A W-2 employee is someone who works for a company and receives a W-2 form at the end of the year. This form reports their annual wages and the taxes withheld from their paychecks. 

A 1099 employee, often referred to as an independent contractor, receives a 1099 form instead of a W-2. This classification means they are self-employed and responsible for their own taxes. 

The primary difference lies in tax responsibilities and benefits. W-2 employees have taxes withheld by their employer and often receive benefits, while 1099 employees must manage their own taxes and typically do not receive benefits.