14 ms·

NLRB rules graduate students are employees

213 points by lvs 10y ago

beamatronic 10y ago
Do most graduate students receive a W-2 or a 1099 at tax time?
- dmd 10y ago
  W-2.
- tanderson92 10y ago
  Those on federal fellowships (NSF, DOD, DOE) receive neither, but must still pay federal and state income tax. And no, the dollars are not eligible for Roth IRA contributions. Sen. Warren tried to fix this earlier in the year (unsuccessfully, so far)
  - cozzyd 10y ago
    Not just federal fellowships but private and even departmental fellowships as well. Makes for a big surprise tax season when you realize you should have paid estimated taxes.
    - tanderson92 10y ago
      Yes but those can and do vary in their tax status, with some just treated as a source of your stipend compensation (i.e. W-2). The government doesn't really know about when you were paid though, so you're unlikely to get hit with penalties if you do forget to pay the estimated tax.
      - mbreese 10y ago
        They don't vary in the taxable status. Any[1] income you receive is taxable. The IRS doesn't care if it is a "fellowship", a "stipend", or "wages" - or if your school considers you a student or an employee - if you got income, it needs to be reported. And if you don't get a W2 (and withholding), it is a big pain to deal with the estimated taxes. You only get leeway for failing to pay estimated taxes for your first year. After that, you're supposed to know that you owe taxes and can (and will) be hit with penalties. The timing issues only come into play with "seasonal" or farm work... for these purposes, the IRS will assume you're paid on a regular basis, and thus owe estimated taxes on a regular basis. It makes it really fun when you and your spouse are both grad students, and have to deal with that twice. [1] Okay, not everything, but for the purposes of this discussion, yes.
        tanderson92 10y ago
        Yes, they do. Bizarrely, I know of two people with an NSF GRF at different institutions, one who receives a W-2 and one who does not. They both receive departmental "fellowships". There is more to "tax status" than whether you must pay income tax. There are payroll taxes, Roth IRA-eligibility, etc.
        maxerickson 10y ago
        It can still be taxable income without a W-2.
        tanderson92 10y ago
        Agreed! That is not in dispute. The question is whether tax status of income is wholly determined by whether the income is considered "taxable income". In the bizarro world of the IRS, the answer is no !
        cozzyd 10y ago
        Yes, I believe generally full-time students are exempt from payroll taxes when paid by the same institution they are students at.
        mbreese 10y ago
        I've been on fellowships where I got a W2 (and taxes withheld), and others where I was paid a stipend and I had to pay estimated taxes myself. My point is - just because a "fellowship" income is not reported via a W2 doesn't mean one doesn't have to pay taxes on it. But, it's all taxable income as far as the IRS is concerned.
        tanderson92 10y ago
        Yes, but my larger point here was that "taxable income" ==/==> "taxable compensation". That is, there is strictly more to "tax status" of income than whether it is taxable income. For more, read Pub 970. It's really quite complicated than whether you pay taxes on the income or not.
      - sldivzklhc 10y ago
        I had a grant-funded summer internship at a military institute. They gave me a 1099, with all the money filled in to a box that indicated I didn't owe tax. Got hit with self-employment taxes and a penalty two years after. Pretty sure I fit the requirements for W2 and they should have paid but I'm not about to report the military to the IRS or sue them.
        dnautics 10y ago
        > I'm not about to report the military to the IRS or sue them. Suing them is not a good idea, but why not report them? It's not like retribution will come your way and it could be interesting, if not better (as in "less contradictory") for future people in your position.
    - deleted 10y ago
      [deleted]
  - cfallin 10y ago
    At least on the NSF GRFP, and at least in my department at CMU, I still received W-2s, and federal deductions happened normally as per my W-4. (The fellowship funding went through the dept and I was paid by CMU.) Maybe my department is an outlier, though shrug Also, some states treat graduate stipends specially. In Pennsylvania, the stipend is exempt from state and local income tax.
    - tanderson92 10y ago
      I wouldn't say it is an outlier, but I know numerous people with GRFPs in both situations. I used to think that it was better to receive it as W-2 income. Now, with Social Security looking less certain 30 years from now, I wonder who really is in the better position.
      - Cyph0n 10y ago
        > Now, with Social Security looking less certain 30 years from now, I wonder who really is in the better position. I'm new to the U.S. tax system. What do you mean by that? Isn't tax mandatory? I mean, either way you're going to have to pay up, be it every month or when tax filing time comes around. I'm actually applying for the GRFP this year, but I'm not sure how my university handles the funds.
        joeyo 10y ago
        [ The following is not tax advice. ] Stipends are generally considered "awards" and not "wages", so Social Security and Medicare taxes are not withheld. There's no free lunch, of course, because each quarter that those taxes are not withheld are quarters that don't accrue the "credits" needed to qualify for Social Security benefits. This could be an issue for someone who, for example, became permanently disabled at a young age. Most people, of course, will work enough years after graduate school that they will qualify for Social Security benefits, but it is something to consider. I think it's standard at this point for universities to not withhold any tax from stipends (or the stipend portion of a disbursement to a graduate student if they are paid from multiple sources). Of course, income is income, whether it's "earned income" or not: so it's not like there isn't a tax liability just because the university doesn't withhold tax. Note that all this is even more complicated for foreign nationals, for whom some combination of state and federal taxes may actually be withheld depending on the specific tax treaty that applies, the visa status of the student and current IRS policy.
  - gsteinb88 10y ago
    Not universally true -- I know students on NDSEG fellowships (i.e. DoD) receive a 1099. I can't speak to the other fellowships though, and I don't get any deduction/withholding done for me, so I have to pay estimated quarterly. And funds that come through my university do get a W-2 come tax time.
    - tanderson92 10y ago
      It's utterly bizarre in that it varies from institution to institution. I am on a DOE CSGF and we receive /nothing/, just a letter stating what funding we received in a given year. I received a NDSEG as well and my research showed up a lack of homogeneity in how each school handles things.
      - gsteinb88 10y ago
        "Utterly bizarre" captures a lot of my feelings about science funding and the graduate student research mill, yeah
- ubernostrum 10y ago
  The presence or absence of tax forms, or which tax form is provided, makes surprisingly little difference to whether someone is legally considered an employee. The guidelines the IRS uses are multi-factor and weight heavily around things like how much control is exercised over someone's work, when they work, how they work, etc.
  - DashRattlesnake 10y ago
    Isn't that more the employee/independent contractor distinction? Couldn't contractors unionize if they liked?
- sevensor 10y ago
  I did, but I wasn't an employee. Nonetheless, there was an HR department for the lab I worked at, and they were responsible for me. It's a mess.
- st3v3r 10y ago
  The tax form wouldn't matter because, if they were misclassified, they'd receive the wrong form. Someone who is supposed to be an employee, but is misclassified as a contractor is still going to get a 1099.
- colanderman 10y ago
  I didn't while working on my PhD at Brown. They were actively hands-off about the tax implications of a stipend, telling new students nothing, and if asked, saying that it was the students' responsibility to figure it out. Difficult enough for me as a US citizen, probably hell for a foreign student on a visa. It's not clear that this ruling would force Brown and others to give W-2s or 1099s, but I hope it does because fuck them for ignoring students' legal needs.
  - semi-extrinsic 10y ago
    I did my PhD in Norway, where PhD students are considered employees. However, the university is foot-deep in have-my-cake-and-eat-it-too land. We had department heads, even heads of faculty, tell us in front of a hundred students that yes, you are expected to work more than the amount specified by law and your official contract. And no, you will not be paid overtime. And yes, you have to fill out a form saying when you will take your legally-mandated five weeks of holidays. But oh, no, we don't want you to actually take all those weeks as holidays, and no, you can't get a student bus card either, you're employees! Only good that came out of it for me was a bag full of ammo whenever someone in admin complained that I hadn't filled out some stupid paperwork or whatever. A short crass email pointing out their blatantly illegal public statements, together with the words "or I'll contact my union's free lawyer service" shut them up quicker than contact cement.
    - Joky 10y ago
      I think in France it is more on the "best of both-side" in the sense that you're employee and student (you get a student card, with the associated benefit). I can have changed in the recent years though.
      - semi-extrinsic 10y ago
        I'm sure details vary between countries and even universities. But for me, and I think essentially everyone, a fundamental part of being a PhD student is having to work long hours outside the applicable working time regulations. What is the point of promoting a group to employee status when everyone knows this group will be regularly violating the employee rights law (whether US, UK, EU etc.)?
- BDGC 10y ago
  Depends on the institution. I was paid by an NIH training grant and received a 1099, and every year I had to prove to the IRS I wasn't an independent contractor.
- pravula 10y ago
  Yes. W-2
mabbo 10y ago
Sets up for the (in my opinion) far more interesting debate: are college sports players employees?
- johnnyhillbilly 10y ago
  Yes. In the college marketing department.
- 6stringmerc 10y ago
  I thought the Northwestern University Football Team[1] case was in part addressing that or making thing more complicated? Not saying it's settled or whatnot, just that maybe it's at play too. [1] http://www.si.com/college-football/2015/08/17/northwestern-football-players-union-nlrb-ruling-analysis http://www.si.com/college-football/2015/08/17/northwestern-f...
- deleted 10y ago
  [deleted]
jasonmp85 10y ago
Does this similarly apply to medical fellowships? There's a weirdness that residents are considered employees, but if you want to go into a specialty requiring a fellowship, you're back in the "student" category.
takk309 10y ago
I am sure that this will be an unpopular opinion but I think this is wrong. Graduate students are students. They are paying to be in school. They may be paying for it with money gained from the University but they are still students. Should an undergrad that is on a university scholarship be considered an employee too? How are the economic realities of grad school any different from undergrad? If you can't afford to go to school, you have a few choices: debt, poverty, or don't go to school. If you have a family, you have to factor them into your choice too. All this being said, I went to graduate school and received a master's degree in Civil Engineering. I was able to be fully funded through the research that I performed and did not have to pay a dime in tuition. I also received a stipend that, if I was very frugal, was enough to pay my bills and feed myself. During this time I lived with four roommates and road my bike as much as I could to save money. Another item of note is that in Montana, where I got my degree, engineers registered with the State are bared from joining unions of any kind. Even as a grad student, I was registered as an EI, therefore I would not be eligible to join the grad student union.
- deleted 10y ago
  [deleted]
- CocaKoala 10y ago
  An undergraduate going to school on a university scholarship isn't doing work (such as laboratory research or being a TA or teaching intro classes); these graduate students are. When the undergrads at my alma mater were TAs or research assistants or whatever, they were absolutely considered part-time employees of the university, in addition to their student status. If they were doing full time work, forty hours of work a week, they would have been considered full time employees. Why should those employees not be subject to the same employment protections afforded to the non-student employees?
- Kinnard 10y ago
  It might actually depend on the school . . . and maybe even the grad program . . .
- tinco 10y ago
  I don't think anyone said that graduate students are not students. They just said that if they're teaching and researching for universities, that they are employees, and have employee rights. Is a university scholarship conditional on your performance? Are you producing anything that's of value to your university as a grad student? Even if you can't draw a clear line between post-grad and grad, that doesn't mean there isn't a line being crossed. A grad student will be working on a thesis for 6 months to a year, a Phd for 4 years! That distinction alone is worth making sure that these people are getting their times worth and their due rights during that time.
caseysoftware 10y ago
This has always made sense to me looking at it from a 1099 vs W2 point of view. (Those are the independent contractor vs employee tax forms in the US. Grad students who teach can't determine their own schedule, they can't accept/reject individual tasks, they don't have multiple customers, and they are receiving training throughout. Ref: https://www.learnvest.com/knowledge-center/the-difference-between-a-1099-and-a-w-2/2/ https://www.learnvest.com/knowledge-center/the-difference-be... My only surprise is how long it took this to happen.
- gnicholas 10y ago
  I'd agree that IRS rules could be relevant, though the 1099/W2 distinction isn't the one I'd look to. The question there is "how focused is the service provider on providing services to just this one recipient (i.e., the putative employer)?" That question is orthogonal to the question of whether one is primarily a student or primarily a worker (either employee or IC—it doesn't matter), which is more relevant to the recent NLRB ruling. The Supreme Court addressed this issue in 2011 in the Mayo Clinic case [1]. They held that medical residents do not qualify for the "student exemption" to FICA (a certain type of payroll withholding). At first glance, this seems to support the NLRB ruling regarding grad students, insofar as it indicates that people who work and learn can be classified as primarily workers. However, I think it might ultimately undermine the NLRB decision. In the Mayo Clinic case, the Supreme Court basically said: there are people who are students who get paid, and there's a FICA exemption for them, but medical residents are a different kind of beast—they're more like workers. This line of reasoning implies that students who do qualify for the FICA exemption—presumably including grad students who receive stipends—are more like students than workers in the view of the Supreme Court. That would mean that they would be less likely to be owed the right to unionize, which is a protection granted to workers, not students. Caveats: The Mayo Clinic case was decided under a specific provision of tax law (not labor law), though it did involve the general question of "what is a student?". Also, I am now a "recovering lawyer", no longer in practice. 1: http://www.clhe.org/marketplaceofideas/uncategorized/supreme-court-upholds-irs-regulation-saying-medical-residents-are-students-and-subject-to-fica-tax/ http://www.clhe.org/marketplaceofideas/uncategorized/supreme...
sbwm 10y ago
I guess I thought this was common. Maybe this development is private universities only? Where I went to school (Michigan) many (most IIRC) of the grad students were in the union: http://www.geo3550.org/ http://www.geo3550.org/
levbrie 10y ago
Many of the comments so far revolve around whether graduate students are students or not, as if being a student and an employee are somehow mutually exclusive or the fact that graduate students also take classes mean they must be equivalent to undergrads and ought to be given the same treatment. Clearly this is not the case. Acquiring the specialized knowledge that a PhD entails requires tremendous sacrifice (and, in the case of PhDs hoping to become professors, it often ends in tremendous disappointment). Universities have two primary functions - conducting research and teaching. This is the job of the university. Undergraduates don't have the specialized knowledge required to teach or to contribute substantially to research. Graduate students, however, do both of these jobs. Indeed, they are absolutely essential to the functioning of the university. And while the average time to completion for science and engineering doctorates hovers around 5 years, it's not uncommon to find humanities PhDs who take 8 years or more to complete their dissertations. This isn't because they're lazy. This is because the competition for academic posts is brutal, the expertise expected of them is vast, and, more to the point, because they're busy working. Universities are subjecting students to increasingly unjustifiable tuitions and pocketing massive profits couched as expanded endowments. Pretending like graduate students are just really smart, really old, really slow-to-catch-on interns and not a part of their extremely lucrative business operations just adds insult to injury.
- sldivzklhc 10y ago
  >Undergraduates don't have the specialized knowledge required to teach or to contribute substantially to research. Graduate students, however, do both of these jobs. I don't think grad/undergrad is the right distinction here. I was employed by my undergrad-only liberal arts alma-mater as a teaching assistant and research assistant. And the college employed many of my classmates in other positions. We weren't exploited like many graduated students are, but another institution could have treated us worse.
  - Chronic9q 10y ago
    > college employed many of my classmates in other positions And how many classmates were not employed? Far more. So yes, the grad/undergrad distinction is valid. Undergrads are often assigned boring research jobs and are paid less.
danieltillett 10y ago
Interesting that nobody has commented on what this will likely result in - fewer grad students. If this is a good or a bad thing depends on your point of view. Edit. Stupid typo :)
- jessaustin 10y ago
  Wouldn't fewer grad students lead to fewer professors and less income for universities? Why would administrators accept that?
  - danieltillett 10y ago
    Yes :) I did day it depended on your point of view. As a grad student less competition is good - if you are part of those exploiting grad students then not so good.
    - an_cap 10y ago
      I hope you realize that in addition to being bad for those who exploit grad students, it is also bad for the marginal grad student who is no longer going to be able to go to grad school. For a lot of us foreigners, grad school in the US is essentially our only ticket to a life in the first world. So I implore you to consider the impact of a policy that results in fewer grad students on the marginal ones - typically foreigners or minorities or females in male heavy fields.
      - aianus 10y ago
        Does grad school qualify you for a different visa? As far as I know, a bachelor's is sufficient for a TN or H1-B.
  - eaq 10y ago
    At least in science/engineering: not really. Faculty positions are saturated, only one in three PhDs will get hired as an assistant professor, let alone receive tenure. One could argue that the number of graduate students is hugely inflated, since they're such cheap labor.
jostmey 10y ago
FINALLY!!!!!
twblalock 10y ago
In some states and university systems, grad students have been unionized and treated as employees for decades. So while this is a big change for some universities, it won't have a significant effect on others. I wouldn't expect this ruling to have a seismic effect on academia as a whole.
sbuttgereit 10y ago
I haven't seen this in the comments so far, and admittedly I'm not so familiar with the issues at stake in the university context.... still I'll mention it... I suspect that opposition to this is the increase of cost and employment related regulatory burden for universities. Much of the discussion I'm seeing is whether or not certain students qualify for employment status (and presumably the benefits that come with that status). However, will not treating grad students as employees reduce the opportunities available for grad students? Usually when labor costs increased like this marginal positions are eliminated. Seems like if research positions are more expensive, research opportunities correspondingly have to be reduce. Sure, the next shoe to drop is spend more tax money on research (given the dependency of many universities on the public treasury), and the one after that is tax more/borrow more... but even if that happens over time, the cost increase seems much more immediate. (Yes, you could raise fees and tuition, but in today's environment that would also lead to demands for greater tax expenditure.) Anyway, curious if anyone is thinking about the other side of the equation.
- CJefferson 10y ago
  The same argument can be made of any employee of any company. If we did away with some employee rights, the company would save money. Here in the UK this problem is clearly solved -- if you teach, you are an employee.
- daughart 10y ago
  You could argue that in today's environment graduate students are artificially under-priced, creating incentive for universities to use them as a cheap form of labor while training more than the job market can support.
- omegaworks 10y ago
  >I suspect that opposition to this is the increase of cost and employment related regulatory burden for universities. Heaven forbid we have actual administrative work for the bloated administrative departments to do! http://www.bloomberg.com/news/articles/2012-11-21/the-troubling-dean-to-professor-ratio http://www.bloomberg.com/news/articles/2012-11-21/the-troubl...
StillBored 10y ago
About time! Now we just need to get rid of the rules, that the work done by the students is owned by the university.. Which for most students doesn't matter, but I know that in computer engineering a number of my friends intentionally avoided things that might have commercial significance because they wanted to keep the ideas for themselves. Getting a MS/PhD is enough of a financial ding (probably on the order of $200-$400k) that the insult of both paying the school _AND_ giving them the resulting work is just to much.
- dougws 10y ago
  Speaking from academic computer science, I have never heard of anyone making the decision not to work on something for this reason--perhaps because if an idea could immediately be turned into a successful company, it's probably not good research! And most (all?) CS PhD programs (which include an MS in passing in the USA) guarantee full funding for a number of years and most successful students are funded the whole time.
- _delirium 10y ago
  In practice people I know who've built startups on top of tech they built at universities haven't run into problems. A common strategy is to open-source any code you might want to later use commercially, as a way of throwing it over the fence. Your startup can then use it on whatever terms you open-sourced it under (probably BSD/MIT, if you want to give your later self maximum flexibility). Granted, so can anyone else. But usually the research-prototype code itself isn't enough to build a competitor, and the common case for research code open-sourced by a grad student in some random .tar.gz code dump on their website (or worse, included as a file appendix to their thesis), is that nobody else will even so much as look at it. The university may have to approve this, but at major CS departments approving students to open-source the code that goes with their thesis is pretty rubber-stamp, at least if it's self-contained.
  - lvs 10y ago
    Intellectual property generated in other fields does not benefit from this kind of liberal license loop-hole, unfortunately. We cannot open-source all applied science according to the current rules.
Animats 10y ago
College football players, however, are not. The NLRB decided that one last year.
- Finnucane 10y ago
  Right, because for the schools with the biggest sports programs, those programs are _serious_ cash cows. Sharing that with the students would be way bad! In some states, the head coach is the _highest paid public employee_.
maverick_iceman 10y ago
Higher education is ironically one of the least regulated industries in the US. Classifying employees as contractors (adjuncts and grad students), importing cheap labor from overseas, sky-high compensation for administrators who add little value, easy loans to barely adult students without any collateral - the list goes on and on.
- sackofmugs 10y ago
  Maybe that's a good thing that it's self-governing and less regulated then. Research universities contribute a ton of research and teaching to society. Can't say the same about other industries.
  - marcoperaza 10y ago
    You're kidding right? "Other industries" have literally built pretty much everything you see around you, generated the knowledge to do it, and train millions of workers in it.
    - sackofmugs 10y ago
      You mean after being educated at research universities for years, learning from the academic literature and textbooks, and meeting collaborators in classes? Like Google, right? Or Facebook? Or do you mean Wall Street? Or Boeing? Or did some self-taught teenager "generate knowledge" in his spare time from scratch?
      - marcoperaza 10y ago
        In the tech industry alone, Google and Microsoft run top-tier research arms. And before them, Bell Labs and others did at least as much as universities to advance the field.
- clarkmoody 10y ago
  Higher education breeds the thinkers that drive popular opinion -- the thought leaders and intellectual elites. The State bestows special privilege to intellectuals in government and handles academia with kid gloves. That special treatment lasts as long as academia continues to churn out elites who magnify the State in their writings and policy recommendations. Dissenting voices are dutifully dismissed and compromised in the halls of academia's upper echelons.
deleted 10y ago
[deleted]
Finnucane 10y ago
My wife, who is an admin at an academic lab, will, however, be looking forward to informing the students in her group that this means that they really do only get two weeks vacation time, and actually need to show up at the office.
- j2kun 10y ago
  Most graduate students I know get no vacation time.
- wavefunction 10y ago
  Seems like a weird thing to look forward to telling people...
doggydogs94 10y ago
I suspect that this will lead to students paying taxes on scholarships (and other graduate student funding) at some point in the future. It was a "feel good" win in the short run, but it will be harmful for students in the long run.
- eaq 10y ago
  What? All of my fellowships/assistantships as a PhD student have always been considered taxable income.
kchoudhu 10y ago
Is this retroactive? My wife would love to go back and get 7 years of FICA paid for.
j7ake 10y ago
For comparison, PhD students in other universities such as ETHZ have salaries of >$60000 per year and includes benefits such as >20 days of vacation and a pension.
einpoklum 10y ago
A very similar issue is just now coming up for discussion in the Country-wide Labor Court in Israel: The question is whether Graduate Students, who get a monthtly stipend and have the obligations of an employee essentially (and who used to be recognized as employees) are indeed employees, despite the university's refusal to recognize them as such. Here is some background material in English: https://app.box.com/s/osnf6xfqgqgvmnat6ldq https://app.box.com/s/osnf6xfqgqgvmnat6ldq I'm involved in the proceedings, having been the vice-chairperson of the Graduate Union at the university in question (the Technion). Whoever is interested in more details (including the official court rulings, briefs, affidavits etc.), or in collaboration in writing something on these matters is welcome to write me at eyalroz at technion dot ac dot il .

213 points by lvs 10y ago

beamatronic 10y ago

Do most graduate students receive a W-2 or a 1099 at tax time?

dmd 10y ago
W-2.
tanderson92 10y ago
Those on federal fellowships (NSF, DOD, DOE) receive neither, but must still pay federal and state income tax. And no, the dollars are not eligible for Roth IRA contributions. Sen. Warren tried to fix this earlier in the year (unsuccessfully, so far)
- cozzyd 10y ago
  Not just federal fellowships but private and even departmental fellowships as well. Makes for a big surprise tax season when you realize you should have paid estimated taxes.
  - tanderson92 10y ago
    Yes but those can and do vary in their tax status, with some just treated as a source of your stipend compensation (i.e. W-2). The government doesn't really know about when you were paid though, so you're unlikely to get hit with penalties if you do forget to pay the estimated tax.
    - mbreese 10y ago
      They don't vary in the taxable status. Any[1] income you receive is taxable. The IRS doesn't care if it is a "fellowship", a "stipend", or "wages" - or if your school considers you a student or an employee - if you got income, it needs to be reported. And if you don't get a W2 (and withholding), it is a big pain to deal with the estimated taxes. You only get leeway for failing to pay estimated taxes for your first year. After that, you're supposed to know that you owe taxes and can (and will) be hit with penalties. The timing issues only come into play with "seasonal" or farm work... for these purposes, the IRS will assume you're paid on a regular basis, and thus owe estimated taxes on a regular basis. It makes it really fun when you and your spouse are both grad students, and have to deal with that twice. [1] Okay, not everything, but for the purposes of this discussion, yes.
      - tanderson92 10y ago
        Yes, they do. Bizarrely, I know of two people with an NSF GRF at different institutions, one who receives a W-2 and one who does not. They both receive departmental "fellowships". There is more to "tax status" than whether you must pay income tax. There are payroll taxes, Roth IRA-eligibility, etc.
        maxerickson 10y ago
        It can still be taxable income without a W-2.
        tanderson92 10y ago
        Agreed! That is not in dispute. The question is whether tax status of income is wholly determined by whether the income is considered "taxable income". In the bizarro world of the IRS, the answer is no !
        cozzyd 10y ago
        Yes, I believe generally full-time students are exempt from payroll taxes when paid by the same institution they are students at.
        mbreese 10y ago
        I've been on fellowships where I got a W2 (and taxes withheld), and others where I was paid a stipend and I had to pay estimated taxes myself. My point is - just because a "fellowship" income is not reported via a W2 doesn't mean one doesn't have to pay taxes on it. But, it's all taxable income as far as the IRS is concerned.
        tanderson92 10y ago
        Yes, but my larger point here was that "taxable income" ==/==> "taxable compensation". That is, there is strictly more to "tax status" of income than whether it is taxable income. For more, read Pub 970. It's really quite complicated than whether you pay taxes on the income or not.
    - sldivzklhc 10y ago
      I had a grant-funded summer internship at a military institute. They gave me a 1099, with all the money filled in to a box that indicated I didn't owe tax. Got hit with self-employment taxes and a penalty two years after. Pretty sure I fit the requirements for W2 and they should have paid but I'm not about to report the military to the IRS or sue them.
      - dnautics 10y ago
        > I'm not about to report the military to the IRS or sue them. Suing them is not a good idea, but why not report them? It's not like retribution will come your way and it could be interesting, if not better (as in "less contradictory") for future people in your position.
  - deleted 10y ago
    [deleted]
- cfallin 10y ago
  At least on the NSF GRFP, and at least in my department at CMU, I still received W-2s, and federal deductions happened normally as per my W-4. (The fellowship funding went through the dept and I was paid by CMU.) Maybe my department is an outlier, though shrug Also, some states treat graduate stipends specially. In Pennsylvania, the stipend is exempt from state and local income tax.
  - tanderson92 10y ago
    I wouldn't say it is an outlier, but I know numerous people with GRFPs in both situations. I used to think that it was better to receive it as W-2 income. Now, with Social Security looking less certain 30 years from now, I wonder who really is in the better position.
    - Cyph0n 10y ago
      > Now, with Social Security looking less certain 30 years from now, I wonder who really is in the better position. I'm new to the U.S. tax system. What do you mean by that? Isn't tax mandatory? I mean, either way you're going to have to pay up, be it every month or when tax filing time comes around. I'm actually applying for the GRFP this year, but I'm not sure how my university handles the funds.
      - joeyo 10y ago
        [ The following is not tax advice. ] Stipends are generally considered "awards" and not "wages", so Social Security and Medicare taxes are not withheld. There's no free lunch, of course, because each quarter that those taxes are not withheld are quarters that don't accrue the "credits" needed to qualify for Social Security benefits. This could be an issue for someone who, for example, became permanently disabled at a young age. Most people, of course, will work enough years after graduate school that they will qualify for Social Security benefits, but it is something to consider. I think it's standard at this point for universities to not withhold any tax from stipends (or the stipend portion of a disbursement to a graduate student if they are paid from multiple sources). Of course, income is income, whether it's "earned income" or not: so it's not like there isn't a tax liability just because the university doesn't withhold tax. Note that all this is even more complicated for foreign nationals, for whom some combination of state and federal taxes may actually be withheld depending on the specific tax treaty that applies, the visa status of the student and current IRS policy.
- gsteinb88 10y ago
  Not universally true -- I know students on NDSEG fellowships (i.e. DoD) receive a 1099. I can't speak to the other fellowships though, and I don't get any deduction/withholding done for me, so I have to pay estimated quarterly. And funds that come through my university do get a W-2 come tax time.
  - tanderson92 10y ago
    It's utterly bizarre in that it varies from institution to institution. I am on a DOE CSGF and we receive /nothing/, just a letter stating what funding we received in a given year. I received a NDSEG as well and my research showed up a lack of homogeneity in how each school handles things.
    - gsteinb88 10y ago
      "Utterly bizarre" captures a lot of my feelings about science funding and the graduate student research mill, yeah
ubernostrum 10y ago
The presence or absence of tax forms, or which tax form is provided, makes surprisingly little difference to whether someone is legally considered an employee. The guidelines the IRS uses are multi-factor and weight heavily around things like how much control is exercised over someone's work, when they work, how they work, etc.
- DashRattlesnake 10y ago
  Isn't that more the employee/independent contractor distinction? Couldn't contractors unionize if they liked?
sevensor 10y ago
I did, but I wasn't an employee. Nonetheless, there was an HR department for the lab I worked at, and they were responsible for me. It's a mess.
st3v3r 10y ago
The tax form wouldn't matter because, if they were misclassified, they'd receive the wrong form. Someone who is supposed to be an employee, but is misclassified as a contractor is still going to get a 1099.
colanderman 10y ago
I didn't while working on my PhD at Brown. They were actively hands-off about the tax implications of a stipend, telling new students nothing, and if asked, saying that it was the students' responsibility to figure it out. Difficult enough for me as a US citizen, probably hell for a foreign student on a visa. It's not clear that this ruling would force Brown and others to give W-2s or 1099s, but I hope it does because fuck them for ignoring students' legal needs.
- semi-extrinsic 10y ago
  I did my PhD in Norway, where PhD students are considered employees. However, the university is foot-deep in have-my-cake-and-eat-it-too land. We had department heads, even heads of faculty, tell us in front of a hundred students that yes, you are expected to work more than the amount specified by law and your official contract. And no, you will not be paid overtime. And yes, you have to fill out a form saying when you will take your legally-mandated five weeks of holidays. But oh, no, we don't want you to actually take all those weeks as holidays, and no, you can't get a student bus card either, you're employees! Only good that came out of it for me was a bag full of ammo whenever someone in admin complained that I hadn't filled out some stupid paperwork or whatever. A short crass email pointing out their blatantly illegal public statements, together with the words "or I'll contact my union's free lawyer service" shut them up quicker than contact cement.
  - Joky 10y ago
    I think in France it is more on the "best of both-side" in the sense that you're employee and student (you get a student card, with the associated benefit). I can have changed in the recent years though.
    - semi-extrinsic 10y ago
      I'm sure details vary between countries and even universities. But for me, and I think essentially everyone, a fundamental part of being a PhD student is having to work long hours outside the applicable working time regulations. What is the point of promoting a group to employee status when everyone knows this group will be regularly violating the employee rights law (whether US, UK, EU etc.)?
BDGC 10y ago
Depends on the institution. I was paid by an NIH training grant and received a 1099, and every year I had to prove to the IRS I wasn't an independent contractor.
pravula 10y ago
Yes. W-2

mabbo 10y ago

Sets up for the (in my opinion) far more interesting debate: are college sports players employees?

johnnyhillbilly 10y ago
Yes. In the college marketing department.
6stringmerc 10y ago
I thought the Northwestern University Football Team[1] case was in part addressing that or making thing more complicated? Not saying it's settled or whatnot, just that maybe it's at play too. [1] http://www.si.com/college-football/2015/08/17/northwestern-football-players-union-nlrb-ruling-analysis http://www.si.com/college-football/2015/08/17/northwestern-f...
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jasonmp85 10y ago

Does this similarly apply to medical fellowships? There's a weirdness that residents are considered employees, but if you want to go into a specialty requiring a fellowship, you're back in the "student" category.

takk309 10y ago

I am sure that this will be an unpopular opinion but I think this is wrong. Graduate students are students. They are paying to be in school. They may be paying for it with money gained from the University but they are still students. Should an undergrad that is on a university scholarship be considered an employee too? How are the economic realities of grad school any different from undergrad? If you can't afford to go to school, you have a few choices: debt, poverty, or don't go to school. If you have a family, you have to factor them into your choice too. All this being said, I went to graduate school and received a master's degree in Civil Engineering. I was able to be fully funded through the research that I performed and did not have to pay a dime in tuition. I also received a stipend that, if I was very frugal, was enough to pay my bills and feed myself. During this time I lived with four roommates and road my bike as much as I could to save money. Another item of note is that in Montana, where I got my degree, engineers registered with the State are bared from joining unions of any kind. Even as a grad student, I was registered as an EI, therefore I would not be eligible to join the grad student union.

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CocaKoala 10y ago
An undergraduate going to school on a university scholarship isn't doing work (such as laboratory research or being a TA or teaching intro classes); these graduate students are. When the undergrads at my alma mater were TAs or research assistants or whatever, they were absolutely considered part-time employees of the university, in addition to their student status. If they were doing full time work, forty hours of work a week, they would have been considered full time employees. Why should those employees not be subject to the same employment protections afforded to the non-student employees?
Kinnard 10y ago
It might actually depend on the school . . . and maybe even the grad program . . .
tinco 10y ago
I don't think anyone said that graduate students are not students. They just said that if they're teaching and researching for universities, that they are employees, and have employee rights. Is a university scholarship conditional on your performance? Are you producing anything that's of value to your university as a grad student? Even if you can't draw a clear line between post-grad and grad, that doesn't mean there isn't a line being crossed. A grad student will be working on a thesis for 6 months to a year, a Phd for 4 years! That distinction alone is worth making sure that these people are getting their times worth and their due rights during that time.

caseysoftware 10y ago

This has always made sense to me looking at it from a 1099 vs W2 point of view. (Those are the independent contractor vs employee tax forms in the US. Grad students who teach can't determine their own schedule, they can't accept/reject individual tasks, they don't have multiple customers, and they are receiving training throughout. Ref: https://www.learnvest.com/knowledge-center/the-difference-between-a-1099-and-a-w-2/2/ https://www.learnvest.com/knowledge-center/the-difference-be... My only surprise is how long it took this to happen.

gnicholas 10y ago
I'd agree that IRS rules could be relevant, though the 1099/W2 distinction isn't the one I'd look to. The question there is "how focused is the service provider on providing services to just this one recipient (i.e., the putative employer)?" That question is orthogonal to the question of whether one is primarily a student or primarily a worker (either employee or IC—it doesn't matter), which is more relevant to the recent NLRB ruling. The Supreme Court addressed this issue in 2011 in the Mayo Clinic case [1]. They held that medical residents do not qualify for the "student exemption" to FICA (a certain type of payroll withholding). At first glance, this seems to support the NLRB ruling regarding grad students, insofar as it indicates that people who work and learn can be classified as primarily workers. However, I think it might ultimately undermine the NLRB decision. In the Mayo Clinic case, the Supreme Court basically said: there are people who are students who get paid, and there's a FICA exemption for them, but medical residents are a different kind of beast—they're more like workers. This line of reasoning implies that students who do qualify for the FICA exemption—presumably including grad students who receive stipends—are more like students than workers in the view of the Supreme Court. That would mean that they would be less likely to be owed the right to unionize, which is a protection granted to workers, not students. Caveats: The Mayo Clinic case was decided under a specific provision of tax law (not labor law), though it did involve the general question of "what is a student?". Also, I am now a "recovering lawyer", no longer in practice. 1: http://www.clhe.org/marketplaceofideas/uncategorized/supreme-court-upholds-irs-regulation-saying-medical-residents-are-students-and-subject-to-fica-tax/ http://www.clhe.org/marketplaceofideas/uncategorized/supreme...

sbwm 10y ago

I guess I thought this was common. Maybe this development is private universities only? Where I went to school (Michigan) many (most IIRC) of the grad students were in the union: http://www.geo3550.org/ http://www.geo3550.org/

levbrie 10y ago

Many of the comments so far revolve around whether graduate students are students or not, as if being a student and an employee are somehow mutually exclusive or the fact that graduate students also take classes mean they must be equivalent to undergrads and ought to be given the same treatment. Clearly this is not the case. Acquiring the specialized knowledge that a PhD entails requires tremendous sacrifice (and, in the case of PhDs hoping to become professors, it often ends in tremendous disappointment). Universities have two primary functions - conducting research and teaching. This is the job of the university. Undergraduates don't have the specialized knowledge required to teach or to contribute substantially to research. Graduate students, however, do both of these jobs. Indeed, they are absolutely essential to the functioning of the university. And while the average time to completion for science and engineering doctorates hovers around 5 years, it's not uncommon to find humanities PhDs who take 8 years or more to complete their dissertations. This isn't because they're lazy. This is because the competition for academic posts is brutal, the expertise expected of them is vast, and, more to the point, because they're busy working. Universities are subjecting students to increasingly unjustifiable tuitions and pocketing massive profits couched as expanded endowments. Pretending like graduate students are just really smart, really old, really slow-to-catch-on interns and not a part of their extremely lucrative business operations just adds insult to injury.

sldivzklhc 10y ago
>Undergraduates don't have the specialized knowledge required to teach or to contribute substantially to research. Graduate students, however, do both of these jobs. I don't think grad/undergrad is the right distinction here. I was employed by my undergrad-only liberal arts alma-mater as a teaching assistant and research assistant. And the college employed many of my classmates in other positions. We weren't exploited like many graduated students are, but another institution could have treated us worse.
- Chronic9q 10y ago
  > college employed many of my classmates in other positions And how many classmates were not employed? Far more. So yes, the grad/undergrad distinction is valid. Undergrads are often assigned boring research jobs and are paid less.

danieltillett 10y ago

Interesting that nobody has commented on what this will likely result in - fewer grad students. If this is a good or a bad thing depends on your point of view. Edit. Stupid typo :)

jessaustin 10y ago
Wouldn't fewer grad students lead to fewer professors and less income for universities? Why would administrators accept that?
- danieltillett 10y ago
  Yes :) I did day it depended on your point of view. As a grad student less competition is good - if you are part of those exploiting grad students then not so good.
  - an_cap 10y ago
    I hope you realize that in addition to being bad for those who exploit grad students, it is also bad for the marginal grad student who is no longer going to be able to go to grad school. For a lot of us foreigners, grad school in the US is essentially our only ticket to a life in the first world. So I implore you to consider the impact of a policy that results in fewer grad students on the marginal ones - typically foreigners or minorities or females in male heavy fields.
    - aianus 10y ago
      Does grad school qualify you for a different visa? As far as I know, a bachelor's is sufficient for a TN or H1-B.
- eaq 10y ago
  At least in science/engineering: not really. Faculty positions are saturated, only one in three PhDs will get hired as an assistant professor, let alone receive tenure. One could argue that the number of graduate students is hugely inflated, since they're such cheap labor.

jostmey 10y ago

FINALLY!!!!!

twblalock 10y ago

In some states and university systems, grad students have been unionized and treated as employees for decades. So while this is a big change for some universities, it won't have a significant effect on others. I wouldn't expect this ruling to have a seismic effect on academia as a whole.

sbuttgereit 10y ago

I haven't seen this in the comments so far, and admittedly I'm not so familiar with the issues at stake in the university context.... still I'll mention it... I suspect that opposition to this is the increase of cost and employment related regulatory burden for universities. Much of the discussion I'm seeing is whether or not certain students qualify for employment status (and presumably the benefits that come with that status). However, will not treating grad students as employees reduce the opportunities available for grad students? Usually when labor costs increased like this marginal positions are eliminated. Seems like if research positions are more expensive, research opportunities correspondingly have to be reduce. Sure, the next shoe to drop is spend more tax money on research (given the dependency of many universities on the public treasury), and the one after that is tax more/borrow more... but even if that happens over time, the cost increase seems much more immediate. (Yes, you could raise fees and tuition, but in today's environment that would also lead to demands for greater tax expenditure.) Anyway, curious if anyone is thinking about the other side of the equation.

CJefferson 10y ago
The same argument can be made of any employee of any company. If we did away with some employee rights, the company would save money. Here in the UK this problem is clearly solved -- if you teach, you are an employee.
daughart 10y ago
You could argue that in today's environment graduate students are artificially under-priced, creating incentive for universities to use them as a cheap form of labor while training more than the job market can support.
omegaworks 10y ago
>I suspect that opposition to this is the increase of cost and employment related regulatory burden for universities. Heaven forbid we have actual administrative work for the bloated administrative departments to do! http://www.bloomberg.com/news/articles/2012-11-21/the-troubling-dean-to-professor-ratio http://www.bloomberg.com/news/articles/2012-11-21/the-troubl...

StillBored 10y ago

About time! Now we just need to get rid of the rules, that the work done by the students is owned by the university.. Which for most students doesn't matter, but I know that in computer engineering a number of my friends intentionally avoided things that might have commercial significance because they wanted to keep the ideas for themselves. Getting a MS/PhD is enough of a financial ding (probably on the order of $200-$400k) that the insult of both paying the school _AND_ giving them the resulting work is just to much.

dougws 10y ago
Speaking from academic computer science, I have never heard of anyone making the decision not to work on something for this reason--perhaps because if an idea could immediately be turned into a successful company, it's probably not good research! And most (all?) CS PhD programs (which include an MS in passing in the USA) guarantee full funding for a number of years and most successful students are funded the whole time.
_delirium 10y ago
In practice people I know who've built startups on top of tech they built at universities haven't run into problems. A common strategy is to open-source any code you might want to later use commercially, as a way of throwing it over the fence. Your startup can then use it on whatever terms you open-sourced it under (probably BSD/MIT, if you want to give your later self maximum flexibility). Granted, so can anyone else. But usually the research-prototype code itself isn't enough to build a competitor, and the common case for research code open-sourced by a grad student in some random .tar.gz code dump on their website (or worse, included as a file appendix to their thesis), is that nobody else will even so much as look at it. The university may have to approve this, but at major CS departments approving students to open-source the code that goes with their thesis is pretty rubber-stamp, at least if it's self-contained.
- lvs 10y ago
  Intellectual property generated in other fields does not benefit from this kind of liberal license loop-hole, unfortunately. We cannot open-source all applied science according to the current rules.

Animats 10y ago

College football players, however, are not. The NLRB decided that one last year.

Finnucane 10y ago
Right, because for the schools with the biggest sports programs, those programs are _serious_ cash cows. Sharing that with the students would be way bad! In some states, the head coach is the _highest paid public employee_.

maverick_iceman 10y ago

Higher education is ironically one of the least regulated industries in the US. Classifying employees as contractors (adjuncts and grad students), importing cheap labor from overseas, sky-high compensation for administrators who add little value, easy loans to barely adult students without any collateral - the list goes on and on.

sackofmugs 10y ago
Maybe that's a good thing that it's self-governing and less regulated then. Research universities contribute a ton of research and teaching to society. Can't say the same about other industries.
- marcoperaza 10y ago
  You're kidding right? "Other industries" have literally built pretty much everything you see around you, generated the knowledge to do it, and train millions of workers in it.
  - sackofmugs 10y ago
    You mean after being educated at research universities for years, learning from the academic literature and textbooks, and meeting collaborators in classes? Like Google, right? Or Facebook? Or do you mean Wall Street? Or Boeing? Or did some self-taught teenager "generate knowledge" in his spare time from scratch?
    - marcoperaza 10y ago
      In the tech industry alone, Google and Microsoft run top-tier research arms. And before them, Bell Labs and others did at least as much as universities to advance the field.
clarkmoody 10y ago
Higher education breeds the thinkers that drive popular opinion -- the thought leaders and intellectual elites. The State bestows special privilege to intellectuals in government and handles academia with kid gloves. That special treatment lasts as long as academia continues to churn out elites who magnify the State in their writings and policy recommendations. Dissenting voices are dutifully dismissed and compromised in the halls of academia's upper echelons.

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Finnucane 10y ago

My wife, who is an admin at an academic lab, will, however, be looking forward to informing the students in her group that this means that they really do only get two weeks vacation time, and actually need to show up at the office.

j2kun 10y ago
Most graduate students I know get no vacation time.
wavefunction 10y ago
Seems like a weird thing to look forward to telling people...

doggydogs94 10y ago

I suspect that this will lead to students paying taxes on scholarships (and other graduate student funding) at some point in the future. It was a "feel good" win in the short run, but it will be harmful for students in the long run.

eaq 10y ago
What? All of my fellowships/assistantships as a PhD student have always been considered taxable income.

kchoudhu 10y ago

Is this retroactive? My wife would love to go back and get 7 years of FICA paid for.

j7ake 10y ago

For comparison, PhD students in other universities such as ETHZ have salaries of >$60000 per year and includes benefits such as >20 days of vacation and a pension.

einpoklum 10y ago

A very similar issue is just now coming up for discussion in the Country-wide Labor Court in Israel: The question is whether Graduate Students, who get a monthtly stipend and have the obligations of an employee essentially (and who used to be recognized as employees) are indeed employees, despite the university's refusal to recognize them as such. Here is some background material in English: https://app.box.com/s/osnf6xfqgqgvmnat6ldq https://app.box.com/s/osnf6xfqgqgvmnat6ldq I'm involved in the proceedings, having been the vice-chairperson of the Graduate Union at the university in question (the Technion). Whoever is interested in more details (including the official court rulings, briefs, affidavits etc.), or in collaboration in writing something on these matters is welcome to write me at eyalroz at technion dot ac dot il .