Personal Services Payments - Attachment 11
FREQUENTLY ASKED QUESTIONS/COMMENTS
Under the examples of Academic Support Services, the example of the agreement with the local school system is in conflict with the understanding that supervisory teachers are considered to be employees.
Supervisory or critic teachers are not University employees nor are they independent contractors. Instead, they are acting as employees of the local school district when supervising UW System student teachers. The preferred method of obtaining these services is by contract with the school district as illustrated in the example. Some universities have agreed to pay the teachers directly. Since the payments are wages subject to Social Security, the universities assumed the school district liability and placed the teachers on payroll to collect these taxes. The Social Security liability belongs to the school district as it is the employer in these cases. A university that does not agree to assume the school district's Social Security liability would not have to payroll supervisory teachers.
What type of form/contract should be used for Academic Support Services that are less than $5,000?
An institution may use the Academic Support Services Agreement (Attachment 9) for all such agreements regardless of amount. It must be signed by the authorized institutional approval.
The policy allows for an exception to putting a nonemployee/nonstudent on the payroll if the payment will be less than $500. What if our institution wants to put all employer/employee relationship payments on the payroll?
An institution may adopt a more stringent policy than outlined in FPPP #31. The $500 exception only alleviates the need to put nominal payments on the payroll, it does not eliminate the employer/employee relationship.
Why aren't students or current UW System employees covered by the $500 tolerance in section III A.5?
Students are not covered by the $500 exception because frequently the amount of pay is so small that an institution could exercise the exception to eliminate student payroll.
Section 3402(e) of the Internal Revenue Code requires treatment of all remuneration paid to employees to be considered wages if more than 50% of the remuneration is for wages. Therefore, the UW System will take a conservative approach and if the person is currently a UW System employee, all payments will be deemed to be wages.
Could there ever be a situation where services provided by a UW employee would not have to be paid on the payroll?
Yes. If the employee is a business entity with a federal employer identification number and an employer/employee relationship is not in existence for the service, the employee could be considered to be an independent contractor. Also, payments to employees who periodically participate in clinical trials or as research subjects need not be payrolled.
Can the Academic Support Services Agreement ever be used for a personal service not related to instruction/research/public service?
No. The concept of the Academic Support Services Agreement originates from unique non-competitive services needed by the UW System because of our instruction/research/public service missions. The administrative aspects of the UW System are not unique to us and purchases of personal services should flow through the normal purchasing process.
Can the $500 exception be considered "nominal fees" in determining whether a non-exempt employee must be compensated for overtime?
No. The rules of the Fair Labor Standards Act must be followed with regard to overtime for any payments that are payrolled. Payments under the $500 exception could not contain overtime because this exception is not available for UW employees or student help.
If the PIR form was completed and submitted prior to the services being rendered, the method of payment could more easily be reviewed and approved beforehand.
If an institution can put this policy into effect, control over these types of payments is obviously improved. This may not be a realistic approach for some institutions.
Who is the probable contracting officer at the institution who will verify that an activity is unique, noncompetitive activities supporting instruction/research/public service?
The person(s) most likely to be in a position to make this determination will be someone in the Academic Office, the Vice Chancellor or delegated designee.
Who is the person who will verify that FPPP #31 has been complied with? Who will make the determination that an employer/employee relationship does/does not exist?
Each institution will need to determine which office is most knowledgeable and capable of making these decisions. Typically, the decision would be made in the Personnel Office but an institution may prefer the Business Office to make the determination.
Sometimes an individual or entity providing a service to the UW requests that payment be made to a charity or some other entity other than to the individual or entity which provided the service. Is that allowed?
No. For internal control and tax implication reasons, payments must be made only to the individual or entity which provided the service. It is then their prerogative to make charitable contributions or donations as they deem appropriate.