What is a Statutory Employee?

A statutory employee is an employee that performs services for an employer under a written contract, and that employer’s contract or written agreement is required by law, statutory employee is someone who works for a business but is not subject to withholding tax on their earnings.

However, the employer is required to withhold Medicare and Social Security tax from their wages.

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Who can work as a Statutory Employee?

A statutory employee is an employee whose compensation is paid by an employer pursuant to a provision of law, without regard to whether the employee performs any services for his/her own account or is employed by any other employer.

This term is frequently used in worker's compensation (workers’ comp) laws.

A statutory employee is entitled to worker's compensation benefits, even if such employee is performing services for an employer other than the employer that provides the worker’s compensation benefits.

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Why are statutory employees necessary?

Statutory employees are necessary because they help businesses comply with the law. Without them, businesses would have to find other ways to comply with the law, which could be more expensive and time-consuming.