W-2 Employee

A W-2 employee is a worker classified as a direct employee of a company, receiving wages subject to federal and state tax withholding. These employees work under the company’s direct control and supervision: they follow set schedules, use company equipment, and perform duties that are integral to the business.

Employers withhold income tax, Social Security, and Medicare from a W-2 employee’s paycheck, and also pay matching employer contributions. The employment relationship comes with legal protections, benefits eligibility, and formal documentation through payroll systems and tax reporting.