Compensation is an amount received by an individual which represents payment for past, present or future services.

Dependent Compensation vs. Independent Compensation

Compensation may be classified as dependent compensation (salaries and wages paid to an employee) and independent compensation (payments made to independent contractor).

Refer to Policy 9.12 for guidelines to determine whether the compensation is independent compensation. If the individual does not qualify for an independent contractor, the individual must be hired as an employee and paid through Payroll.

Compensatory Stipend vs. Scholarship Stipend

Frequently Departments pay a “stipend” to students, postdoctoral fellows or other individuals. It is very important to determine whether the stipend is compensatory (as compensation) or noncompensatory (as scholarship/fellowship) in order to report and tax the recipient appropriately.  See Compensatory Stipend vs. Scholarship Stipend (PDF).