Hiring an independent contractor?

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Permalink Reply by Helen Moss on February 6, 2012 at 12:14pm

I am one yr into my practice, I have a friend who wants me lease her my other room and Im not sure what to do .

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Permalink Reply by Relax & Rejuvenate on February 7, 2012 at 8:22am

I would suggest getting in the right frame of mind. You don't "hire" independent contractors, you contract them. Employees are hired. May sound like semantics, but try telling that to the labor board when a disgruntled IC uses your emails/postings against you.

 

You have 3 options, each with their +/-

 

Hire an employee

+ you control their actions/behaviors/schedules. If this is your business, and your clients think of it as your business when you get a massage from other therapists, then this is critical

 

- the paperwork and liability. Depending on your state this can vary greatly. If CA, IL, NYC, MA or one of the other anti-business states, I would avoid if at all possible. Most major banks -- BofA in particlar -- offer online payroll support which makes it a matter of sending them y our employee's hours and tip info each pay period and they do the rest.

 

Contract an IC

 

+ low cost, low hassle

- lack of control. Risk of treating them like an employee and getting hauled before the labor board. Need to consult a labor/contract attorney to structure the agreement correctly. YOu can't really have an IC work set hours -- the days you are off -- so this might not even be viable.

 

Sub-lease your space

* Need to see if your lease allows

* Requires the sub-lesee to be properly insured

 

+You can write the lease that gives you the control you are looking for -- you are leasing on x, y & z days. Business must be "open" during certain hours on those days. You can charge % of revenue as rent, a flat fee, or a combination. You can even provide "services" such as scheduling and CC processing payment, but those must be explicit in the rent payment. $x for rent, %Y for "services" which can also include utilities, etc.

 

- it is hard to have a sub-lesee represent your buisness. It is their business, occupying your space.

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Permalink Reply by Daniel Cohen on February 7, 2012 at 9:13am

I agree that wording can get you in trouble and result in costly penalties. However sub leasing is not a requirement establishing an IC. In fact subleasing seperates the businesses completely and should not require an IC contract. The bottom line is the more control you exert over work conditions and remuneration for services the less likely the relationship is going to look like an IC. So be careful how you write the lease as it is evidence. Anything on paper, computer or recorded is evidence. I always follow the Kiss principle; "keep it simple stupid".

Labor Boards take a dim view of what appears to be an attempt to deceive them, which means over time pay denied reducing taxes and fraud against the government.

Relax & Rejuvenate said:

I would suggest getting in the right frame of mind. You don't "hire" independent contractors, you contract them. Employees are hired. May sound like semantics, but try telling that to the labor board when a disgruntled IC uses your emails/postings against you.

 

You have 3 options, each with their +/-

 

Hire an employee

+ you control their actions/behaviors/schedules. If this is your business, and your clients think of it as your business when you get a massage from other therapists, then this is critical

 

- the paperwork and liability. Depending on your state this can vary greatly. If CA, IL, NYC, MA or one of the other anti-business states, I would avoid if at all possible. Most major banks -- BofA in particlar -- offer online payroll support which makes it a matter of sending them y our employee's hours and tip info each pay period and they do the rest.

 

Contract an IC

 

+ low cost, low hassle

- lack of control. Risk of treating them like an employee and getting hauled before the labor board. Need to consult a labor/contract attorney to structure the agreement correctly. YOu can't really have an IC work set hours -- the days you are off -- so this might not even be viable.

 

Sub-lease your space

* Need to see if your lease allows

* Requires the sub-lesee to be properly insured

 

+You can write the lease that gives you the control you are looking for -- you are leasing on x, y & z days. Business must be "open" during certain hours on those days. You can charge % of revenue as rent, a flat fee, or a combination. You can even provide "services" such as scheduling and CC processing payment, but those must be explicit in the rent payment. $x for rent, %Y for "services" which can also include utilities, etc.

 

- it is hard to have a sub-lesee represent your buisness. It is their business, occupying your space.

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Permalink Reply by Relax & Rejuvenate on February 11, 2012 at 11:21am

A sublease is a commercial contract, taking the entire discussion out of the realm of any labor board.

 

The sublessee is not an IC -- they don't even have to be an MT.

 

Look at your current lease for some guidance. When I look at our spa lease with a national REIT, I see things like Required Minimum hours of operations / days of the week. Flat Rent amount & % rent amount. Assessments for Marketing of the shopping development (you can charge a marketing fee since your advertising brings clients that may to to the sublessee, depending on schedule). Assessments for Common Area Maintenance (which in a massagte practice could be a waiting area, reception desk, changing room, bathroom) Utilities paid by landlord billed to us on a square footage basis, (a "service" provided by the landlord)

 

Your lease should also contain a clause for dispute resolution.

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