Personal and Service Contracts - NMU Purchasing

PERSONAL AND LIMITED SERVICES CONTRACT GUIDELINES

Northern Michigan University often supplements the current work force by hiring individuals to provide services to NMU through personal or limited services contracts. 

Personal and Limited Service contracts are administered through the purchasing department; beginning July 2024 Risk Management is no longer the administrator of these. Still, the following provides important information to help you determine whether you are hiring an employee or an independent contractor.  It also provides the timeline for the process of submitting a personal services contract request.  

1) Determine if the Services Must be Hired through an Independent Contractor

The first step is to determine if an independent contractor should be hired; only hire an independent contractor if the services you are considering are not provided on campus.  For example, if you are having an event which requires food, you must coordinate with Dining Services for such support.

Also, you are not allowed to contract with any person already employed by NMU (full-time, part-time, temporary labor) without specific approval from the Purchasing Director, who will consult with Human Resources.

2) Determine if there are Enough Funds in the Account

Prior to completing forms, ensure there is appropriate funding accounted for hiring the independent contractor.

3) Complete the Forms

Once it has been decided to hire an independent contractor, the next step is to complete the required documents. 

NMU uses three documents which are available through Printing Services and are also attached below: Limited Personal Service Contract
Standard Personal Service Contract
Transmittal Form

Use the Limited Personal Services contract when the contract is for things like:

• a one-time event (like a concert or a lecture)
• individual performers or speakers
• athletic officials
• professional trainers (for non-academic credit only)
• evaluators  

Use the Standard Personal Services contract format in the following situations: 

• When the period services are being provided exceeds 6 weeks
• When the services being provided involve risk which will necessitate an insurance requirement to be inserted in the contract form or 
• When multiple payments are planned
• When the payment amount is to be determined based on performance of the terms of the contract.

The Transmittal Form arranges how the contractor will be paid and should accompany each Limited and Standard Personal Service Contract.

It is crucial that these documents are completed and approved before the work is done. Include the dates of the entire period in which services will be rendered to NMU and the type of services to be provided. When completing the compensation portion on the Limited Personal Service Contract, there can be only a single dollar amount listed on the document.  This amount must encompass all cost for the entire project or program. Reimbursable amounts cannot be listed separately on these forms.

4) Submit the Forms for Approval

Once the Transmittal form and Personal Services Contract form have been completed and signed by all parties, send it the Purchasing Director to be approved and signed. 

• Paper versions can be sent to the Purchasing Department, 136 Services Building
• Electronic versions can be emailed to Purchasing - purchase@nmu.edu

Purchasing will review the document to ensure that the university does not need to purchase additional insurance.

5) Allow Enough Time for Processing

The IRS requires all independent contractor requests to be approved prior to services being rendered to the organization.  Failure to approve such requests in advance may result in a fine levied against NMU for each contract approved after the fact.  Allow enough time to:

• Determine that the department has enough money to pay for the contract 
• Obtain the signatures of the requestor (a person authorized to approve spending money in the organization number that will be charged).
• Obtain the signature of the contractor.  Depending on the location of the contractor, the request may have to be mailed to and from the contractor for signature prior to submitting the request; faxed signatures are allowed for personal service contracts.  
• Obtain review and approval from Purchasing.  In certain cases, Purchasing will contact Human Resources for their review and approval.  The process takes between 1 and 3 days. 

A good rule is to allow 45 days prior to the services being rendered to collect all signatures and process the document.  If short-term notice arrangements have to be made, immediately contact Joe Ombrello (906-227-2360).

6) Send Payment to Contractor 

The requestor is responsible for ensuring that the contracted services have been completed.  Once the services are complete, the requestor uses the Concur invoice system to initiate payment to the contractor.  Sign on to Concur Invoice through the Employee Services tab of MyNMU.  

In the rare case where the contractor will be paid immediately following the service, process a check request through Concur Invoice.  

 7) Who to Contact for Further Assistance

If you have questions, please contact Joe Ombrello, Purchasing Director at (906) 227-2360 or purchase@nmu.edu.