Non-Employee Compensation Definition

Term Definition
When someone performing a service or providing a product is determined not to be an employee, compensation is paid as a non-employee. This non-employee compensation occurs most frequently with self-employed individuals.

Extended Definition
You pay non-employee compensation to individuals who do work for you that are not your employees. The most common non-employee compensation is paid to the self-employed. In these situations, you report non-employee compensation on Form 1099-NEC.

Related Article:
What Is Nonemployee Compensation?