The purpose of this guide is to provide staff and faculty with a step-by-step process for reviewing, engaging, and paying independent contractors and limited engagement (LE) service providers to ensure compliance with federal, state, and local regulations. It also assists in identifying and determining the appropriate classification and compensation method when engaging an individual.

Outlined below are the procedures that should be followed when a situation arises that requires the potential use of an independent contractor or limited engagement service provider. 

Please note: this review process must take place PRIOR to engaging/hiring an individual.

For questions or clarifications, please contact Ken Zeferes, Assistant Director of Fiscal Operations.

• Forms & Definitions
• Worker Classification Process
• Limited Engagement Process
• University Guidelines and Policies

Forms & Definitions

Below are links to and descriptions of the forms used to review and process payments to independent contractors and limited engagement service providers.

The Process  section reviews when each form should be used.

Service Provider Questionnaire

Prior to formally engaging an individual, the department/program sends this form to individual/supplier/vendor for completion.

The purpose of this form is to gather information from an individual PRIOR to engaging him/her to assist in determining whether their relationship with the University is one of independent contractor/client or employee/employer. This form should not be used with Limited Engagements. An individual should not be engaged until this form is completed and a classification determination is made using the Service Provider Evaluation Worksheet.

Service Provider Evaluation Worksheet

Department/program (or his/her assignee) completes and sends to the Business Office.

 The purpose of this form is to assist department/programs in collaboration with the Business Office and GSE Human Resources in the evaluation of an individual’s relationship with the University. This form should be completed by the department/program based on the information provided in the Service Provider Questionnaire, along with any other relevant information they have concerning the project. Human Resources is responsible for making the final classification determination. In situations where the activity is taking place outside of the United States, Global Support Services (GSS) or Tax and International Operations (TIO) will provide guidance to Human Resources in making the classification determination.            

Limited Engagement Agreement – Services within the U.S. (U.S. Persons)

Prior to formally engaging the individual, the department/program completes this form, sends to the Business Office for review and signature.

The purpose of this form is to formally document the relationship between the University and a U.S. person providing a service within the U.S. of an academic nature, short duration, and/or low dollar amount ($1,000 or less per engagement; $5,000 per year max). This form should be completed prior to engaging an individual to provide services to the University. A new Limited Engagement Agreement Services within the U.S. (U.S. person) needs to be completed for each engagement. If engagements become more frequent, the relationship needs to be reviewed by Human Resources to determine whether a different classification is more appropriate.

Limited Engagement Agreement - Services within the U.S. (Nonresident Aliens)

Prior to formally engaging the individual, the department/program completes this form, sends to the Business Office for review and signature.

The purpose of this form is to formally document the relationship between the University and a nonresident alien providing a service within the U.S. of an academic nature, short duration, and/or low dollar amount ($1,000 or less per engagement; $5,000 per year max). This form should be completed prior to engaging an individual to provide services to the University. A new Limited Engagement Agreement - Services within the U.S. (nonresident aliens) needs to be completed for each engagement. If engagements become more frequent, the relationship needs to be reviewed by Human Resources to determine whether a different classification is more appropriate.

Limited Engagement Agreement Global – services outside the U.S.

Please contact the Business Office to discuss this option.

Worker Classification Process

The first sub-section details the process for independent contractor situations. The second sub-section details the process for limited engagements.

1. Need for service is identified.
2. Department/program requests the potential independent contractor to complete:
   1. Service Provider Questionnaire
   2. If an independent contractor submits a contract he or she has created, this agreement must be forwarded with the remainder of the paperwork through the process for review. Staff and faculty are not permitted to sign contracts.
      Purchasing Services is responsible for reviewing and signing all Personal/Professional Service Agreements on behalf of the University, including agreements for activity outside of the United States.
   3. For nonresident aliens providing a service within the U.S. - Foreign National Information Form.
      Please note: If an independent contractor is a nonresident alien providing services in the U.S., there may be restrictions to the work he/she can perform for the University based on his/her visa status. The Business Office will contact the office of Tax and International Operations prior to engaging a nonresident alien as an independent contractor to understand the limitations of his/her visa status and the additional paperwork required for processing payment. Global Support Services also has put together a helpful guide on Payments and Reimbursements to Foreign Non-Affiliates to Foreing Non-Affiliates that will assist you in this area.
   4. If the activity/service takes place outside of the United States, please contact the Business Office.
3. Using the completed Service Provider Questionnaire and what they know about the project, the department/program completes the Service Provider Evaluation Worksheet and sends to the Business Office along with the Service Provider Questionnaire form from Step 2 (above).  
4. The Business Office and Human Resources reviews the completed Service Provider Questionnaire, Service Provider Evaluation Form, department/program’s description of services, and any other relevant documentation provided by the individual service provider to determine the correct classification status for the individual. GSE Human Resources is responsible for making the final classification determination.
   1. If the determination is made that the individual should be engaged as an independent contractor, the paperwork is returned to the department/program for independent contractor processing.
   2. If the determination is made that the individual should be engaged as an employee, the department/program continues to work with Human Resources to complete the hiring process. Note: If the individual is hired as an employee but is not located near main campus, the University has a reciprocal agreement with various institutions across the country to verify the I9 on behalf of the University.
5. If the individual is being engaged as an independent contractor:
   1. If individual is not in the Penn Marketplace as a PO supplier, the Business Office will request a new PO supplier.
      1. The supplier receives a registration link to completed pertinent data and information to become a Penn Vendor via the Supplier Portal.
      2. The individual supplies the department/program with an agreement, MOU, SOW or contract or uses the standard independent contractor agreement. Purchasing Services (sourcing@upenn.edu) to put together a contract between the independent contractor and the University. Purchasing Services is responsible for reviewing and signing all Personal/Professional Service Agreements on behalf of the University.
      3. The Business Office creates a PO for the service and shares the PO# with the department/program contacts. The vendor is notified of the Purchase Order via email.
      4. Once the contract is executed by the independent contractor and Purchasing Services, the individual can be engaged to begin providing services.
      5. After completion of the project (or at the intervals agreed upon in the contract), the independent contractor submits an invoice/invoices through the Penn Marketplace.
   2. For nonresident aliens, Tax and International Operations reviews the registration documentation and verifies whether the nonresident alien can be paid for the services.

Limited Engagement Process

Limited Engagement Fee: A Limited Engagement Fee is a payment to an individual (non- employee/faculty, non-student) for providing a service of an academic nature, short duration, and/or low dollar amount ($1,000 or less per transaction; $5,000 per year max). This is intended for guest speakers, guest lecturers, artists, performers, writers/editors, board members, critics, preceptors, and mentors and/or those services meeting the fee guidelines. (See Policy #2319.3 – Payments Made for Limited Engagements)

LE Providing Service within the U.S. – U.S. Person

If the provider’s services falls under the Limited Engagement agreement:

• Have them complete and sign the Limited Engagement agreement
• The Business Office forwards the Limited Engagement agreement to sourcing@upenn.edu for review and signature
• The signed Limited Engagement agreement will be returned to the department/program
• If the individual is not an existing supplier, the Business Office will request Non-PO payee be added as a new Non-PO supplier
• Payee will complete the supplier registration and is responsible for uploading their W-9 in the secure portal.
• Non-PO Payment Request is prepared and the signed Limited Engagement agreement, and statement of work/supporting documents, if any, are uploaded.

LE Providing Service within the U.S. – Nonresident Alien

If the provider’s services falls under the Limited Engagement agreement:

• Have them complete and sign the Limited Engagement agreement
• Forward the Limited Engagement agreement to gse-pay@gse.upenn.edu for review and signature
• If the individual is not an existing supplier, the Business Office will request Non-PO payee be added as a new Non-PO supplier
• Payee will complete the supplier registration and is responsible for uploading their W-8BEN and passport in the secure portal.
• Non-PO Payment Request is prepared and the signed Limited Engagement agreement, statement of work/supporting documents, and I-94 U.S. Departure Record are uploaded.

LE Doing Service Outside of the U.S.

LE Process under Grant Funding

If service falls within these categories, no further review required by the Office of Research Services (ORS)*:

• Service on a Data Safety Monitoring Board
• Service on a Scientific Advisory Board
• Service on other Advisory Boards (e.g. Community Advocate or Patient Engagement)

Department/Program should:

• Have individual service provider complete and sign the Limited Engagement agreement
• Forward the Limited Engagement agreement to gse-pay@gse.upenn.edu for review and signature
• The signed Limited Engagement agreement will be returned to the department/program
• If the individual is not an existing supplier, request Non-PO payee be added as a new Non-PO supplier
• Payee will complete the supplier registration and is responsible for uploading their W-9 (U.S. persons)/W-8BEN and passport (non U.S. persons) in the secure portal. Non-PO Payment Request is prepared and the signed Limited Engagement agreement, statement of work/supporting documents, and I-94 Departure Record (non U.S. persons) are uploaded.