Understanding what is considered a stipend can be confusing. The information listed below is from the U.S. Department of Labor’s (DOL) guidelines for a Trainee/Learner. These guidelines state that if an internship/stipend meets the six criteria listed below, the position can be categorized as a Trainee/Learner position and does not need to follow minimum wage regulations. If your internship/stipend does not meet these criteria, an employment relationship exists and you must hire that person as an employee.
The decision to pay a stipend is dependent upon the funding source, an individual’s relationship with the University and the activities performed. The Payroll Office is unable to advise departments on whether or not a stipend payment is appropriate and the decision must be made at the department level.
* If the internship is more of a training/learning experience, as opposed to a job, it is typically acceptable if the employer derives some advantage from the student’s service. The internship must be predominantly for the benefit of the student and not the employer.
- Stipend Payments are not considered wages and have no Federal Witholding Tax deducted from them (the only exception is for some Foreign Nationals).
- Stipend Payments are distributed with payroll wages, but are not reported as wages on a Form W2.
- UW Student stipend payment information will be reported at year end on a 1098-T.
- Non-UW Student Trainee/Learner stipend recipients will receive a Stipend Letter at the end of the year.