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Independent Contractor Vs Employee
Greetings All,
I would love some feedback on a situation that has presented itself to me. I am currently an employee of a chiropractic clinic located in a rural community as a massage therapist. I am the sole therapist on staff at this time. I feel I am well paid for the work that I do. During down times (no massages) I do marketing work for the clinic, setting up seminars, taking care of brochures, clinic maintainance (hanging shelves, brochure racks, cleaning, pretty much everything that needs attention).
Recently the owner of the clinic approached me with the opportunity of converting to an Independent Contractor. I'm interested in the idea for it will free me up from a non-compete agreement I have as an employee. The owner says it will save her money in terms of not having to pay taxes on me (ssi, workman's comp, etc). It will also save her on not having to pay me hourly wages. It would be a cut in my earnings yet offer me more opportunities in my own personal business.
I am curious to find out what you think is a fair percentage for compensation working as an IC, particularly in regards to work that is billed to insurance. The owner wants to compensate me based on what is collected, not what is billed. I am aware that those are 2 different figures, insurance does deny payment on claims for various reasons.
I am considering proposing a set minimum compensation for work that is not collected on if we go that direction. Another option I plan on proposing is a set percentage for all work that is billed, another percentage for all work that is paid up front. Is there anyone who has experience working as an independent contractor for a chiropractor or PT? I would welcome your advice. Thanks.
I would love some feedback on a situation that has presented itself to me. I am currently an employee of a chiropractic clinic located in a rural community as a massage therapist. I am the sole therapist on staff at this time. I feel I am well paid for the work that I do. During down times (no massages) I do marketing work for the clinic, setting up seminars, taking care of brochures, clinic maintainance (hanging shelves, brochure racks, cleaning, pretty much everything that needs attention).
Recently the owner of the clinic approached me with the opportunity of converting to an Independent Contractor. I'm interested in the idea for it will free me up from a non-compete agreement I have as an employee. The owner says it will save her money in terms of not having to pay taxes on me (ssi, workman's comp, etc). It will also save her on not having to pay me hourly wages. It would be a cut in my earnings yet offer me more opportunities in my own personal business.
I am curious to find out what you think is a fair percentage for compensation working as an IC, particularly in regards to work that is billed to insurance. The owner wants to compensate me based on what is collected, not what is billed. I am aware that those are 2 different figures, insurance does deny payment on claims for various reasons.
I am considering proposing a set minimum compensation for work that is not collected on if we go that direction. Another option I plan on proposing is a set percentage for all work that is billed, another percentage for all work that is paid up front. Is there anyone who has experience working as an independent contractor for a chiropractor or PT? I would welcome your advice. Thanks.
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Replies to This Discussion
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Permalink Reply by Lauren on
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Hello again Gerry! I am an ic where I work, although imo we are treated as employees in many ways. But that's besides the point. I am not sure what is the usual practice in these situations, but this is how it works at my place of employment. We are given 50% comission, she does all our marketing (at least in theory because she really doesn't do any), if there is a promotion we still get paid the same (if we do an hour massage at $80 & the client has a 20% off coupon, we still make $40), she supplies our materials (sheets, lotions, office staff to book our appts., even clietns sometimes), we are not required to be in the office if we are not booked, but do need to be close by if there is a possibility that one of her clients will want a massage (works for me because I only live 10 min. away, some of the other ics are 30+ min away) . They submit insurance, meaning they take payments from the client & if the insurance company covers it they send the client a check & for pip clients we wait for approval (which can be bad because they need approval every so often & approval can take several weeks sometimes). If a client does not pay their bill then we still get compensation. We do not get paid for down time or no shows. As you can see many practices at our office are not standard.
I know ics who go the route of paying a flat rate for the room. If you are considering this option I would call around & find out what is the avg. going rate for rental space in your area, around here I have heard from $250-$500/month & you would collect 100% commission. You probably took this into consideration, but I will bring it up anyway- you will be paying more in taxes (& need to be very good at setting $ aside, some of my coworkers have gotten themselves into a big hole w/ this one). Disability & unemployment are a foggy issue w/ me as when I went on maternity leave I got so many different answers & ended up not persueing the issue, but you may not be eligable. If you are not good at doing your taxes, your accounting bill will probably be higher. There are other factors which may present themselves, but this is what came up in my situation.
I know I gave you more input then you asked, I hope something helped. BTW, I work for an acupuncterist. Good luck in whatever you decide to do!
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Permalink Reply by Marissa on
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Greetings Gerry. I'm an IC at a Physical Therapy office. I started 7 years ago doing a 50/50 split. They supplied everything from lotion, sheets, laundry, table, to client booking and advertising. I told them the days and hours I would be available, with no "within" 24 hour bookings unless approved by me first. This saves you from being at the grocery store and having to run like a mad-man to make an appointment in 30 minutes! I would make sure that the Chiro sets aside a separate account for massage therapy. That way, there's a "kitty" in order to always get paid your full rate regardless of the situation. It also allows them to take from those funds to cover expenses(sheets, laundry, table, etc) when needed. Now, I'm doing a 70/30, because after all this time they realize massage is not expensive for them to have and only makes them money. Plus, when I'm not there, they book their own patients in the room. If you rent the room, it's not legal for them to step foot in there w/o your permission. And as Lauren said, you have to be slightly OCD when running your own business. You are your own boss, w/o the overhead. It is critical to have good business sense in terms of keeping track of expenses. Even your drive in to the clinic is deductable. Cell phone around 40%. Get a great CPA and they will make sure you get everything, even their fee from the previous year! This is a great opportunity to do some soul searching to find out which direction you want to go. You may discover you have a knack for being your own boss. Possibly, booking yourself 3 days a week at the clinic and doing 2-3 days at another location(maybe your own permanent location?). I hope this helps. I will answer any other questions you may have to the best of my ability.
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Permalink Reply by Bridget Turnbach on
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As a business owner with 26 Sub-contractors I can say this. You should receive greater then 50% for the work you do. I would ask for a 60/40 split on the billable ammount. You have nothing to do with their codes or really know what they are billing ie: hot towels etc that bump up their claim. If you don't have access to their records then you have to base your pay on the billable ammount. Also you should come up with an hourly wage if you contuine to do marketining with the Chiro and health fair etc. Downside is paying your own taxes. Upside is potential growth in your personal business. May want to re-think structure on a T Chart. Good Luck.
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I've been an IC with a chiropractor for almost 4 years. The commission is 50% for people who are also chiropractic patients, and 60% if they are my massage clients. I think it's a great arrangement, since the chiropractic office manages all the insurance billing, reception and advertising. Every once in awhile they give out gift certificates for free 1-hour massage to encourage clients back into the office, and I get paid a flat fee when the certificates are honored. I do pay my own taxes, but also get to write off all my equipment & supplies & mileage at tax time. The arrangement provides me 10-18 massages per week on average in an intellectually challenging environment, and still leaves the necessary time to be with my family and my private clients closer to home. I know I function on a smaller scale than many therapists, but I hope this bird's eye view of my similar situation helps you put yours into perspective.. ~marilyn
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Permalink Reply by Gerry Bunnell on
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Thank you all for your input.
Lauren - I had not considered the case of discounts and promotions, thank you for bringing that up.
Renting the room is not an option in this case.
Marissa - I appreciate your idea of no same day bookings without prior approval. I agree with the notion that if I am not being paid for my time, it is my personal time.
I am looking forward to the deductions I will be able to claim. :)
Bridget - 26 Sub-contractors? Wow! Even though I have access to codes, I am concerned over my lack of control over billing. This is why I will insist on being compensated based on billable amount instead of collected amount. Also, that will facilitate timely payment. I feel it is unfair to ask any contractor to wait weeks or months until their work is paid for.
Marilyn - Do you have your own NPI# for insurance billing or are your services billed under the chiropractor's NPI#?
I feel there are a lot of grey areas between being an IC and an employee that a lot of employers overlook. You may have input here Bridget. It seems to me that a lot of therapists who are ICs struggle to maintain their independence, and their position evolves into one that would be better defined as an employee/employer relationship. I realize there are definate rules and differences between being an IC and an employee. Should I convert to an IC, my down time will be my own and any marketing I do should and will be compensated for.
Things I still need to iron out are property rights. Since I will be doing notes on my own time, are the notes considered my property, or the property of the clinic? Could I consider the Chiropractic patients that I work with to be my clients, or do they remain the property of the clinic? If the clinic brings on more MTs, would I be able to maintain contact and control of my clients should I leave the clinic?
Decisions, decisions...
Thanks again and Peace
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If you do go IC, DO NOT SIGN ANOTHER NON-COMPETE! People are not objects to be owned. If they decide they want to stay with you, that is their choice. Signing a piece of paper will then not only make it a legal issue, but also an ethical one. You can have something in writing that says that you will not ACTIVELY pursue clinic patients. This should appease the Chiro and your clients. The Chiro won't be thinking that you're trying to take all her patients. The clients will be happy that they can follow you and not feel guilty about any Chiro loyalties and that they have a choice. Good luck!
Gerry Bunnell said:Thank you all for your input.
Lauren - I had not considered the case of discounts and promotions, thank you for bringing that up.
Renting the room is not an option in this case.
Marissa - I appreciate your idea of no same day bookings without prior approval. I agree with the notion that if I am not being paid for my time, it is my personal time.
I am looking forward to the deductions I will be able to claim. :)
Bridget - 26 Sub-contractors? Wow! Even though I have access to codes, I am concerned over my lack of control over billing. This is why I will insist on being compensated based on billable amount instead of collected amount. Also, that will facilitate timely payment. I feel it is unfair to ask any contractor to wait weeks or months until their work is paid for.
Marilyn - Do you have your own NPI# for insurance billing or are your services billed under the chiropractor's NPI#?
I feel there are a lot of grey areas between being an IC and an employee that a lot of employers overlook. You may have input here Bridget. It seems to me that a lot of therapists who are ICs struggle to maintain their independence, and their position evolves into one that would be better defined as an employee/employer relationship. I realize there are definate rules and differences between being an IC and an employee. Should I convert to an IC, my down time will be my own and any marketing I do should and will be compensated for.
Things I still need to iron out are property rights. Since I will be doing notes on my own time, are the notes considered my property, or the property of the clinic? Could I consider the Chiropractic patients that I work with to be my clients, or do they remain the property of the clinic? If the clinic brings on more MTs, would I be able to maintain contact and control of my clients should I leave the clinic?
Decisions, decisions...
Thanks again and Peace
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Gerry- I know the question wasn't directed at me, but all the mts in our office have their own npi#, I think that was the only way they could get the reimbursement. Another thing to consider is would you be required to be close by if a client of the chiro might want a massage (a new client perhaps).
As far as clients & paperwork, in our office all clients & notes (which we do on our time) are property of the office. If we bring personal clients to the office, we have to notify them & the notes are still property of the office. If you do the marketing & pay for it, then I think the clients should be yours. I am assuming you want to do the marketing but get reimbursed for anything out of your pocket, so that makes it kind of grey since you are putting your time into it. IMO, if the clients are deemed property of the chiro then so are the notes, if they are yours, then the notes are yours. And we need a better word then referring to clients as property. Before thinking about it too hard I would ask the chiro what he is thinking & get it in writing.
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Hi again, Gerry! To answer your question to me, my fee is billed under the chiropractor's NPI#. They pay me up-front for my portion of the work I've done, even tho they get reimbursement from the insurance company later. Since MI dosn't have its legislative act together yet, there are no regulations for MTs on paper, so having an NPI# is not an option here.
Also, like Marissa mentioned, I also make an effort to just be available for same-day appointments that come up...so I stay in the neighborhood (their office is 14 miles from my home) and/or mentally consider myself "on call" during their office hours. Many of my clients really appreciate that I will see them on short notice if necessary, and it keeps them coming back. So far, nobody has tried to abuse my time.
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Permalink Reply by Travis Alligood on
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Gerry,
Bridget was kind to share her expertise as the business owner. I would probably try 70/30 that is my percentage now and where I am located that is where it will always be .I know it, Im Happy. CPA is good. Very Helpful.
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Permalink Reply by Darcy Neibaur on
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I have worked both as an IC and now as an employee. For me, Both situations are just about the same. Only difference is, as an employee now, I do receive 15% for sitting, which is better than nothing. As an IC the split was 50/50 most of the time, depending on the service provided. Everything was supplied. Now as an employee, the split is 20-50% depending on the service and everything is provided. I now work at a state of the art spa with all electric tables and the laundry is sent out and done. All lotions are provided and we do receive 15% for sitting. I also have a private pratice that I am building as well.
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With reference to your concern about property rights as an ic: I consider my notes to be my property and they come with me. I have an agreement with the chiropractors I work with that I won't massage active clients outside of the office; in the event that a client no longer wishes to be a chirporactic client, they still know I am available to them via a house call or at my home. My biz cards reflect both of my work settings & contact information. I hold my own liability insurance, but if something were to "happen" to an active chirporactic client while I might be massaging them off-site, it does present a liability for the chiropractors, hence the agreement we have. I also supply all of my own linens, equipment (which, happily, gets to stay at the office) and lotion. There is one other ic at that office and she hasn't a clue what I do with clients...and as for the clients who have seen both of us, it's their prerogative who they wish to see again. This is a recent development, so that story remains open...
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Permalink Reply by Mae Onosaki on
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Gerry,
I was in an IC situation with a DC that was a billing nightmare. I think if you can agree to get paid based on billing vs. collections that would be the way to go. I left my situation 4 months ago, and am still working on getting paid for my services. Even though I had my own NPI and state Labor & Industries (Worker's Comp) provider #, it was all billed under the chiropractor.
There are a lot of things to consider, and many of my bad experiences have been addressed by others here. I think also it helps that you have a previous working relationship with the DC.
My suggestion (passed to me by my CPA) is that you review the IRS guidelines for IC's here
In my case, it probably should have been an employee situation, and although I loved my clients and the steady work, I really felt taken advantage of, and ethically compromised. I had no control over billing, hours worked, my records & notes, and many other things.
I have worked in other independent contracting situations quite happily, though, so ultimately that is the bottom line. Are you happy and treated fairly? Can you communicate your concerns to the chiropractor and her staff? How will you be compensated for non-massage work, should you continue to provide that?
Best of luck!
Mae
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