D. Statutory Non-Employees

A statutory non-employee is treated the same as an independent contractor. As such, statutory non-employees are generally excluded from the protections of most workplace laws and are treated as self-employed for federal income tax, employment tax, disability, and social security benefits purposes.

Examples of statutory non-employees include licensed real estate agents and direct sellers. The IRS defines a direct seller as a person who sells goods to an end-user consumer (such as selling cosmetics door-to-door). The IRS considers direct sellers to be statutory non-employees when their compensation is a direct result of sales output, when they use a written employment agreement that specifies that they are not employees, when they control their own work schedule and are not required to report to an employer, and when their selling is done outside an established retail store or showroom.

Tip:The distinction as to whether you are legally deemed a statutory non-employee or a statutory employee is not clear-cut. For example, many delivery drivers, life insurance agents, home workers, and salespeople who might not appear to be typical employees are treated as such by state laws and the IRS. If you are a statutory employee, you are covered by wage and hour laws, overtime, and tax withholding requirements imposed on employers.