Definition of non-employee

Posted by: Joel Capperella

Non-employee [non em-ploi-ee] — noun: A person working for another person or business in a situation in which the individual or business benefiting from the work is not under legal obligation to report to the Internal Revenue Service (IRS) wages paid to that employee via form W-2.

In plainer English, the non-employee seemingly works for a company but is not paid as an employee of that company. The simplest examples of the non-employee are temporary workers (paid by a staffing firm), freelance workers (typically paid via a third-party payroll organization), consultants and independent contractors (typically paid directly as a result of the service provided. This income is not wage-related and must be reported to the IRS via form 1099.).

In plainer language still, non-employees are doing work for us, but they don’t actually work for us.

Clear as mud, right?

It really isn’t all that complicated, but it can become so because of the varying degrees of the non-employee. There are those that are clearly service providers, earning a fee for services rendered, while others seem very much like employees. The latter gives chills to those in charge of independent contractor compliance and co-employment risks.

Why even bring it up? Well, there needs to be a way to categorize this segment of the workforce. While the IRS actually does have a statutory definition for the non-employee, it doesn’t really capture the essence of how and where these individuals are working within the company.

Additionally, we (me, in particular) use the term frequently. We get enough quizzical looks when using the term, that we thought it was appropriate to identify what exactly we are referring to.

Lastly, we are days away from announcing the results of the research we’ve been teasing you with. Critical to consuming those results, is putting it in proper context. The survey dug into the details of how larger organizations are handling the non-employee segment of their workforce, and how they plan to utilize non-employees in the immediate future.

We’re excited to share the results with you. But not quite yet. In the meantime, rest easy. There will be no vocabulary quiz on terms defined by The Seamless Workforce!