In a landmark decision on August 23rd, the National Labor Relations Board ruled in favor of recognizing graduate students at private colleges and universities - “who perform services at a university in connection with their studies” - as statutory employees, under section 2(3) of the National Labor Relations Act. This ruling covered a petition filed by the Graduate Workers of Columbia, a group seeking to represent graduate and undergraduate teaching and research assistants at Columbia University. The decision allows students who “perform work, at the direction of the university, for which they are compensated” to unionize.
What is a Statutory Employee?
Aside from unionized student workers, how will this ruling affect universities and their employees? The decision has tax implications for employee and employer alike. This is because the NLRB ruled that student workers are statutory employees. Statutory employees, as defined by the IRS, are employees who are otherwise treated as independent contractors. The major difference is they are able to claim taxes under Schedule C rather than Schedule A. This allows employees to claim work expenses on their taxes. At the same time, they don’t have to pay the full FICA tax liability, as the employer pays a portion.
This decision will likely have even more effects as the decision is further interpreted. Make sure to subscribe, and we’ll keep you updated!