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Independent Contractor Information

 Overview

The objective of the Independent Contractor Information is to provide direction, clarification, and best practices for the engagement of independent contractors within the CSU, and CSUSB.

CSUSB must comply with State/Federal laws and CSU policies regarding the proper classification of employees and independent contractors. Misclassification of a worker as an independent contractor can result in serious wage and benefit obligations, financial penalties, tax consequences, and other liabilities.

For more information, please view

Technical Letter HR/Salary 2021-07

Independent Contractor Procedure Changes

Since the introduction of AB5 in January, a change to the independent contractor process has occurred.  Effective immediately, all requests for independent contractors must go through Human Resources for review.  Procurement in collaboration with Human Resources' Classification & Compensation Services (CCS) will determine whether the worker can be categorized as an "independent contractor". Note that AB5 assumes that all workers are considered "employees" until certified otherwise by the criteria outlined by the new regulation.

On April 30, 2018, the California Supreme Court adopted a single test for determining whether a person is an employee or independent contractor (See Dynamex Operations West, Inc. v. Superior Court decision). The test, which is now referenced as the “Dynamex Test”, requires significant changes to how CSUSB contracts with both independent contractors and companies (i.e. those hired through Purchasing). Below you will find the main changes that will impact departments.

California recently passed AB 2257, effective September 4, 2020, which outlines additional exemptions to the Dynamex Test for certain occupations and professions. These exemptions only apply if certain criteria are met. If exemptions do apply, the determination of whether the worker should be classified as an independent contractor is governed by the Borello Test and not the Dynamex Test. The exemptions contained in AB 2257 are highly complex and require detailed analysis as to their applicability.

Major Changes

  1. The Dynamex or Borello (if exemption applies) test must be applied to all independent contractor applicants prior to services rendered.  
  2. CSUSB may not contract with current or recently separated CSU employees.  
  3. Work that is regularly completed by campus employees are not eligible to perform work as an independent contractor. They would need to be hired as a CSUSB Employee and are subject to CSUSB hiring policies and applicable Collective Bargaining Agreements (CBA).

Independent Contractor Review Process

Procurement in collaboration with Human Resources, as delegated by the President, will have final approval authority for IC requests.  Each IC request is reviewed on a case-by-case basis and must go through a multi-step process.

  • Procurement in collaboration with Human Resources HR will respond to the requesting Department/Division with a decision to all requests within 5-7 business days of receipt, pending additional information and/or union notice is not required.
    • An approval flow is now integrated into each IC request.
      • Approver 1: Class & Comp Services
      • Approver 2: Employee & Labor Relations, if needed.
      • Approver 3: Procurement Services
      • Approver 4: Department MPP
  • Approved requests will include a confirmation attachment to use in Step Three of the Independent Contractor Process.
  • Work should not be performed on campus prior to the completion of the Independent Contractor Process.

Review of Work and Worker (Step 1)

Hiring Department MPP reviews the scope of work being performed by the worker to determine if the work potentially falls under an existing CSU classification. As well as, reviewing if the worker qualifies as an Independent Contractor.

Questions MPP Should Use to Help Determine Appropriate Action

  • Does the worker potentially fall under an existing CSU Classification?
  • Is union notice required?
    • Unit 1

      • Contracting Out

        • 26.3 When the Employer deems it necessary in order to carry out the mission and operations of the campus, the Employer may contract out work within the limitations and requirements imposed by law. 26.4 The CSU shall notify the Union thirty (30) days prior to the effective date of a decision to contract out. 26.5 The Union may request to meet and confer on the impact of contracting out work when such contracting out is to be for more than one (1) year. The CSU shall meet and confer with the Union for this purpose within fourteen (14) days of such a request.

    • Units 2,5,7 and 9

      • Contracting Out

        • 3.2 When the CSU deems it necessary in order to carry out the mission and operations of the campus, the CSU may contract out work to external vendors and third-party providers of services provided that the contracting out does not displace bargaining unit employees. "Displacement" includes layoff, demotion, involuntary transfer to a new classification, involuntary transfer to a new satellite campus location or a location requiring a change of residence, and involuntary timebase reductions.

      • Long-Term Contracting Out

        • 3.3 Long-term contracting out shall mean contracting out work which is more than one hundred eighty (180) days.

        • 3.4 The CSU shall notify the Union when contracting out is to be on a long-term basis for an initial long-term contract. Notice to the Union shall be no later than one hundred twenty (120) days prior to the commencement of long-term contracting out.
        • 3.5 In emergency circumstances, when the University enters into a contract under which long-term contracting out will commence in less than forty (40) days, when possible, notification shall be made two (2) weeks prior to implementing the contract, but in no event later than ten (10) working days after commencement of the long-term contracting out.

        • 3.6 The Union may request to meet and confer on the impact of long-term contracting out work within 30 days of receiving notice from the CSU. The CSU and CSUEU shall schedule a meet and confer for this purpose within thirty (30) days of such a request.

      • Successor Contracts

        3.7 CSU shall notify the Union prior to contracting out for a successor contract. Notice to the Union shall be no later than ninety (90) days prior to contracting out. If there is no Request for Proposal, the CSU shall notify the Union no later than ninety (90) days prior to the commencement of the contracting out. Within thirty (30) days, the Union shall inform the CSU whether or not it wishes to meet and confer.
      • Contracting Out Information

        3.8 Prior to meeting and conferring on long-term contracting out or contracting out under a successor contract, the University will provide to CSUEU all existing relevant written information, which may include, the Request for Proposal, copies of all bids received, any cost analysis used by the University to evaluate the need for contracting out, and copies of all consultants' reports, if any, used by the University in making its decision regarding contracting out. The meeting will not delay the commencement of the contracting out.

    • Unit 6

      • Contracting Out

        • 4.1 Normal bargaining unit work may include the maintenance, repair, remodel, minor renovations and minor construction of University facilities, where the Union represents employees who do the work, and does not include Major Capital Outlay Projects or work performed by or for separate, independent corporations or auxiliaries.

        • 4.2 In addition to normal bargaining unit work, the following types of work may be assigned to bargaining unit employees: Charge-back work; Work funded from the following sources: Minor capital projects, Minor capital—deferred maintenance projects, Minor capital—renewal projects. Minor capital – energy savings projects; and any other projects approved by campus facilities manager.

        • 4.3 The University shall have the prerogative to contract work. The University shall make every reasonable effort to perform normal Bargaining Unit work in-house, within the limitations and requirements imposed by law. The Campus shall consider the following factors before contracting out the work: a. The availability for Bargaining Unit employees to perform the work to be contracted out; b. Whether the available Bargaining Unit employees have the special skills and licensures to perform the project; c. Whether or not the work could be completed within time constraints applicable to the project; d. The availability of required materials and/or equipment necessary to complete the project; and/or Teamsters Local 2010/CSU Page 9 January 26, 2016 - June 30, 2020 Collective Bargaining Agreement e. The cost involved in performing the work in-house versus contracting out that work.

        • 4.4 The Chief Campus Steward, or designee, on each Campus shall be notified of contracts pertaining to normal Bargaining Unit 6 work at the Campus. Circumstances permitting, such notifications shall be prior to the start of such contracted work.

        • 4.5 To meet this notice obligation under 4.4 upon mutual agreement between Plant Administration and Teamsters Local 2010, the Chief Steward, or designee for the appropriate trade, on each Campus may attend the weekly, bi weekly or monthly meetings of the Shop Supervisors to review all normal bargaining unit work projects pending on each Campus.

  • Does the Worker qualify as an Independent Contractor?
    • Does the worker meet All ABC Test Criteria?
    • Does the Worker qualify as an Independent Contractor under an exemption?
    • Does the worker meet the Borello Test Criteria?
    • Is the worker a current CSUSB, other state agency employee, or have they been extended an offer of employment?

Independent Contractor Request Submitted Through Cherwell (Step 1 Continued)

  1. Independent Contractor Information​ 
    1. Complete the proposed IC’s information as requested on the Form. ​
  2. Department Request Details​ 
    1. The hiring department must provide its department name, department MPP, date range of work to be performed, amount to be paid, and charge to Department ID.
  3. Description of Services/Justification​ 
    1. Justification must describe the nature of the request, business rationale, nature/ scope of work for the services to be performed and any supporting information available​. 
    2. Attach all supporting documents for IC request including but not limited to the proposed scope of work outlined in a draft contract.​
  4. ​Independent Contractor Request Determination
    1. Request Denied: (See Independent Contractor Review Denied Option Grid Below)
    2. Request Approved: Department Submits CFS procurement requisition.

Independent Contractor Review Request

Independent Contractor Review Request

Confirmation of Worker & Work Meet Independent Contractor Criteria (Step 2)

The Independent Contractor Request is created to ensure CSUSB confirms that the work to be performed can be done by an independent contractor and not an employee. Also, the worker must be evaluated to confirm that they meet the independent contractor criteria. Human Resources verifies that the work does not fall within a CSU Classification. Procurement verifies that the worker qualifies as an Independent Contractor.

Scope of Work Confirmation (Dynamex Requirement 1 & 2):
  • State Side Staff Classifications: Classification & Compensation Services
  • Union Notice for Staff Classification Determination: Employee & Labor Relations
  • State Side Faculty Classifications: Faculty Affairs & Development
  • Union Notice for Faculty Classification Determination: Faculty Affairs & Development
  • Auxiliary IC Requests: Auxiliary Human Resources
Worker Confirmation (Dynamex Requirement 3):
  • Procurement

Independent Contractor Request Approved

Engagement of Independent Contractor for Services & – Check Residency Status for Employment and Tax/Reporting Purposes (Step 3)

The engagement of an independent contractor for services is generally covered by the campus's standard requisition and general terms and conditions of service. A specific independent contractor agreement may also be used. Agreements must be reviewed and signed by the campus procurement/contracts office in accordance with CSU policy.

The following forms/documents may be required by the campus procurement/contracts office prior to retaining services:

  • Campus Independent Contractor Request and Determination approval form.
  • Requisition
  • Scope of Work
  • Proof of Insurance (including Certificate of Insurance with Additional Insured Endorsement)
  • Proof of Background Check (If required)
  • Vendor Data Record form (STD 204)
    • The Vendor Data Record Form should be completed before work commences and must be completed before payment can be issued. This form is mandatory for all vendors paid by the campus.

Independent Contractor Review Denied

Options
Hire through Human Resources Hire through Faculty Affairs & Development

Recruitment submitted through CSU Recruit:

Department/Division Analyst will need to submit CSU Recruit Recruitment that includes the:​

  • Position Description​
  • Position Number​

Recruitment must follow the standard requisition approval process.

For more information, please contact Faculty Affairs at facultyaffairsanddevelopment@csusb.edu

Independent Contractor Resources:

Independent Contractor Workflow

Independent Contractor Procedures

Independent Contractor Training Video

Independent Contractor Training PowerPoint 5/16/2023

Independent Contractor FAQs

Q. What is the Human Resources review timeline?

A: Classification and Compensation Services will respond to the requesting Department/Division with a decision to all requests within 5-7 business days of receipt, pending additional information is not required

Public Contract Code Restrictions for CSU Employees FAQs

Important: This FAQ addresses restrictions resulting from Senate Bill 41, IRS rules and CSU Conflict of Interest Code. Additional and outside employment opportunities for CSU employees also may be limited by restrictions in other state laws and collective bargaining agreements, not addressed in this document.

Restriction 1: 

A CSU employee, except for those employees with teaching or research responsibilities, may not “contract on his or her individual behalf as an independent contractor with any California State University department to provide services or goods.” (PCC 10831)

Q: Can a CSU employee receive a “stipend” or “honorarium” payment though Accounts Payable for services provided to another CSU campus?

A: No.

Q: Can a CSU employee contract with a state agency other than the CSU to provide a needed service?

A: No, because the state agencies all make payments to employees as a single employer through the State Controller’s Office. The Internal Revenue Service (IRS) requires that all payments made by a single employer to an employee be reported on a W-2, not on Form 1099.

Q: Can a CSU employee with a specialized skill or expertise contract with the CSU to provide a needed service?

A: No. This violates the CSU Conflict of Interest Code. Additionally, as noted above, the IRS would require that payment be reported to the individual as an employee on a W-2.

Q: Are there any exceptions?

A: No.

Q: How can a CSU employee provide a needed service to the CSU?

A: The CSU employee can be hired as an employee of the CSU (e.g., utilizing the “special consultant” classification), as long as the employment is not funded by a CSU contract with a vendor to perform services for or on behalf of the vendor).

Q: Can a CSU employee be employed by and/or contract with a CSU foundation or auxiliary to provide a needed service or expertise?

A: CSU employees can be employed by or contract with the CSU foundation or an auxiliary, provided that the employees’ activities are not funded by a CSU contract between the CSU foundation or auxiliary and meet the definition of Independent Contractor.

Restriction 2: 

A CSU employee, except for those employees with teaching or research responsibilities, may not engage in any employment or activity for which the employee receives compensation through or by a CSU contract, unless the employment or activity is within the course and scope of the employee’s regular CSU employment. (PCC 10831)

Q: Can a CSU employee have his/her activities funded by a CSU contract?

A: No

Q: Can a CSU employee provide a needed service or expertise to the CSU if the employee is hired by a private sector entity to do work that is funded by a CSU contract?

A: No.

Q: Does this restriction apply to employee contracts with a CSU auxiliary, where the auxiliary has contracted to perform a service for CSU?

A: Yes.

Q:What determines if an employee’s work on an activity funded by a CSU contract is within the course and scope of the employee’s regular CSU employment?

A: A CSU employee's position description or employment agreement may identify activities that the employee might be required to perform on an activity funded by a CSU contract. However, it may be that an activity is only an occasional part of the employee’s job, and not specifically identified in the position description, but is within the course and scope of the employee’s regular employment. The CSU, as the employer (not the employee), appropriately determines whether the activity is within the course and scope of the employee’s regular CSU employment. If the CSU appropriately designates the activity as within the course and scope of employment, the employee can be compensated as an employee.

Restriction 3: 

For two years following retirement or separation from CSU employment, no former employee may enter into a contract “in which he or she engaged in any of the negotiations, transactions, planning, arrangements, or any part of the decision-making process relevant to the contract while employed in any capacity by any CSU department.” (PCC 10832 (a))

Q: Can a separated/retired employee be hired as an employee by the selected vendor to assist in meeting the contract obligations?

A: Yes.

Q: Do “negotiations, transactions, planning, arrangements, or any part of the decision-making process relevant to the contract” include technical support?

A: If the separated employee provided limited technical support to the planning or procurement process as requested, but did not participate in planning or decision-making, the restriction does not apply.

Q: Can a separated/retired employee be rehired by the CSU as an employee to provide a service related to the selected vendor’s contract?

A: Yes. However, the timing of the hire must not conflict with CalPERS re-employment restrictions.

Q: Can a separated/retired employee who participated in the planning or procurement process contract with the CSU to provide a service related to the selected vendor’s contract?

A: Yes.

Q: Can a CSU employee who participated in the planning or procurement process relevant to a proposed contract enter into that same contract after he/she retires or is otherwise separated from CSU employment?

A: No.

Q: Can a separated/retired employee who participated in the planning or procurement process contract with the selected vendor to assist the vendor in meeting its CSU contract obligations?

A: Yes.

Restriction 4: 

For 12 months following retirement or separation from the CSU, no former employee may contract with the CSU if he or she was employed by the CSU “in a policymaking position in the same general subject area as the proposed contract within the 12-month period prior to his or her retirement…or separation.” Exempted are contracts for expert witness services and contracts to continue attorney services. (PCC 10832 (b))

Q: Can a former employee in a policymaking position provide needed service or expertise to another state agency, if that agency has a contract with the state?

A: Yes. However, if the former employee is retired, the timing of the retiree hire and work to be performed must not conflict with CalPERS re-employment restrictions.

Q: What is a policymaking position?

A: An employee in a policymaking position sets or recommends CSU policy. Management Personnel Plan administrators are in policymaking positions. Network analysts generally are not in policymaking positions. Each campus must review a separated/retired employee’s prior position to determine its policymaking impact.

Q: What does “in the same general subject area” mean?

A: This language should be interpreted broadly. If an employee specialized in one area of, for example, human resources, that employee would be subject to the 12-month restriction from all areas of human resources. If a campus academic administrator managed the Business school, s/he could not contract for work developing a business curriculum.

Q: Can a CSU employee in a policymaking position who retires/separates provide services in his/her subject area on a contract basis to the CSU within 12 months of separation?

A: No. There are two limited exceptions: Contracts for expert witness services and contracts to provide continuing attorney services.

Q: Can a separated/retired employee in a policymaking position contract with a different CSU campus to provide services in the same general subject area?

A: No. Even though CSU campuses and the Chancellor’s Office are separate employers, for the purpose of this restriction, a systemwide preclusion applies.

Q: How can CSU secure needed expert services or skills of former employees?

A: CSU can hire former employees as continuing CSU employees. This restriction does not prohibit the rehire of former employees or retirees. However, the timing of the retiree hire must not conflict with CalPERS re-employment restrictions.

Q: Can a CSU employee in a policymaking position who separated/retired provide contract services to another state agency other than the CSU within 12 months of separation in any area of expertise?

A: Yes. This restriction applies only to CSU contracts.

Q: Can a former employee in a policymaking position be employed by or contract with a foundation or other auxiliary to provide services to CSU in his/her subject area?

A: Yes. However, if the former employee is retired, the timing of the retiree hire and work to be performed must not conflict with CalPERS re-employment restrictions.