Statement of the Problem/Issue

Employment status of visiting scholars (J-1 visas) on externally funded projects (see e-mail correspondence in Attachments 1, 2, and 3).

Attachment 1

Date:Thu, 21 Nov 1996
From: "William K. Sellers" <wsellers@desire.wright.edu>
To: kselm@wright.edu
Subject: Hiring foreign visiting scholars

I am working on the issue of employing visiting foreign scholars who are here temporarily (on J-1 visas). Normally we would hire them on research grants and contracts. This would not apply to all those who come here on J-l's. But for those we do want to hire, we need to have an appropriate employment category. The level of benefits they would receive is another issue. Do you have any thoughts to get the ball rolling? These people would typically have Ph.D.s, with some experience, and working under supervision.

William Sellers, Director, Research and Sponsored Programs

Attachment 2

Date: Thu, 21 Nov 1996
From: Kenneth Selm <kselm@pop.wright.edu>
To: wsellers@desire.wright.edu
Subject:Hiring Foreign Visiting Scholars

Bill,

Currently we "employ" visiting foreign scholars under the classification of Visiting Scholar (#099977). There is no pay grade assigned this classification because we do not consider them employees. They are paid under a special earnings code in accounting reserved for "non-productive time". For visiting scholars there is no leave accrual, no vacation, no retirement benefit, etc. There are no taxes taken out of their check and they receive no W2 form. They are not considered employees. Current visiting scholars here under a J-l visa include Zhen Ding, Xuejun Liang, Lanchao Lin, Zhen Chang Liu, Chunbao Zhang, and Guogun Zhao.

Please contact Sally Clayton in Legal Affairs concerning information you may need on Jl or other type visas.

Ken Selm

Attachment 3

Date:Fri, 22 Nov 1996
From:"William K. Sellers" <wsellers@desire.wright.edu>
To:kselm@pop.wright.edu
Subject: Re: Hiring Foreign Visiting Scholars

Ken,

Thanks for your reply. I didn't make it clear that we were trying to make a change in the current situation. Jay and I feel strongly that those visiting scholars who are working on research grants and contracts should be treated as "employees". If this change can be made in current practice, then I am looking ahead to see what sort of employee category they would fit into.

William Sellers, Director, Research and Sponsored Programs

Background

The United States Information Agency describes the primary purpose of the Exchange Visitor Program is to foster the exchange of ideas between Americans and foreign nationals and to stimulate international collaborative teaching and research efforts. The exchange of professors and research scholars promotes interchange, mutual enrichment, and linkages between research and educational institutions in the United States and foreign countries. It does so by providing foreign professors and research scholars the opportunity to engage in research teaching, and lecturing with American colleagues, to participate actively in cross-cultural activities with Americans, and ultimately to share with their fellow citizens their experiences and increased knowledge about the United States and their substantive fields.

WSU apparently has a purpose similar to the one stated above, in that, (a) it participates in several study abroad programs in Liberal Arts and Business in Europe, South America and Australia as well as summer cultural exchange programs at WSU sister universities in China, Japan and Brazil and (b) in addition to existing international programs, one of the New Initiatives' goals in the 1998-2002 Strategic Plan is to establish a University Center for International Education (UCIE). The UCIE would consolidate and strengthen current international programs and exchange responsibilities, combining them in Academic Affairs with the International Studies program and existing outreach programs of the College of Business and Administration. The proposed Center speaks directly to the Mission priority on internationalization.

With this existing and increased emphasis on international programs, it is anticipated that participation in the visiting scholars program at WSU will increase in the future. Accordingly, the hiring process and employment status of these visiting scholars need to be addressed as they pertain particularly to externally funded programs.

Currently, WSU is hiring visiting scholars who are on J-1 visas to work on externally funded grants and contracts. As of 4-10-97, seven visiting scholars were in this status. These individuals are paid a stipend and not classified as employees. Prior to 1995, the stipends for these individuals were charged to an object code for Miscellaneous Services (1720). This was changed in September 1995 to an object code (7310) for Scholarship/Fellowships to avoid the payment of indirect costs on these stipends. To authorize the stipends for visiting scholars, a letter is sent to payroll by the responsible person indicating that the university is providing this experience as a learning opportunity and no service is being rendered by the visiting scholar to the university. Nevertheless, the university is conducting work on federal grants and contracts where the university is expected to provide reports and deliverables and visiting scholars are being paid under these agreements.

Analysis

The research administration discussion group was queried on this subject as follows: "A visiting scholar is invited to come to the institution to work on a research grant. But your affirmative action officer requires that the hiring process be conducted according to the normal routine whereby a pool of applicants is selected from. Only in this case you don't have a pool. You seem to be stuck between IRS rules for treating people as "employees" and paying them wages (as opposed to giving them a stipend) and affirmative action rules." One response was as follows: "We remind people that these are not permanent positions and go away when grants do and that this is similar to the sole source provisions for procurement. There has been absolutely no issue here and at my previous institution with hiring in this manner." At another institution, visiting faculty and research scholars appointments involving paid university employment must have prior approval through a search waiver process, with approval by affirmation actions, before an appointment is finalized. Yet another university's approach has the visiting faculty scholar paid as nonresident aliens who perform independent personal services for the university. They cite IRS definition of independent personal services as services performed in the United States by an independent nonresident alien contractor, rather than by a nonresident alien employee. Included in compensation are payments for professional services, such as fees of an attorney, physician, or accountant made directly to the person performing the services; consulting fees, and payment for performances by public entertainers, such as artists, actors, musicians, and athletes. Travel expenses are paid as part of the payment for independent personal services.

At a WSU meeting held April 8, 1997 on the topic of the employment status of visiting scholars concerns were expressed about the current payment process for visiting scholars, especially those hired on grants and contracts external to the university. One concern deals with the fact that the positions are not advertised, yet it appears the people are hired to accomplish some tasks on the projects. Another concern was expressed about the lack of travel funds for those visiting scholars to return to their country when they do not meet the expectations of the project director and are not continued on the project. Yet another concern dealt with the small compensation being paid to some visiting scholars while performing work in the United States.

OMB Circular A-21, Cost Principles for Education Institutions, is silent with regard to specifically addressing compensation for visiting scholars. However, Paragraph J.8., Compensation for Personal Services, states, "Compensation for personal services covers all amounts paid currently or accrued by the institution for services of employees rendered during the period of performance under sponsored agreement." Paragraph J.32., Professional Services Costs, states, "Costs of professional and consulting services, including legal services rendered by the members of a particular profession who are not employees of the institution, are allowable, when reasonable in relation to the services rendered...." Paragraph J.8. further states , "These costs are allowable to the extent that the total compensation to individual employees conform to the established policies the institution, consistently applied, and provided that the charges are for work performed directly on sponsored agreements...." It does not appear to be the intent of these paragraphs that payments may be made to anyone unless they are for services rendered under sponsored projects, federal or otherwise, since the policies must be consistently applied.

Outcome

Recommend that the following policies be implement for compensating visiting scholars on J-1 visas (see Attachment 4). It would appear by the nature of the policies that Human Resources will be the implementing agency (i, e, it deals with compensation, fringe benefit rate, affirmative action and classifications).

a. For work on external agreements that requires specific duties over the period of the project, the visiting scholar should be called Visiting Scholar/Research Associate with no pay range. These positions should be considered as full-time temporary positions. The person should be hired as an employee through a search waiver request (sample attached) process. A revised fringe benefit rate should be established for this classification, since individuals applying for J-1 visas have to show proof of medical coverage before the visas is granted.

b. For work on external agreements that has a more narrow focus, the visiting scholar's work should be consider as independent personal services (consultant) and paid for the services rendered based on a statement of work. This compensation should include travel expenses for the consultant to and from the country of origin. These individuals would not be employees and should meet the contractor versus employee test to qualify as a consultant. Attached is a program used at other university.

c. For visiting scholar who are participating in an exchange program as a learning opportunity and no service is being rendered by the visiting scholar to the university, the current procedure of paying a stipend should be continued. The individuals in this category should not be included as participants in externally funded projects.

Attachment 4, Policy Memo

DATE: November 18, 1997

TO: Deans and Directors

FROM: Joseph F. Thomas, Jr., Associate Provost for Research

SUBJECT: New Policy and Procedure for Appointment of Visiting Scholars

In order to be in compliance with IRS regulations, this memo announces a new policy and procedure for the treatment of visiting scholars who will enter the United States on J-1 visas and who are to be paid for performing a service for the University such as working on a research grant or contract. This policy does not apply to students, trainees (including residents sponsored by the School of Medicine graduate medical education programs), or visiting scholars who are not performing services for the University. The new policy takes effect December 1, 1997, but is not retroactive; thus visiting scholars who are already here will not be affected.

The hiring process will be similar to the one used for hiring Adjunct Professors. The newly hired person will be in a special position called "Visiting Scholar (J-1)," classification 4080013. These positions are temporary-generally up to one year with the possibility of a one-year extension-and may be full- or part-time. The minimum salary will normally be $24,000 for a doctoral level scholar and $28,000 for a postdoctoral level scholar (on a full-time annualized basis). The fringe benefit rate is the rate for faculty: currently 22.83% of salaries for full-time and 16.19% for part-time. In both cases, the employee will be contributing to the retirement program, but immigration regulations allow for the visitor to apply for reimbursement of these expenses when he/she returns to the home country. Compensation may also be subject to federal, state, and local taxes.

If you have any questions about this policy, please contact Alexia Etsios in Human Resources at ext. 4531.

cc:
John Fleishchauer
Alexia Etsios
Ken Selm
Ruth Bolus
Juanita Wehrle-Einhom
Steve Lyons