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Exempt Organizations: Who Is a Statutory Employee?

Some workers are deemed to be employees by statute. For an exempt organization, the most common employees in this category are its officers.  In addition, while not as prevalent in an exempt organization, the following workers are also statutory employees:

  • A full-time traveling or city salesperson who solicits orders from wholesalers, restaurants, or similar establishments on behalf of a principal. The merchandise sold must be for resale (e.g., food sold to a restaurant) or for supplies used in the buyer's business;
  • A full-time life insurance agent whose principal business activity is selling life insurance and/or annuity contracts for one life insurance company;
  • An agent-driver or commission-driver engaged in distributing meat, vegetables, bakery goods, beverages (other than milk), or laundry or dry cleaning services; and
  • A home worker performing work on material or goods furnished by the employer.

An employer should indicate on the worker's Form W-2 whether the worker (other than a corporate officer) is classified as a statutory employee.  Non-officer statutory employees report their wages, income, and allowable expenses on Schedule C (or Schedule C-EZ), Form 1040.  They are not liable for self-employment tax because their employers must treat them as employees for social security tax purposes.

Page Last Reviewed or Updated: 18-Apr-2014