Special Consultant vs. Independent Contractor
Overview
The objective of the Independent Contractor Information is to provide direction, clarification, and best practices for the engagement of independent contractors (IC) within the CSU, and SSU.
Sonoma State Universtiy 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.
Any person who works for the U.S. government, the State of California, a local city or county, or any other public employer, such as a school district or transportation agency (e.g., Bay Area Rapid Transit) is a government or “public sector” employee.
For more information, please view Technical Letter HR/Salary 2019-16
Indpendent Contractors
Employment Services provides initial review before departments may contract with an individual as an Independent Contractor. Complete this Independent Contractors Review Form and forward it to Human Resources for review prior to making any arrangements to hire an Independent Contractor.
Employment Services provides initial review before departments may contract with an individual as an Independent Contractor. Complete this Independent Contractors Review Form and forward it to Human Resources for review prior to making any arrangements to hire an Independent Contractor.
Independent Contractor Procedure Changes
Since the introduction of AB5 in January 2020, 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 and Compensation Specialist 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 SSU 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.
- SSU 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 an SSU Employee and are subject to SSU 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 Independent Contractor Review 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
Special Consultants
Individuals appointed to the Special Consultant classification are employees of the California State University, and as such, are required to complete appropriate employment paperwork.
A Special Consultant performs special assignments of a temporary nature, based on a particular knowledge, ability or expertise. This classification should be used for work that meets the “exempt” criteria of the Fair Labor Standards Act (FLSA) and is not to be used for non-exempt work. Incumbents in this classification are paid on a daily rate.
- To initiate an appointment of a Special Consultant, please complete the Special Consultant Agreement Form (PDF), and submit along with the individual's CV/Resume.
- Please note, if this individual is currently a faculty member of SSU, please go through the Faculty Affairs Office for appointment. All other individuals, including those who are currently a faculty member at another CSU campus, should go through HR for a special consultant appointment.
- To initiate an appointment for an Independent Contractor, please review and complete the Independent Contractor Review Request Form (PDF)
- To issue payment, after a Special Consultant appointment is in place, please complete the Special Consultant Voucher (PDF)
Special Consultant should sign agreement BEFORE on campus approvals are completed. The form must be completed and fully approved prior to the beginning of the assignment.
Review the SSU Special Consultant Processing Guidelines. For questions please contact Human Resources at hr@sonoma.edu.
CSU Additional Employment Policy
The California State University (CSU) Additional Employment Policy establishes reasonable limits on the total amount of employment an individual may have within the CSU system.
Additional Employment refers to any CSU employment that is in addition to the employee’s primary appointment. Additional employment limitations are based on time-base, not salary. A maximum of 125% time-base is allowed under certain circumstances. The salary rate for additional employment may be the same as the rate for the primary appointment; however, a different salary rate is permitted if appropriate for the work performed and if allowed by the funding source. When determining the 125% additional employment under the CSU Additional Employment Policy, all CSU employment and all outside CSU foundation and other CSU auxiliary employment are considered together.
Outside Employment refers to any employment not compensated through the CSU payroll. Employment directly compensated by a CSU foundation or other CSU auxiliary that is not compensated through the CSU payroll is considered outside employment. Employment that is compensated through the CSU payroll and is reimbursed by a foundation, other auxiliary, or other funding source is considered CSU employment. CSU employees may, consistent with campus policies governing outside activities, be employed outside the CSU system. However, conflicts of interest are not permitted.
Please contact Employment Services prior to assignment of additional work to any current CSU employee for further review.
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 I
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)
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).
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.
No.
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.
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.
No.
Restriction II
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)
No.
No.
Yes.
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 III
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))
No.
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.
Yes. However, the timing of the hire must not conflict with CalPERS re-employment restrictions.
Yes.
No.
Yes.
Restriction IV
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))
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.
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.
No. There are two limited exceptions: Contracts for expert witness services and contracts to provide continuing attorney services.
No. Even though CSU campuses and the Chancellor’s Office are separate employers, for the purpose of this restriction, a systemwide preclusion applies.
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.
Yes. This restriction applies only to CSU contracts.
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.
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.