What are statutory employees?

This article covers US tax requirements and applies to Wave Payroll in the US.

The IRS distinguishes certain kinds of workers as “statutory employees.” This means that although at face value the worker may appear to be a contractor, the IRS considers them employees for certain tax purposes.

The IRS considers the following types of workers statutory employees:

  • A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.
  • A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
  • An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.
  • A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer’s business operation. The work performed for you must be the salesperson's principal business activity.

Tax requirements differ according to your business and location, so Wave can’t give you specific tax advice. If you aren’t sure if the worker you’re paying is an employee, a contractor, or a statutory employee, check out the IRS website or talk to your accountant.