationship without incurring a liability for failure to complete the job?
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Independent Contractors
Test Proctors (Expertise needed)
• Consultants
• Sports Officials
• Dance Judges
• Trimming Horses (Must have business and use own tools)
• Guest Speakers and Presenters (non-credit)
• Entertainment (short-term engagement)
• Artist
• Professional Photography (short-term engagement)
• Student Teacher Supervisors
• Student Teacher Coordinators (other than University
employees)
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Taxable Compensation
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All payments for services by individuals and business
entities represent taxable compensation to the recipient.
If an employer-employee relationship exists, the
compensation is considered wages and is subject to
withholding tax and applicable FICA contributions.
Wages are reported on a W-2
If an independent contractor relationship exists then
cumulative annual payments over $600.00 will be
reportable to the IRS on a 1099 MISC.
• Reimbursed travel expenses will be included in
taxable amount of the 1099 Misc.
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Independent Contractor Payments
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Payment requests for independent contractors need
to be completed before the contractor performs the
service.
All requests for payment to a foreign individual
must be reviewed by the Accounts Payable Office
for tax treaty issues and withholding requirements.
Contracts over $2,500, for a recurring event or
where there is risk to the University should be
processed through the Purchasing Office.
Payments to individuals for a onetime event and
under $2,500 may be completed using the
independent contractor form.
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Independent Contractor Payment Request Form
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Payment
Checks will be mailed to the Independent Contractor
(Direct Deposit is available)
• On rare occasions, some vendors may require
payment upon completion (day of show) for their
services. When this is the case, the requisitioning
department must clearly indicate in the “Description
Field” of the request that a payment upon completion
is requested and the reason for the request for pick up
and who will pickup the check. The department
should request the check to be picked up the
afternoon before the service or performance.
•
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Website for Independent Contractor
BYU-I Payroll Home Page
• Under Policies and Procedures select
Independent Contractor
•
Questions
© 2014 Brigham Young University–Idaho
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Employment vs. Workplace Experiences
Student
Employee
Paid
Internship
Employee
Employment
Unpaid
Internship
Other
Workplace
Experiences
Volunteers
Practicum
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Volunteers Under FLSA
Individuals who volunteer or donate their services,
usually on a part-time basis, for public service,
religious or humanitarian objectives, not as
employees and without contemplation of pay, are
not considered employees of the religious,
charitable or similar non-profit organizations that
receive their service.
© 2014 Brigham Young University–Idaho
Consequences of Misclassification
What happens if we incorrectly classify an employee as a
volunteer?
• Employees are owed wages, including any overtime
payments. Tax withholdings, such as income tax and
social security payments, would also need to be paid.
• We could potentially incur fines or penalties being
imposed by the Department of Labor.
• We would also have to cover the worker for workers’
compensation, as well as potentially being liable for
unemployment benefits.
• We would represent the university poorly in the public
eye and would have taught improper practices to our
students.
© 2014 Brigham Young University–Idaho
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Volunteers
© 2014 Brigham Young University–Idaho
Volunteer or Employee?
•
Scenario:
•
John comes to you and is very interested in the university and really
wants to gain a better understanding of your department. You mention
that you are not currently hiring, but John’s reply is: “You wouldn’t have
to pay me anything. I want to volunteer my time to help you and your
department in any way that I can. I would really love to do this because
this is a way for me to give back to this university while gaining valuable
experience”.
© 2014 Brigham Young University–Idaho
Volunteer or Employee?
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Is the worker motivated by a personal civic, humanitarian,
charitable, religious or public-service motive?
Are the services performed typically associated with volunteer
work?
Are the services provided different from those typically
performed by paid workers and are the hours of service less
than full time?
How much control does the nonprofit exert over the volunteer
while she or he is performing services?
Does the volunteer typically arrange his or her own schedule
to provide services when it is convenient for the volunteer?
Source: nonprofitrisk.org
© 2014 Brigham Young University–Idaho
Employees As Volunteers
© 2014 Brigham Young University–Idaho
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Employees As Volunteers
•
Scenario:
•
Lisa loves her job. She enjoys the fact that what she does has an impact
and helps make the lives of other people better. She is a non-exempt
employee (paid hourly) and her manager has let everyone know that
overtime is not allowed. Lisa’s work seems to be never ending and she
knows that if she were to spend an extra hour or two every day that she
would have no problem keeping up with the work load. She thinks to
herself: “I will just stay an extra hour every day, work through lunch
some days and volunteer my extra time….after all, I really do believe in
the mission and purpose of my work and I would love to provide a
service for my employer.”
© 2014 Brigham Young University–Idaho
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Employees As Volunteers
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Designation of “volunteer” status is not done unilaterally by
the employer to avoid minimum wage or overtime
requirements;
The volunteer time must be for a civic, charitable, or
humanitarian purpose without any promise, expectation or
receipt of compensation by the employee
The act of volunteering truly must be voluntary, without any
direct or implied coercion from the employer;
The employee’s volunteer activities must not be similar to the
services he/she performs as part of his/her regular
employment; and
The volunteering must be performed outside the employee’s
normal work hours.
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Church-Service Missionaries at BYU-Idaho
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Human Resources is the campus point of contact
Individuals and couples must meet church service requirements to
be called
Missionaries are approved and called under ecclesiastical authority
Service is 8-32 hrs. per week and lasts 6-24 months
Part-time church service missionaries receive assignments with the
approval/request of university
See full policy (2-14) under Employment Policies
© 2014 Brigham Young University–Idaho
Trainee/Practicum Experience
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The training, even though it includes actual operation of the facilities
of the employer, is similar to that which would be given in a
vocational school;
The training is for the benefit of the trainees or students;
The trainees or students do not displace regular employees, but
work under close supervision;
The employer that provides the training receives no immediate
advantage from the activities of the trainees or students and, on
occasion, his operations may even be impeded;
The trainees or students are not necessarily entitled to a job at the
conclusion of the training period; and
The employer and the trainees or students understand that the
trainees or students are not entitled to wages for the time spent in
training.
© 2014 Brigham Young University–Idaho
The Test For Unpaid Interns
© 2014 Brigham Young University–Idaho
The Test For Unpaid Interns
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The internship, even though it includes actual operation of the
facilities of the employer, is similar to training which would be given
in an educational environment;
The internship experience is for the benefit of the intern;
The intern does not displace regular employees, but works under
close supervision of existing staff;
The employer that provides the training derives no immediate
advantage from the activities of the intern; and on occasion its
operations may actually be impeded;
The intern is not necessarily entitled to a job at the conclusion of the
internship; and
The employer and the intern understand that the intern is not entitled
to wages for the time spent in the internship.
© 2014 Brigham Young University–Idaho
Student Employment
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Individuals must be admitted to BYU-Idaho and assigned to a “track”
as degree-seeking, fully matriculated students and be at least 16
years old.
Student employees must carry at least 6 credits during on-track
semesters to qualify for the FICA exception under IRS guidelines.
Students are non-exempt employees and receive the protection of
overtime wages for any work over 40 hours per week.
Student employees who travel as part of their work assignments
should follow the Travel Time (2-4 N) Policy.
Students must reside in Idaho during their employment.
Students may work up to 20 hours per week during their on-track
and off-track semesters.
Exceptions may be requested to work more than 20 hours per week
during off-track semesters only.
© 2014 Brigham Young University–Idaho
Scholarships
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Scenario:
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A student received a scholarship from a department for her special skills
to fill a leadership role. Two weeks into working in the role, the student
no longer wants to fill this role and decides to leave the program.
Question:
•
What happens to the scholarship the student received?
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Definitions
Accolade
Achievement
Aid
Allowance
Award
Benefit
Contribution
Funding
Gift
Grant
• A mark of acknowledgment
• Something that has been done or achieved through effort
• To provide with what is useful or necessary in achieving an end
• An amount of money that is given to someone regularly or for a specific purpose
• To officially decide that someone would get something
• Something extra that is given by an employer to workers in addition to their regular pay
• A payment made for a special or extraordinary purpose
• A sum of money or other resources whose principal or interest is set apart for a specific objective
• Something that is given to another person, group or organization
• To give something legally or formally
Incentive
• Something that encourages a person to do something or to work harder
Payment
• Something that is given to someone in exchange for something else
• The act of giving money for something
Prize
Salary
Scholarship
• Something offered or striven for in competition or in a contest of chance
• Fixed compensation paid regularly for services
• Can impact both exempt and non-exempt employees
• An amount of money that is given by a school, organization, person, etc., to a student to help pay for
the student's education
Stipend
• A small amount of money that is paid regularly to someone
• A fixed sum of money paid periodically for services or to defray expenses
Subsidy
• Money that is paid to aid usually by a government to keep the price of a product or service low or to
help a business, organization or student to continue to function
Support
• To give help or assistance to someone or something
Wage
© 2014 Brigham Young University–Idaho
• An amount of money that a worker is paid based on the number of hours, days, etc., that are worked
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