What is an independent contractor?

An independent contractor is an individual who provides services to Princeton University and is not an employee. More specifically, it is a worker who:

• Is engaged in an independently established profession or business;
• Provides a service outside of the University’s usual course of business; and
• Is free from the University’s control or direction when providing services.

Why is it important to differentiate between an employee and an independent contractor?

Independent contractors and employees are treated differently with respect to tax withholding, and employee benefits and are paid using different payment methods. Misclassification of individual service providers can result in fines and penalties levied by government agencies. Please note, Agency temps are not considered independent contractors. For questions about whether an individual service provider should be an employee or independent contractor, please contact Procurement Services.

When engaging independent contractors, use one of the University’s model agreements which can simplify the contracting process and ensure risks are minimized.

How to Engage Independent Contractors

Limited Engagement

• Total payment is typically $5,000 or less
• Service is low risk and provided only once (or one time per year)
• Required form: Limited Engagement Agreement (for U.S. citizens) or  Limited Engagement Agreement (for Foreign Nationals)
• The documentation required for onboarding a Foreign Limited Engagement payee depends on whether the service is provided inside or outside the US. Refer to the Foreign Supplier/Payee Quick Reference Card for more information.
• The payment is processed using the Non-PO Payment process

Examples of limited engagements:

• Distinguished guest speakers at University functions 
• Short-term, professional manuscript reviewers, or editors 
• Non-recurring seminar or workshop leaders

Honorarium

• Total payment is typically $2,500 or less
• Payment is made voluntarily to recognize a guest or collaborator
• Payments cannot be made to a third party
• Engagement is related to usual academic activity
• Funding cannot come from a Federal source
• The documentation required for requesting a new Honorarium payee depends on whether the service is provided inside or outside the United States. Refer to the Foreign Supplier/Payee Quick Reference Card for more information.
• The payment is processed using the Non-PO Payment process

Examples of honoraria:

• Guest lecturing, teaching, or consulting
• Attending meetings, symposia or seminars
• Conducting research

Agreements for the Purchase of Services

A best practice is to complete the agreement (contract) with the supplier before the work begins. To simplify this process, a number of model agreements are available on the University Contracting Website. While these agreements provide a framework, it is important in any contract to clearly identify the specific work the service provider is expected to accomplish.

If you have any questions about how to use any of these agreements, please contact Procurement Services.

Services Agreement (formerly the Independent Contractor Agreement or ICA)

Used for the purchase of most services provided by an individual or business and should be used if:

• The services require a licensed provider
• A vehicle is integral to the work to be performed
• There is risk of injury or property damage
• Insurance is required
• The purchase is transacted via the Requisition/PO process

Examples of Services Agreements:

• Creating a website
• Conducting research on Princeton’s behalf
• Servicing a piece of equipment
• Restoring an artifact

Performer/Speaker Agreement

• Engagement of an individual or a business to give a performance, speech, lecture or similar service, particularly when it is academic in nature
• This purchase may be transacted by the Requisition/PO process or the non-PO payment process depending on the specifics of the situation

Entertainment Agreement

• Engagement of comedians, bands, DJs, and other entertainers, always non-academic in nature and purely for entertainment
• Cost of the engagement does not affect use of this agreement
• The purchase is transacted via the Requisition/PO process

License Agreement

• Engagement of photographers, writers, illustrators and other freelance artists to create works that the University seeks to use, copy and display
• When the University seeks permission to use, copy and display existing works
• Cost of the engagement does not affect use of this agreement
• The purchase is transacted via the Requisition/PO process

Works Made for Hire Agreement

• Engagement of photographers, writers, illustrators and other freelance artists to create works in which the University seeks full ownership, including all copyrights
• Cost of the engagement does not affect use of this agreement
• The purchase is transacted via the Requisition/PO process

Related Resources

To learn more about policies and procedures surrounding Independent Contractors, please visit the Independent Contractors website.

To learn more about temporary staffing, including the preferred agencies, please visit the Hire and Pay Temporary Staff page. This provides a link to the HR website which lists the University’s preferred agencies with contracts that protect the University, provide competitive rates, and ensure compliance with regulations including the Affordable Care Act (ACA).