(2) Are you compensating the student for employment service to the University?
Determining whether a payment is compensation
HRMS is used when services are performed for the university, of an employment nature at the direction and control of the university. Students may be employed as hourly employees, Federal Work-Study employees, student academic appointees (i.e., GAs, AIs, SAAs).
It is not appropriate to use scholarship funds in SIS to circumvent hiring a student through HRMS in order to compensate the student for performing services for the university. Further, it is not appropriate to use non-monetary forms of compensation (such as a free trip, tangible item, campus housing or meals) in lieu of hiring a student for services performed for the university. Please see Policy USSS-09 and Tax Standard Operating Procedure - 3.08 for more information.
When an award is intended to support a student's pursuit of their studies and performance of a service is a condition of the award, an analysis should be performed using University Tax Services Standard Operating Procedure (TSOP) 5.02 - Service Component for Student Awards. This will guide units and departments on how to correctly classify payments and will provide resources if you have further questions.
In determining how to pay for services performed, consider the following:
- IU is required to track all hours worked to comply with the Affordable Care Act. As a result, flat rate "stipends" are no longer used to compensate students for services.
- IU must also comply with IRS withholding, tax, and wage and income reporting requirements.
- Use of the incorrect payment method can have adverse effects to the university (penalties and fines), and to the student (on the student's personal tax return or consideration for future financial aid).