Stipend Vs. Salary

by E.M. Rawes; Updated September 26, 2017
Volunteers Collecting Food Donations In Warehouse

Depending on the type of work you do, you can receive hourly pay, a salary or pay per assignment. There is also a form of compensation called a "stipend" that is less common than hourly or salary pay as stipends are only paid in select situations. A stipend is a type of compensation that is similar to a salary, but a stipend and a salary have different components.

Stipend

Care

A stipend is a fixed sum of money and its primary purpose is to cover expenses. Taxes are generally not withheld from stipend payments, but the payee is responsible for reporting his stipend payments to the IRS. Volunteers, interns, fellows, students, apprentices and trainees are often paid stipends instead of salaries. For example, volunteer firefighters receive a $550 stipend for taking a two-week course at fire school, according to the U.S. Department of Labor. If the person receiving the stipend is in a learning position, the employer or institution does not have to pay minimum wage to the stipend recipient, according to the DOL.

Learning Position Classification

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An employee is in a learning position if she receives training similar to that which would be received in a vocational school. The employer cannot receive immediate benefit from the employee's training and her presence cannot displace regular employees. She is under the watchful eye of a regular employee or trainer. In addition, the employee and the employer both understand the terms of the arrangement and the employee understands she is not entitled to wages for her time in training. Her training may lead to a job, but it does not necessarily have to lead to a guaranteed position, according to the DOL.

Salary

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An employer provides a salary in regular intervals, such as weekly or monthly. The employee's salary is the same regardless of how much time he spends working. Employees generally receive salaries and salaries are usually negotiated upon employment. Salaried employees commonly receive overtime, health and other benefits that vary from company to company. In most cases, salaried employees must receive minimum wage. State and federal taxes are also generally withheld from salary.

Similarities

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People who are paid a stipend do not necessarily receive minimum wage, such as when stipend payees are in a learning setting. There are also situations where those who are paid a salary do not have to receive minimum wage, for instance, when a salaried employee is considered exempt from certain overtime pay provisions.

Differences

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An employer pays her employees salaries in regular intervals; employers do not make one-time salary payments. One-time payments to employees are called "bonuses." Although stipend payments are sometimes paid at regular intervals, there are also one-time stipend payments.

About the Author

E.M. Rawes is a professional writer specializing in business, finance, mathematical and social sciences topics. She completed her studies at the University of Maryland, where she earned her Bachelor of Science. During her time working in workforce management and as a financial analyst, she reinforced her business and financial know-how.

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