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Office of the Controller

Frequently Misused Payment Types

Independent Contractor includes payment for work/labor/service(s). Independent contractor payments are processed through Purchasing /AP.


Employment (Salary/Hourly/Benefits)- The Affordable Care Act (ACA) defines an employee using the common law standard. An employment relationship exists when the person for whom the services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work, but also as to the details and means by which that result is accomplished. The employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. Employment arrangements  include temporary work, part-time work, seasonal work or some other employment arrangement etc. Employment payments are processed through HR/SE.


Scholarship and Scholarship awards- A payment specifically intended to be spent by the individual to defray the expenses of their studies, training or research and or is in any way related to their course of study. Processed through the Business Office

Awards- Awards must result from a contractual obligation (enrolled in, entered in, participated in, etc.) of the following criteria:

     1. Exists prior to an individual's performance (not to be confused with work related service),

     2. Is based on predetermined objective standards, and

     3. Is subject to a stated maximum amount

Examples of an award are as follows: recognition for some sort of special achievement, special skill, special acknowledgement, special recognition, or an award in a contest.

Honorarium-  β€œgratuitous payments given to professional persons for services for which fees  are not legally or traditionally required and no invoice is presented for payment.” This is not an appropriate payment for an employee. Non employee payments are processed through AP.


Stipend- is a wage payment that is not subject to FICA. It is similar to an award in nature. However, there is a service requirement for this type of payment. When stipend payments are paid from a grant, the grant will state the nature, the extent, and the substance of the "work" requirement which will determine the processing department, HR/SE or AP. When stipend payments are paid from a designated account, documentation must be provided to determine which department should process the payment.

HR/SE or AP. Without documentation, stipend payments should be processed by definition and through the HR department.


Measurable Criteria for Stipend:

  •                 Enrolled at USM or another University at least half time, β€œor”
  •                 Receiving Credit USM or another University

For example

  •                    Internships
  •                    Externships

Fellowship- is a value provided (cash or noncash) to someone who is not necessarily attending   school at an educational organization, but requires living support for study or research.  As a practical matter, the Internal Revenue Code (IRC) treats them exactly the same and they are often just lumped together as "scholarships." Since a fellowship is for living support or travel or research expenses for someone who is not currently attending classes at an educational institution, it is never a tax-free qualified scholarship. It is processed through AP unless employed and then processed through HR/SE.





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Bond Hall 230
118 College Drive #5143
Hattiesburg, MS 39406

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