An employee is a person who works for an employer, who controls when, where, and how the work is performed.
Understanding What an Employee Really Is
In the world of work and taxes, understanding the term employee is essential. An employee is someone who performs work for an employer under specific direction and control. This means the employer decides the schedule, work location, and the methods the employee must follow to get the job done.
Employees are different from independent contractors, who have more freedom in how they work. Knowing the distinction matters because it affects everything from taxes to workplace rights and benefits.
How the Employer–Employee Relationship Works
The relationship between an employer and an employee is defined by control.
The employer controls the work environment
Employers typically decide:
- When the employee must work
- Where the work takes place
- How the tasks should be performed
This level of control is a key factor in determining whether someone is legally considered an employee.
The employer provides tools and training
Employees usually receive tools, equipment, or training necessary to perform their job. For example, a retail worker uses a store’s register, and an office worker uses company-provided computers.
The employee follows company rules and expectations
Employees must follow workplace policies, procedures, and supervision set by their employer.
Why It Matters Whether You Are an Employee
Your classification as an employee affects important areas of your working life.
Tax responsibilities
Employees have federal, state, and payroll taxes withheld directly from their paychecks. Employers handle:
- Social Security and Medicare contributions
- Federal and state income tax withholding
- Unemployment tax contributions
Independent contractors must handle these taxes themselves, which can be more complicated.
Benefits and protections
Being an employee often comes with benefits such as:
- Health insurance
- Paid time off
- Retirement benefits
- Worker’s compensation
- Unemployment insurance
Independent contractors typically do not receive these benefits.
Legal protections
Employees are covered by workplace laws, including minimum wage rules, overtime laws, and anti-discrimination protections.
Real-Life Examples
Example 1: Retail employee
Sarah works at a clothing store. Her employer sets her work schedule, assigns tasks, and trains her on how to process returns. She is clearly an employee.
Example 2: Office employee
Marcus works at a marketing firm. He must arrive at 9 AM, use company software, attend weekly meetings, and follow the company’s workflow. These are all signs of an employee relationship.
Example 3: Not an employee
A freelance photographer who chooses their own schedule, brings their own equipment, and works independently for several clients is not considered an employee — they are an independent contractor.
Employee vs. Independent Contractor
Many people confuse the terms, but the IRS looks at the degree of control to determine the difference.
Employees:
- Follow employer instructions
- Have set work hours
- Use company tools
- Receive employee benefits
Independent contractors:
- Control how they complete the job
- Provide their own tools
- Work for multiple clients
- Handle their own taxes
Misclassification can cause tax issues for both workers and employers, which is why the definition of “employee” is so important.
Final Thoughts
An employee is someone who works under the direction and control of an employer — who decides when, where, and how the work is done. This classification affects taxes, benefits, and legal rights, making it essential for workers and employers alike to understand the distinction. Whether you’re starting a new job or managing a team, knowing what it means to be an employee helps you navigate the workplace with confidence and clarity.
