Northern Michigan University often supplements the current work force by hiring individuals to provide services to NMU through personal or limited services contracts.  Though hiring an independent contractor is a great way to obtain special expertise or knowledge for various projects or programs, it is important to know that the hiring process for independent contractors is  governed by IRS guidance as prescribed in IRS Publication 15-A. This publication can be viewed on the IRS website at The publication provides meticulous guidelines about how and when to hire an independent contractor. 

In addition to the guidance outlined in IRS Publication 15-A, NMU also has to meet its notification obligations as described in the various union master agreements.

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.  


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. If you are developing a new webpage, you may have a clerical staff member in your operation that is already trained to accomplish this task or you may obtain some support from the Marketing and Communications department.  If your project requires wiring or network connections, work with the Telecom department. When your project requires audio visual services, coordinate with Audio-Visual Services department. If you are not sure whether the service is offered at NMU or if you are hiring an employee or an independent contractor, please contact Andrew Zerbel (2745) or Julane Cappo (1493) for assistance.


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 online at the Risk Management website. The first is the Transmittal Form (which tells how the contractor will be paid) The and the others are the Limited Personal Services Contract and the Standard Personal Services Contract (which defines the services to be provided).  These documents are fairly easy to complete. However, it is important that these documents be completed and approved before the work is done as well as include the dates of the entire period in which services will be rendered to NMU and the type of services to be provided. Also, 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.

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.

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  

Once the Transmittal form and Personal Services Contract form have been completed and signed by all parties, send the completed documents to Risk Management.  Risk Management will review the document to ensure that the university does not need to purchase additional insurance. If the contract is for certain types of labor, Risk Management will forward the forms to the Human Resources Department.  The Human Resources Department ensures that the request complies with IRS guidance and if necessary notifies the appropriate labor organizations on campus. The Human Resources Department returns the documents to Risk Management for final processing.    Risk Management sends a yellow copy of the approved document to the department as evidence that the request has been processed and approved and that the contractor can now render services to NMU.


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 Risk Management.  In certain cases, Risk Management 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.  Finally, situation do occur where short-term notice arrangements have to be made. If this situation occurs, immediately contact  Andrew Zerbel (2745) or Julane Cappo (1493) for assistance.


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.  


Hiring an independent contractor via the Personal Services Contract request is a great way to obtain services that otherwise would not be available on campus.  Utilizing the guidance above in determining the need and submitting a request for an independent contractor will ensure the University meets its obligation per IRS guidance and the various master agreements as well as minimizing liability for improperly hiring an independent contractor.  Should you have questions reference the above information or the Personal Services Contract process, Andrew Zerbel (2745) and Julane Cappo (1493) are available to assist you with your questions.