You have the correct principles in your procedure. Your internal mechanism has to be tailored to the needs of your other HR and payroll systems. Note that payment of a traineeship or fellowship should result in a 1099 (without withholding unless the payee requests it) for tax purposes, while an employee receives a W-2 (the difference between "income" and "wage income" under tax regulations). A confusion is the careless way individuals speak of "fellow", "post-doc", etc. Be sure that your internal documentation and business practices explicitly differentiate. For federal funds, the program announcement and the award make the differentiation clear. Explicitly, NIH research grants (R-xx) do not support fellowships/traineeships), while other grants (e.g., K-XX and T-xx) support fellowships/traineeships. For other external funds, you may have to probe a little to determine the difference. For internal funds, you must be sure that the differentiation is quite explicit. Note that fewer and fewer institutions have internal funds for fellowships/traineeships. Yes, there is also confusion from the fact that fellows/trainees and employees (at the same levels) appear to perform very similar activities. That is because, at these levels, acquisition of knowledge and skills for fellows/trainees is gained by performing the activities (generally research) that an employee does. One differentiation can be how "success" is evaluated: did the fellow/trainee "learn" through performance; did the employee succeed in performance? Another is the standard for tenure in the position: was the fellow/trainee successfully meet the the training goal (like a scholarship requires continued meeting of a grade point average, for example); does the employee do the required work in a satisfactory manner? What they did day-to-day may be similar, and success may look the same, but the underlying question was different. Making these differences clear in your documentation of procedures may help your legal staff understand. And making transition from one category to another, and back, simple to accomplish will help; leaving any administrative process difficult encourages ignoring correct process, which can lead to major non-compliances. There are related concerns for these two categories in the benefits area. Health benefits -- level and who/how pays -- is most important to these individuals, which is why most fellowship/traineeship awards allow health insurance as a specific direct cost while for employees it is buried in the benefits package. The institution is responsible for FICA/medicare withholding and employer payment for employees, but not for fellow/trainees. DO make the transition easy because often individuals move from one category to another, and can be in either or both during a tax period. And if possible, for perceived equity, make the total compensation (income and health benefits) as similar as possible between individuals who are at equal levels but in different categories. Chuck At 07:10 PM 6/29/2004, you wrote: >All, > >At the past week's NIH regional conference, I heard NIH tell us that any >trainee (postdoc or grad student) who receives a stipend instead of a >salary should NOT be charged to NIH R01 grants. Before we discontinue >this practice at our institute, I thought I'd check with each of you to >see what is actually done in practice. > >We do what I suspect many of you do: treat postdocs on a fellowship as >"non-employees receiving stipends" while treating postdocs paid from >institutional funds as "employees receiving a salary." This ensures that >the former can be paid from fellowship awards (most of which prohibit an >employee-employer relationship) while the latter can be paid from R01 >awards (which REQUIRE an employer/employee relationship, according to my >interpretation of A-122 Paragraph 7a and 53, each of which use the word >"employee"). Even though this drives our legal staff crazy, knowing that >two groups of people who are doing the exact same thing (training) are >treated differently from an employment perspective, we've persevered >anyhow, under the assumption that is how many other >universities/institutes do this. > >Do any of you have a different take? Or treat your trainees differently >from us? > >As always, thanks in advance for your responses. > >Pat Kaufman >Director of Finance >Stowers Institute for Medical Research >Kansas City, MO >816-926-4027 xxxxxx@stowers-institute.org > >====================================================================== >Instructions on how to use the RESADM-L Mailing List, including >subscription information and a web-searchable archive, are available via >our web site at http://www.hrinet.org (click on "Listserv Lists") >====================================================================== Herbert B. Chermside, CRA Special Asst. to VP-Research Virginia Commonwealth University PO BOX 980568 Richmond, VA 23298-0568 Voice: 804-827-6036 Fax 804-828-2051 e-mail xxxxxx@vcu.edu ====================================================================== Instructions on how to use the RESADM-L Mailing List, including subscription information and a web-searchable archive, are available via our web site at http://www.hrinet.org (click on "Listserv Lists") ======================================================================
