Guidance on Hiring for the instruction of For-Credit Course
To provide guidance to academic units on when to classify an individual performing service for the university as an employee versus independent contractor with respect to teaching for-credit courses at MSU.
In order to be compliant with federal laws and regulations it is essential for MSU to develop a consistent practice for hiring all types of instructors, specifically related to non-traditional academic employment arrangements1.
For definitions on determining employment status and/or classification as an independent contractor please refer to Section 76 of the Manual of Business Procedures (MBP).
This guidance applies to the following:
- Individuals teaching in support of for-credit courses at MSU 1.
- Individuals located on MSU’s main campus, off-campus (statewide, out of state and outside the U.S.) and on-line.
Activities cover but not limited to any one or a combination of the following: teaching (classroom, clinical and online instruction), preparation of curriculum, development of syllabi, facilitation of online discussion boards, administering of examinations and/or grades and providing accessibility to students to discuss matters related to the course outside of class time.
1 For purposes of this policy, teaching is intended to be inclusive of faculty and academic staff.
Individuals meeting the criteria listed above will be considered an MSU employee and do not qualify as an Independent Contractor as defined by the IRS (see definitions in the MBP).
The Purchasing office will no longer process Personal Services Contracts (PSC) for individuals meeting the criteria as defined above.
Department administrators will follow the academic hiring process for appointments. Please consult the Academic Hiring Manual for further guidance on the academic hiring process.
In situations when the status of a worker cannot be easily identified, please contact Academic Human Resources at 353-5300 or email@example.com for further guidance.
Guest Speaker: defined as an individual having subject matter expertise in a specific area of course content for a short duration.
Typically, guest speakers participate in courses for not more than 3 lectures during the semester. Guest speaker can by paid (Honoria) or unpaid (adjunct).
Example: MSU department has sought out a sole proprietor to provide ski instruction for spring semester. The proprietor has agreed to provide instruction, equipment, storage, meals and student lodging to students enrolled in the course. The proprietor has agreed to all terms of the course to include development of curriculum, instruction and grading students. How should this individual be paid?
Answer: This proprietor has responsibility for all aspects of this course, he/she would be an employee of MSU and the department should submit a fixed term appointment. With respects to the equipment, storage and meals, a separate contract should be initiated through the Purchasing department.
Answer: No, the guest lecturer is exempt from the employee consideration based on MBP 71 and on the IRS common law rules governing employee and independent contractor status. Additionally, the guest lecturer meets the following criteria for honoraria payment: participated for a short duration of the course, has little to no input on the overall course development and is not a primary instructor.
Example: A faculty member in a department recently resigned and it has become increasingly difficult to find an adequate replacement for the next semester. As an interim measure, the department found another University that offers a very similar program to MSU. As a result, the department has reached an agreement with the other University to have their faculty teach the MSU course. A faculty member has been identified to teach the course at the other institution and is listed as the primary instructor. Is this faculty member considered an employee of MSU?
Answer: No. Often times, institutions have enforced policies that prohibits faculty members from dual employment with other institutions. In cases like these, MSU has the ability to contract with the other institution through a PSC. MSU will make payments to the University and not the individual faculty member.
Example: Department has a series of short (6 weeks in length) on-line for-credit courses. The course was developed by a faculty member; however, the course is facilitated by an instructor that is located off campus. The facilitator is responsible for discussion boards, leading case discussions and compiles assignments in order to form final grades. Is this individual an employee of MSU?
- Every individual performing services for the University and compensated by the University is presumed to be an employee unless they can meet the criteria of independent contractor status. Generally, every individual who performs services that are subject to the will and control of the University, as to both what must be done and how it must be done, is an employee. It does not matter that the University allows the employee considerable discretion and freedom of action, as long as the University has the legal right to control both the method and the result of the services.
- University policy requires that the following workers be compensated as employees:
- Anyone teaching a course for credit.
- Anyone currently employed by the university who performs additional services outside his/her regular job description, in most cases.
- Anyone previously employed by the University and performing the same/related services to the services they provided as an employee.
- Anyone currently enrolled as a University student.
- The general rule of thumb is that an individual is an independent contractor if the University has the legal right to control or direct only the end product of the work and not the means and methods of accomplishing the result. Generally, independent contractors identify themselves as self-employed and make their services available to the public.
- Examples of individuals who might meet the criteria for independent contractor status include:
- Guest performers or artists who otherwise are not affiliated with the University.
- Guest speakers or guest lecturers brought to the University for very short durations because of their expertise.
- Individuals providing professional services with a specialized skill, such as attorneys, accountants and other consultants.
- Payment is made by completing a Disbursement Voucher (DV). Reference MBP section 71 and 75. In cases where a service provider contract is required, the contract must be routed through the Purchasing Department for signature to authorize the contract before services are performed.
- If the service provider does not already exist as a DV or PO vendor in the finance system (EBS), a new DV vendor must be created. The service provider’s Social Security number or tax identification number is required to set up a DV vendor.
- The DV must have the completed Honoraria/Speaker/Performer Checklist attached. Attachment of other pertinent documentation (e.g. an event flier, announcement or invitation letter) is encouraged. The DV is completed using Payment Reason G (Contractual Services / Advertising / Honoraria), and object code 6415 for Honoraria or 6414 for Speaker Fees.
- Payment to any single vendor should be made no more frequently than once per month. For example, a vendor with an engagement that occurs the first and third weeks of a month should receive a single payment. A vendor with an engagement that occurs once in February and once in April can receive two payments.
- Travel expenses are to be processed in accordance with Manual of Business Procedures Section 70. Travel expenses may be included on the DV with the honoraria. Please separate the travel expenses on separate accounting lines, and use the proper travel expense object code.
Yes, individuals involved in what is typically considered academic related activities (i.e. instruction, course development, course moderation, etc.) for-credit courses offered by the university to the public is considered an employee and should be paid as such. If teaching outside the U.S. the hiring unit is not required to provide a work visa. While they are required to submit a W4 upon employment and the University is required to provide form W2 for tax filing purposes. The non-permanent resident is able to file an exemption for filing taxes in the U.S.
No, anyone currently employed by the university who performs additional services outside of his/her regular job description should not be paid as an independent contractor. Contact Purchasing for guidance at 517-355-0357.
Yes, anyone hired as an MSU employee is subject to a criminal background check and all other onboarding requirements for new hires. It is the responsibility of the hiring department to ensure background checks are completed prior to the commencement of employment at MSU.
No, the recently separated employee is not considered an Independent Contractor. Present and former university employees performing the same work for the university will rarely meet criteria for independent contractors and should usually be paid as employees. According to IRO and DOL guidelines, a continuing relationship is one indication of an employee – employer relationship. In these circumstances, the employee can be hired as an on-call or temporary employee.