Research Administration Guidelines

RAG03 Retired Faculty Participation

Policy Status: 

Active

Policy Steward: 

Vice President for Research and Corporate Controller

Contents:

  • Background and Purpose
  • Non-Compensated Basis
  • Compensated Basis - Reemployment Situations
  • Compensated Basis - Independent Contractor Situations
  • Further Information
  • Cross References
  • BACKGROUND AND PURPOSE:

    The University values the contributions made by retired/emeritus faculty to the University's research, teaching, and service missions. This includes contributions by those serving as investigators on sponsored projects. These guidelines clarify certain policy and procedural issues in order to protect the retired faculty member, employees and students working with the retired faculty member, and the University.

    One such issue is that an appropriate Retired Faculty Memorandum of Understanding must exist between the retired faculty member and the University prior to the faculty member serving as an investigator on a sponsored project. Such an agreement should address the faculty member's scope of responsibilities, the use of University facilities, intellectual property ownership, and legal acceptance of administrative/contractual responsibilities that are attendant to being an investigator on a sponsored project.

    Another issue is the question of compensation for work performed by a retired faculty member under a sponsored project. The University is required by law to place certain restrictions on retired faculty receiving compensation. It is important that faculty be aware of these restrictions and follow the applicable policies.

    A final general issue is that retired faculty when serving in a non-compensated mode, assume certain legal responsibilities. Under certain circumstances, they may act as an "agent" of the University. This is a serious role, and thus they must conduct themselves in accordance with the ethical and legal responsibilities identified in Penn State's policies and assumed by those who are employees, even though they themselves are not employees.

    NON-COMPENSATED BASIS:

    Retired faculty who serve as University investigators on a project on a non-compensated basis must sign appropriate agreements and certifications to ensure compliance with federal regulations (e.g., an intellectual property agreement) and University policy, including a written Retired Faculty Memorandum of Understanding between the cognizant University official (Dean, Director, etc.) and the retired faculty member governing liability, use of University facilities, intellectual property ownership, and legal acceptance of administrative/contractual responsibilities. These agreements and certifications must be submitted to OSP prior to the submission of proposals or acceptance of awards involving the participation of retired faculty.

    COMPENSATED BASIS - REEMPLOYMENT SITUATIONS:

    Policy HR45, Post-Retirement Appointments, states the conditions under which a retired faculty who is a PI on an active grant or contract at the time of retirement can continue working as a rehire. These policies apply to faculty wishing to continue on sponsored projects as University employees.

    Prior to the submission of any proposal or acceptance of any award involving payment to a University retiree on a reemployment basis on a grant or contract, the unit must submit, via its Human Resources Representative, a request to the Vice President for Human Resources. Upon receipt of approval from the Vice President for Human Resources, the unit will forward a completed Retired Faculty Memorandum of Understanding and Intellectual Property Agreement to the Office of Sponsored Programs. This approval is required for each proposal or award.

    COMPENSATED BASIS - INDEPENDENT CONTRACTOR BASIS:

    Retired faculty who desire to provide services to the University as an independent contractor must be aware that the law narrowly proscribes the circumstances under which an individual providing services to another may be considered an independent contractor. This essentially means that a University investigator (i.e., someone who is representing the University on a grant or contract as an investigator, whether that individual is called principal investigator, co-principal investigator, co-investigator, research scientist, or other such term) cannot legally be considered an independent contractor. A retiree who has affiliated with a separate company or business entity may participate in University research through a subcontract. In these instances, the company or entity serves as an independent contractor, and the retiree would have no direct relationship with the University, nor any supervision or control over the University's performance of research under the sponsored project. The retiree would have to provide documentation to OSP (which may then be forwarded for legal review when necessary) that addresses the following points:

    • The retired faculty member's / independent contractor's proposed status, responsibilities and statement of work under the grant on contract.
    • The status of the company which will serve as the independent contractor.
      To work as an independent contractor requires a contractual arrangement with a company. The retiree should document that:
      • The company existed prior to the time that it sought to contract with the University, as an established, regularly functioning business.
      • The business has other clients.
      • The business exists separately from the retired individual (a legally separate entity that is lawfully incorporated having separate bank accounts, IRS EIN number, etc.).
      • The business has experienced or is capable of experiencing a loss as well as a profit.
      • The company can perform the proposed statement of work, e.g., it has the lab facilities necessary to conduct the proposed research.
    • The retiree should also represent that:
      • There shall be no right or opportunity to control or influence the University's performance of its obligations under University grants or contracts.
      • There shall be no supervision or oversight of University employees.
      • The subcontract statement of work clearly identifies a specific and distinct scope of activities.

    Prior to the submission of any proposal or acceptance of any award involving payment to a University retiree to be engaged as an independent contractor on a grant or contract, the unit must submit appropriate documentation to the Office of Sponsored Programs. As part of its review, OSP will forward the request packet to the University's Tax Manager. If the Tax Manager's analysis of the documentation demonstrates that an independent contractor status exists, OSP will forward the request packet to the Vice President for Human Resources for approval. Review and approval are required for each proposal or award.

    FURTHER INFORMATION:

    For questions, additional detail, or to request changes to this policy, please contact the Office of the Vice President for Research, or the Office of the Corporate Controller.

    CROSS REFERENCES:

    HR25 – Emeritus Status

    HR45 - Post-Retirement Appointments

    RA64 – Personnel Costs

    RA03 - Eligibility to Serve as a Principal Investigator (PI)

    Effective Date: February 26, 2016
    Date Approved: February 22, 2016
    Published Date: February 26, 2016 (Editorial change, August 1, 2016)

    Most recent changes:

    • February 26, 2016 - Editorial changes to the BACKGROUND AND PURPOSE, NON-COMPENSATED BASIS and COMPENSATED-REEMPLOYMENT SITUATIONS sections to reflect the reference (and correct link to) the Retired Faculty Memorandum of Understanding form.

    Revision History (and effective dates):

    • February 26, 2016 - This policy was previously a Research Administration guideline, RAG09. It has been renumbered to reflect reorganization and reviewed by General Counsel for clarity.
    • July 18, 2013 - Editorial change: "Associate Vice President for Human Resources" changed to "Vice President for Human Resources".
    • June 24, 2005 - Updated verbiage in "Compensated Basis - Reemployment Situations" and "Compensated Basis - Independent Contractor Basis." Established links to applicable forms mentioned.
    • December 22, 2003 - Editorial change: "Assistant Vice President for Human Resources" changed to "Associate Vice President for Human Resources"
    • July 11, 2001 - New Policy