What Is the Difference Between Statutory and Nonstatutory?

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The word “statutory” describes something determined or controlled by a law, or statute. “Nonstatutory” refers to something based on customs or precedents. Most people simply use the phrase common law instead of nonstatutory.

Civil Law vs. Common Law The terms statutory and nonstatutory have roots in civil law and common law systems. In a civil law system, judges use statutes to decide legal issues, but they use case law and precedents to determine what is lawful under a common law system. As a result, common law systems judges play a greater role in the evolution of the law. In Plessy v. Ferguson, for example, the United States Supreme Court ruled that segregation was legal as long as all parties had access to equal facilities. The Supreme Court reversed that decision in Brown v. Board of Education nearly 60 years later, ruling segregated schools unconstitutional and setting in motion the civil rights movement. In both cases, judges relied on previous case law and accepted social theories at the time to form the opinion.

Statutory Crimes Some actions become crimes because they violate statutes established by the authorities. For example, many state and local governments set speed limits for vehicles moving on roads or texting while driving. Neither of those actions is inherently a crime, even though they may lead to a crime if the driver damages life or property as a result. Driving over the speed limit or texting while driving in a state that prohibits it is a statutory crime. In the U.S., criminal law is statutory because the authorities cannot charge someone with a crime unless it’s written down in the constitution or general charter.

Statutory and Nonstatutory Benefits Statutory and nonstatutory apply disciplines other than law. One example that shows the difference between statutory and nonstatutory is the benefits supplied to employees through employers. By law, employees may take leave time through the Family Medical Leave Act. Employers must also provide workers’ compensation coverage to employees. These are statutory benefits because a law, or statute, requires employers to comply. However, employers also offer employees benefits like health insurance and retirement plans, which are not required by law but are a common practice.

Statutory and Nonstatutory Stocks Stocks may also be statutory or nonstatutory. Employees who purchase stock through an employee stock program or incentive stock option buy statutory stock. When that same employee buys stocks through another entity, those stocks are nonstatutory. The employee pays capital gains taxes on both types of stocks but the IRS places different values on them.

Statutory and Nonstatutory Reports Another use of the terms statutory and nonstatutory applies to organizations. For example, companies must produce statutory financial statements that may list information, such as profits, losses and assets. By law, the companies have to share this information with government regulatory agencies, shareholders and customers. Much of the information contained in the statutory reports also appear in nonstatutory reports that the company uses when making decisions. These reports usually detail information that the organization’s leaders need but they may not have a legal obligation to share with others.