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Independent Contractor Determination

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Policy Overview

The purpose of this policy is to provide direction, clarification, and best practices for the engagement of independent contractors within CSUF. These new procedures became effective as a result of  Dynamex Operations West, Inc. v. Superior Court [PDF], the California Supreme Court's adoption of a single test for determining whether a person is an employee or independent contractor. The test, which is now referenced as the “Dynamex Test,” requires significant changes to how CSUF determines the employment relationship.

In light of the Dynamex Test,  before services are performed , CSUF must assess the relationship between the individual and the campus to ensure that the individual is properly classified. Misclassification of a worker as an independent contractor can result in serious wage and benefit obligations, financial penalties, tax consequences, and other liabilities.

The court ruled that establishing such a classification can be best determined by the “ABC Test” as set forth below:

  1. The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract and in the actual performance of the work.
  2. The worker performs work that is outside the usual course of the hiring entity’s business.
  3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.


All three ABC test criteria must be met to be paid as an independent contractor. Otherwise, the worker must be hired as an employee per the State of California Supreme Court Dynamex Operations West decision regardless of whether the IRS 20 Factors have been met and must be paid wages via payroll.

For more information, please view the CSU Independent Contractor Guidelines – Independent Contract vs Employee Determinations  Technical Letter HR/Salary 2021-07 [PDF], dated April 19, 2021. 

 

Because of recent changes in the law, past approvals of an individual as an Independent Contractor should not lead to a presumption that the same classification will be made again. Convenience cannot be a determining factor for classification. It is important to understand that misclassification can result in serious financial penalties and consequences for the campus.

 

Independent Contractor requests can be submitted via the Procure-to-Pay (P2P) process in CSUBUY.

 

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Department Processing Instructions

All Independent Contractor (IC) determination requests must be reviewed and either a Purchase Order or completed offer letter is in place BEFORE work is performed.
Department Processing Instructions

  1. Obtain the worker’s scope of work/proposal detailing, at a minimum, the services to be provided, service timeframe, and itemized costs. This information will be needed to complete The Independent Contractor Determination Request Form.
  2. Determine if the proposed services fall under an existing CSU classification (contact HRDI  talentaquisition@fullerton.edu  for questions) or if the individual is a current employee or recently retired employee. If so, the individual must go through the recruitment process outlined on the  Staff/Management Recruitment page. 
  3. Complete  The Independent Contractor Determination Request Form  to determine if the work can be conducted by an Independent Contractor. It is the department's responsibility to ensure any proposed independent contractor is NOT a current university or state employee.Upon completion of the review, the requestor will be provided with information on the next steps.
  4. If the worker should be designated as an independent contractor, complete the purchase requisition process with Contracts and Procurement following the  "Set up a Contract" instructions. 
  5. If the work is determined to an employee complete the recruitment process outlined on the Staff/Management Recruitment page. 
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