What are the benefits of being a Statutory Employee?
Being labelled as a statutory employee can bring about numerous advantages, blending the characteristics of freelance work with the perks typically associated with regular employment. Some key benefits include:
1. Reporting and Withholding of Taxes: Employers take on the responsibility of withholding taxes for statutory employees, making the tax process much more streamlined compared to independent contractors who must handle their own reporting and tax payments.
2. Access to Specific Benefits for Employees: In addition to the convenience of tax handling, statutory employees may also receive access to desirable benefits commonly associated with traditional employment, such as retirement plans, healthcare coverage, and other perks provided by their employer.
3. Job Stability: Unlike the potential fluctuations in work arrangements that independent contractors may face, statutory employees typically experience a more secure and predictable work dynamic with a single employer.
4. Employer Contributions to Social Security and Medicare: Statutory employees rely on their employers to make contributions to Social Security and Medicare, ensuring their financial security.
5. Protections under Law: Statutory employees have the right to receive various legal protections and benefits that are typically reserved for traditional employees. This includes coverage for workers’ compensation and unemployment benefits.
6. Easier Tax Return Filing: Compared to independent contractors, statutory employees enjoy a more streamlined tax filing process. This is due to the fact that their employer provides them with a W-2 form that outlines their income and the taxes that have been withheld. This simplifies the process and makes it more convenient for statutory employees.
7. Possibility of Employment Benefits and Overtime Compensation: If the nature of their work warrants it, statutory employees are entitled to receive overtime wages and employment benefits, just like traditional employees.
8. More Transparent Employment Relationship: The designation of statutory employee solidifies a definitive connection between employer and employee, offering a well-defined structure for work arrangements.
9. Obtaining Employer Resources and Training: In addition to their regular job duties, statutory employees may have the opportunity to participate in employer-sponsored training, access resources, and engage in professional development, in order to enhance their abilities and knowledge.