Business Services

Determination of Status - Employee or Independent Contractor

For workers' compensation, unemployment insurance, social security and state and federal income tax purposes, employment status is defined as either employee or independent contractor. The legal responsibility for tax withholding and/or provision of benefits depend on this determination.

Prior to entering into a contract, departments must determine whether the relationship with the person or firm providing the service is an employment relationship or an independent contractor relationship. The following Independent Contractor Checklist must be completed and if any questions are answered “NO”, the contractor is not an independent contractor and must be placed on the College payroll, consistent with College Personnel policy.

Before issuing a contract for service, the Business Office and the Payroll Office must be consulted to determine the correct classification for a work relationship.  While each situation must be considered on its own merits, the decision process should be a joint effort to insure all factors are considered and to insure consistency in the evaluation process.

Montana Code Annotated

39-71-120. Independent contractor defined.
(1) An "independent contractor" is one who renders service in the course of an occupation and: (a) has been and will continue to be free from control or direction over the performance of the services, both under the contract and in fact; and (b) is engaged in an independently established trade, occupation, profession, or business.

(2) An individual performing services for remuneration is considered to be an employee under this chapter unless the requirements of subsection (1) are met.

Questions? Email businessoffice@msubillings.edu


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