University of Minnesota Medical School
Handbook
For Medical School Accountants
Fellowship vs Employee
Last Date Reviewed: 12/8/2017

The University of Minnesota is responsible for correctly classifying payments made to individuals. It is important to distinguish fellowshipsfromemployees to insure payroll taxes are withheld appropriately. Misclassifications could lead to adverse tax consequences or unintended financial aid implications.

Individuals that receive payments with the following types of funding sources should be classified as employees:

  • Research Project Grant (R01)
  • Exploratory/Developmental Research Grant Award (R21)
  • Resource-Related Research Project (R24)
  • Research Education Grant (R25)

In addition, if any of the following are true, the individual receiving the payment should be treated as an employee:

  • The individual has performed services for the University as a condition of receiving the payment
  • The individual has an agreement under which there is a University contractual obligation
  • The funding source prohibits fellowships or requires payments for compensation for personal services

Payments made to individuals made by one of the following funding sources should be treated as fellowships:

  • The National Research Service Award (NRSA) fellowship program (such as F31, F32, or T32 programs)
  • The National Health Service Corps Scholarship Program
  • The Armed Forces Health professions Scholarship and Financial Assistance Program

If three or more of the following questions qualify, classify the individual’s payment as a fellowship. If not, classify the individual as an employee:

  • Services performed benefit the University (employee) or are for training and skill development (fellow)
  • Are the individual’s projects determined by the advisoror the supervisor (employee) or does the individual have a say in their projects (fellow)
  • Does the individual serve as a replacement or substitute for an employee (employee), if not (fellow)
  • Is the individual required to perform under planned time schedules, specific hours a day or week (employee), if no (fellow)
  • Is the individual subject to the level and type of supervision over their activities as a University employee (employee), if not (fellow)

Job Aid for Making Fellowship vs Employee Determinations

FY18 SOP Supplemental - FERPJobAid.pdf