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
Independent Contractor Process Overview
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. Human Resources' Classification & Compensation Services (CCS) will determine whether or not 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.
Major Changes
- The Dynamex Test must be applied to all independent contractor applicants prior to services rendered.
- CSUSB may not contract with current or recently separated CSU employees.
- 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
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.
- HR 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.
- Approved requests will include notification to use Procurement Services Process.
- Work should not be performed on campus prior to final approval by Human Resources
Independent Contractor Request Submitted Through Cherwell
- Independent Contractor Information
- Complete the proposed IC’s information as requested on the Form.
- Department Request Details
- The hiring department must provide its name, requestor [Appropriate Administrator], date range of work to be performed, amount to be paid and contact information.
- Description of Services/Justification
- Justification must describe the nature of the request, business rationale, nature of the services to be performed and any supporting information available
- Attach all supporting documents for IC request including but not limited to the proposed scope of work outlined in a draft contract.
Independent Contractor Review Request
Independent Contractor Review Approved
- If the independent contractor is a Foreign institution. Please attach to the requisition an approval email from Margaret Mutadzakupa mmutadza@csusb.edu
- Submit a requisition to procurement through Common Financial System (CFS). Include the following information:
- LINE DESCRIPTION: Name of event
- CATEGORY CODE: 96200 – Misc. Service
- HEADER COMMENTS: Attach information gathered in steps 1 & 2.
Independent Contractor Review Denied
| Hired through Human Resources | Hired through Faculty Affairs & Development |
|---|---|
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Recruitment submitted through CSU Recruit: Department/Division Analyst will need to submit CSU Recruit Recruitment that includes the:
Recruitment must follow the standard requisition approval process. |
For more information, please contact Faculty Affairs at facultyaffairsanddevelopment@csusb.edu |
Independent Contractor FAQs
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)
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.
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.
A: No.
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).
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.
A: No.
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)
A: No
A: No.
A: Yes.
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))
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.
A: Yes. However, the timing of the hire must not conflict with CalPERS re-employment restrictions.
A: Yes.
A: No.
A: Yes.
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))
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.
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.
A: No. There are two limited exceptions: Contracts for expert witness services and contracts to provide continuing attorney services.
A: No. Even though CSU campuses and the Chancellor’s Office are separate employers, for the purpose of this restriction, a systemwide preclusion applies.
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.
A: Yes. This restriction applies only to CSU contracts.
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.
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.