Compensation is an amount paid to an individual in an exchange for professional services. The fact that a payment is termed a “fee” or “stipend” rather than compensation is inconsequential.


A stipend is defined as a fixed sum of money paid. It does not establish the nature or method of payment.

Compensatory Payments

  • Includes wages, salaries, professional fees, and other payments received for services performed
  • Compensation may be classified as:
    • Dependent compensation: Amounts received by an employee from an employer as a salary or wages. 
    • Independent compensation: Amounts paid for services provided by a third party that has the right to control how the work is done. (i.e. payments made to an independent contractor or entity)

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

Non-Compensatory Payments

  • Non-compensatory payments are not payments in exchange for services. The recipient is not required to provide a service for or on behalf of the University,
  • Payment can be qualified or non-qualified scholarship.

Below are a few examples of non-compensatory and compensatory payments. See Compensatory Payment vs. Scholarship Payment .

Non-Compensatory Compensatory
A student receives financial support to do research solely for her thesis that is needed for her degree. The research is not for, nor does it provide a benefit to the University.     A faculty member is working on a project and pays a student to assist with the research.  The student’s participation is not a degree requirement. If the student was not assisting with the research, the faculty member would have to hire someone else to do the work or do it his/herself.
A student is paid to participate in a conference directly related to their graduate studies and career networking. No work is performed.     A student is paid to organize a conference, arrange seating, design flyers, and marketing for the department. 
As part of a degree program, a student is paid to participate in a summer program where they will focus on learning research techniques. The student will not be providing any services but is in a learning role.     A student is paid by a department for providing research assistance. There is no program designed to train students as part of their degree requirements. The student is providing a needed service.
A student committee of volunteers is organized to share common educational challenges, interests, and help each other achieve their educational and career goals. The members of the committee receive financial support for their participation. Students are not providing services. A department is expanding a writing tutoring lab; the tutors are current students. Flexible schedules are available with a minimum amount of hours per week. The tutors (students) are providing services to the department.