In what is becoming a worldwide trend, expect to see more government crackdown on Independent Contractor misclassification. If an Independent Contractor is later to be found an employee —which could occur over a dispute— Tufts could be liable for triple damages on retroactive payroll taxes, payroll withholdings, vacation, severance, plus any applicable fees and penalties. These costs will be charged to the department administering the project.
Enlisting the services of an Independent Contractor can be more straightforward than hiring an employee, but every country has different rules about the distinction between contractors and employees. It’s important to work through local HR processes regarding contractor classifications. In most countries, a worker is assumed to be an employee unless he or she qualifies as a contractor by meeting certain criteria.
The criteria vary, but the following qualities may factor into the classification:
Duration of assignment
Percentage of time spent on the Tufts project
Control over how, when, and where the work is done
A business of doing similar work for clients other than Tufts and also as a contractor
Use of own offices or facilities and equipment
Payment of own business expenses
Compensation based solely on services rendered (e.g. no vacation pay or employer-sponsored benefits like health insurance)
Some countries may require ICs to register as businesses or collect a service tax or value-added tax (VAT) from their customers (i.e. Tufts). A few countries apply employer-like obligations (e.g. tax withholding) even to those institutions engaging contractors. Please contact Global Operations for more information.
IC responsible for tax compliance in most cases
IC responsible for obtaining visa
No Tuft affiliation
Increasing IC restrictions worldwide
Triple damages for misclassification
Can trigger permanent establishment
Can trigger required employer withholdings and reporting requirements
Not a long-term solution
Any costs agreed to in the contract (travel expenses, allowances, etc.)
Agreed-upon payments (based on services rendered
Contact Global Operations to discuss your need for an independent contractor. Global Operations will review Independent Contractor regulations in the country you wish to operate in and guide you through the necessary process, as well as provide you with a locally compliant contract. Please note that the “Goods and Services” contract is only valid in the U.S. and is NOT valid abroad.