Payroll Laws and a Clarification of Hiring Practices
- Issue Date: March 5, 1981
- Primary Contact: Director of Human Resources
- Responsible Member of Directorate: President and Director
- Responsible Office: Human Resources
A. As an employer, the Institution is responsible for deducting the proper amount of income and Social Security taxes from the pay of covered employees and for making the required employer contributions for Social Security and Unemployment Compensation. In addition, the Institution is a Federal contractor and our Equal Employment Opportunity commitments require that all positions which become available be posted.II. Employer/Employee Relationship Criteria
B. All matters dealing with the hiring of employees in the Institution must be processed through the Human Resources Office, which is set up specifically to handle that function and service at the Institution. Purchase Orders are not to be used to hire employees. Questions concerning compliance with Equal Employment Opportunity, nepotism policy, insurance protection, tax withholding requirements, and tax contributions by the employer are matters that the Institution, as an employer, must respond to promptly as a matter of record.
C. Hiring practices are outlined in Hiring Process , as well as in Institution Memoranda. Any question or assistance in these matters should be addressed to the Human Resources Office.
D. If there is an immediate need for an individual to be hired as an employee and sufficient time is not available for the normal hiring procedure to be implemented, a waiver should be requested by the department chair or group manager by way of the Human Resources Office. Once approval has been obtained from the Human Resources Office, an individual hired on this basis may be employed on a temporary basis for not more than three months. Further information about this waiver of hiring practice can be obtained from your Human Resources Representative.
The criteria that are used to establish employer/employee relationships, and several definitions, and statements about employees and compliance with payroll laws are listed below.
A. Employee: The common law definition of "employee" is anyone who performs services for you subject to your will and control as to what shall be done and how.
B. Independent Contractor: Probably the most frequent question of coverage under the payroll withholding laws is whether an individual is an employee or an independent contractor. In answering a question such as this, the payroll tax laws refer in large part to the common-law rules for drawing the line between "employees" and "independent contractors". As a general rule, an independent contractor is hired to do a specific job and is paid a fee or a lump sum at its conclusion. People in business for themselves are not employees. For example, doctors, lawyers, veterinarians, construction contractors and others who follow an independent trade in which they offer their services to the public are usually not employees.
The basic common-law test is the "right to control". An employer/employee relationship exists if you have the right to control both the result to be accomplished and the manner and means by which the result is reached. Whether or not you exercise this right is immaterial. What is decisive is that, shown by the circumstances, you possess the right. If an individual is free from control as to the means and methods for attaining the results, he or she is not an employee.
C. Any further information or clarification regarding payroll laws and hiring practices can be obtained from your Human Resources Representative.