3210 PR.02 Employee vs. Independent Contractor

Revision Date: 
June 13, 2023


1.     Overview

2.     Employee vs. Independent Contractor Test

1. Overview

All individuals must be classified as either a University employee or as an independent contractor prior to providing services to the University, regardless of the amount of compensation to be paid. 

It is the responsibility of the lead administrator to make this determination regardless of the amount of compensation.  All determinations as to whether an individual is an independent contractor or an employee must be made in accordance with the Employee vs. Independent Contractor Test, described in Section 2, below.

2. Employee vs. Independent Contractor Test

A. If a business entity (e.g., corporation, partnership, Limited Liability Company, etc.) is engaged by the University, go directly to Procedure 3210 PR.01 Services Contracts Process

B. The individual is generally an employee if the response to any of the following questions is “yes”: 

  • Is there a continuing relationship between the individual and the University?
  • Are the services the individual provides within the University’s usual course of business? Activities are within the University’s usual course of business if they are performed on a regular or continuous basis.
  • Is the individual substantially full time to the University (i.e., 25 hours or more weekly)?
  • Does the individual perform the engaged services exclusively for the University (i.e., no similar services to other 3rd parties or clients)?
  • Does the University maintain control over the individual as to how the work is to be performed and/or what equipment to use and/or where to purchase supplies, including which workers to hire and which assignments must be performed by a specific individual?
  • Does the University provide training and detailed instructions as to how the work is to be performed and/or require it to be performed in a certain way/sequence?
  • Does the individual receive employee benefits, insurance, vacation, or sick pay from the University?
  • Does the individual have the right to end the relationship without incurring any liability?
  • Will the individual receive predetermined earnings and have little chance to realize significant profit or loss through their services?  For example, the individual is not subject to a real risk of economic loss due to significant investments or a bona fide liability for an expense, such as salary payments to unrelated employees. 

If you have any questions related to Employee vs. Independent Contractor classification, please contact the University Tax Office at tax@yale.edu.