Define: Statutory Employee

A statutory employee is a classification given to certain workers who are treated as employees for tax purposes, even though they may be considered independent contractors under other laws.

Unlike regular employees, statutory employees are not subject to withholding taxes by their employers. Instead, they are responsible for paying their own Social Security and Medicare taxes, as well as income tax.

Common examples of statutory employees include certain drivers, salespeople, and home-based workers who perform services for a company on an ongoing basis.

The determination of whether a worker qualifies as a statutory employee is based on specific criteria set forth by the Internal Revenue Service (IRS). These criteria typically involve the nature of the work performed and the level of control exercised by the employer.

Statutory employees are generally not entitled to the same benefits as regular employees, such as health insurance or retirement plans. However, they may still be eligible for certain benefits under state or local laws.

No, a worker cannot simultaneously be classified as a statutory employee and an independent contractor. The classification is mutually exclusive and depends on the specific circumstances of the working relationship.

Statutory employees are responsible for paying their own self-employment taxes, which include Social Security and Medicare taxes. They may also be eligible for certain deductions and credits related to their self-employment status.

Yes, a statutory employee can be terminated by their employer, just like a regular employee. However, the specific terms of termination may vary depending on the employment agreement or contract in place.

Statutory employees are generally protected by certain employment laws, such as those related to workplace safety and discrimination. However, the extent of these protections may vary depending on the jurisdiction and the specific circumstances.

Yes, a worker who believes they have been misclassified as a statutory employee can challenge their classification. They may need to provide evidence and arguments to support their claim, and the final determination will be made by the relevant authorities, such as the IRS or a court.