Independent Contractor Vs Employee

Replies to This Discussion

Permalink Reply by Gerry Bunnell on September 6, 2009 at 2:40am

Thank you for the IRS link and input Mae. I would prefer to receive comp based on billing. If the DC insists on paying me based on collections I'll propose a maximum time limit of 60 days for collections and then collect a minimum compensation amount based on hours worked. That way I am not waiting more than 2 months on payment for work that I have done. The DC and I work fairly well together so I am sure we can arrange something equitable.

Peace

Mae Onosaki said:

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

• ▶ Reply

Permalink Reply by Julie Onofrio on September 6, 2009 at 3:43pm

It is my understanding that people paid a percentage of the fee should be employees on commission not IC otherwise it could be seen as a kickback. That is what I have come to after years of actually trying to research this. But the IRS have even told a friend of mine something different so who knows.

This is one of the most confusing topics for massage therapists and I wish we had some legal guidelines from our professional associations since hiring a lawyer is really not feasible for most massage therapists trying to figure out if they are an employee or IC.

A flat rate makes you clearly self employed because you are renting. IT would all depend on the amount that is charged for each massage and what you need to make based on how many massages you can physically do a week.

• ▶ Reply

Permalink Reply by Gerry Bunnell on September 7, 2009 at 6:33am

Hi Julie,

Looking at the IRS code from the link provided earlier in the string, the difference between IC and employee has little to do with how you are paid. From what I understand, if you are an IC, you are given a specific result to arrive at and it is totally up to you how you arrive at that result. An example: You work in a Chiropractic clinic. You provide the clinic the schedule you would like to work. During that schedule the DC refers you patients along with the results/goals they want to see from your work. They do not tell you what modalities to use (although they may make suggestions) and they should not tell you how to work your business. Your obligation would be to fulfill all aspects of work only associated with your massage business. (Cleaning your room. Doing your laundry etc.)

If you are an employee, the employer has direct control over your results. They can alter your work schedule, tell you what to wear, how to greet the client, what oils or lotions to use, the specific techniques you should use, etc. etc. They also have the latitude of asking you to work the front desk during down time, clean clinic/spa areas that are not directly associated with your massaging,

That is my understanding of the code. It gets rather grey in a profession like ours and given the lack of specifics in the IRS code I can see how you can take specific situations and have a hard time determining what designation a work relationship falls under.

Peace

Julie Onofrio said:

It is my understanding that people paid a percentage of the fee should be employees on commission not IC otherwise it could be seen as a kickback. That is what I have come to after years of actually trying to research this. But the IRS have even told a friend of mine something different so who knows.

This is one of the most confusing topics for massage therapists and I wish we had some legal guidelines from our professional associations since hiring a lawyer is really not feasible for most massage therapists trying to figure out if they are an employee or IC.

A flat rate makes you clearly self employed because you are renting. IT would all depend on the amount that is charged for each massage and what you need to make based on how many massages you can physically do a week.

• ▶ Reply

Permalink Reply by Donna Whitton on September 8, 2009 at 9:04am

Employee vs Contracted is such a dilemma in our field, I've seen pros and cons of both.

First, I think you might be on the right track regarding the two different percentages of compensation depending on how the payment is collected; I've never heard of that but it seems to make sense since you are correct in that what is billed is often different then what is received - sometimes less and other times more. I worked at a place that charged $35 for a half hour massage but billed insurance $40 and to my knowlegde nearly always got the full amount; however, I only received a percentage of the advertised rate. The upside? I always received the payment whether they did or not.

Second, what about all the time you spend marketing, cleaning, maintenance, etc for the chiropractor? Will you still be doing these duties? Will you be compensated if you continue or will this just be something you pick up during your 'free' time? I know of some chiropractor's who allow MT's to clock in on their down time and do some CA duties, this might not be a route your employee wants to take since he/she's trying to get away from doing taxes. Just remember, having extra duties during down time without paymetn that doesn't apply to you as an MT is one of the biggest complaints IC MT's have - mostly because the end-figure compared to hours worked can often equal less than minimum wage.

Lastly, what about client files. Currently, as employee the chiropractor has rights to keep the files as he/she does to also enforce the non-compete contract. However, if you are an IC you're theoretically placing more time, energy, and resources in gaining as well as keeping clients. What happens if/when you decide to leave? Will you be allowed to at least notify your clients if not take either the files or copies of files with you? This, aside from the percentage, can be one of the biggest issue you address when compiling a contract. Remember, if there's a suit even after you leave the clinic, you'll be the one who the claim is ultimately against.

Oh, almost forgot, you might want to check into place a cap on the percentage taken. It might not be as important starting out, but eventually (hopefully) you'll be seeing enough clients that the percentage taken will equal more than what it would cost to rent space. Before I left both places I'd previously worked the percentage I was giving them equaled three times more than what I pay in rent and utilities at my own place.

I hope this helps you in your decision. Good Luck, as this is a big step.

• ▶ Reply

Permalink Reply by Nichole Honeycutt on September 11, 2009 at 12:02pm

I worked as an IP for a chiropractor and found that it in the beginning while building my practice it was worth it. After 2 years because of the percentage we had set I was giving him more money than I would have (and do) pay for rent in a month. If you have the opportunity to find an office that you can pay a set monthly fee I think that would be ideal. Every situation is unique so if you really like were you are make sure that you don't sell yourself short. Good luck!

• ▶ Reply

Permalink Reply by Allison Boehm on January 1, 2010 at 8:25pm

Hey everyone! You are all discussing a very important topic to me. At this time I am working for a business and when I said on my contract claimed me as an employee/contract labor worker. At the same time, we were all required to sign a non-compete. When a former therapist raised questions over the legitimacy of our standing contract my owner changed our title to strictly contract labor. The question that all of my co-workers are not sure about is will the non-compete still stand if we are now considered strictly contract labor? And to make everyone feel better, we get paid about 25%....definately not a therapist friendly situation. Please respond with any knowledge you have of this

• ▶ Reply

Permalink Reply by Erica Olson on January 1, 2010 at 11:55pm

It depends upon the state you live in. I'd google "non-compete [state] agreement" and go from there. In Colorado, non-competes really don't hold water. As long as client info is publicly available, the spa/etc has no standing. Even if you sign to one, it doesn't matter. Of course, your mileage may vary and you should check with an attorney, etc. Having a good labor relations attorney on retainer is invaluable, IMO.

FYI, the be-all, end-all authority of IC-versus-employee status is the IRS; most state labor boards won't even touch the question. To determine between the two, the IRS has a form (the SS-8, if I remember correctly) that either you or your employer can fill out. Beware that in our profession, most IC contracts do not hold up under scrutiny; basically, the default is employee and one has to work especially hard to prove IC status.

Non-competes do not an IC make. Basically, if the owner feels that s/he has the right to determine how you work (whether or not s/he actually does), then you are determined to be an employee. Gut instinct tells me that in all reality, contract or not, you are probably an employee.

Allison Boehm said:

Hey everyone! You are all discussing a very important topic to me. At this time I am working for a business and when I said on my contract claimed me as an employee/contract labor worker. At the same time, we were all required to sign a non-compete. When a former therapist raised questions over the legitimacy of our standing contract my owner changed our title to strictly contract labor. The question that all of my co-workers are not sure about is will the non-compete still stand if we are now considered strictly contract labor? And to make everyone feel better, we get paid about 25%....definately not a therapist friendly situation. Please respond with any knowledge you have of this

• ▶ Reply

Permalink Reply by Marilyn St.John on January 2, 2010 at 12:26am

Hi, and happy new year! Seems to me that if the employer is taking taxes & SS out of your paycheck, then you are considered an employee; if not, then you're an IC and you take care of that yourself at the end of the year. The employer must give you a 1099 form at the end of the year (as opposed to a W2) in that case, which essentially states the portion of your income the employer kept during that year even tho the form isn't actually worded that way, according to my accountant. I look at it as overhead or really expensive rent for the space provided to me in that location.

• ▶ Reply

Permalink Reply by Erica Olson on January 2, 2010 at 1:05am

Even if you sign a contract agreeing that you are an IC and that all taxes/no workman's comp/it all comes out of your salary doesn't necessarily make it so. Again, if the owner feels that s/he has the right to determine how you work (whether or not s/he actually does), then you are determined to be an employee.

Before I got into massage, I signed as an IC for a mortgage broker. Years later, I came to understand how he (and pretty much every employer since) had screwed me out of my rights/workman's comp/etc.

Seriously, fill out an SS-8. If you employer is on the up-and-up, it won't hurt anything. If not . . . well, a lot of people have suffered and died to make sure we have the labor rights we do.


Marilyn St.John said:

Seems to me that if the employer is taking taxes & SS out of your paycheck, then you are considered an employee; if not, then you're an IC and you take care of that yourself at the end of the year.

• ▶ Reply

Permalink Reply by Marilyn St.John on January 2, 2010 at 8:46am

That's good information and I guess I'm pissed that this is the first I have heard about this specific form/action. My accountant is about to get an earful.

• ▶ Reply

Permalink Reply by Laura Allen on January 2, 2010 at 10:57am

There is good advice here, and as one who has more than a dozen ICs working for me, I will add to it. First, as has been said, be SURE that you will be an IC by the IRS rules. My staff members are in complete control of their own schedules. They come and go at will. I have no say-so over it whatsoever---this has worked for me for six years and I am blessed to have my clinic staffed with great people. They do not do chores or anything else other than massage, and they certainly don't have to sit around when business is not here.

Second advice, re the billing: I have a chiro who works for me, we are members of a chiropractic network, and what is billed and what the insurance companies pay are two very different things. I just totaled for the year, and the network discounted the services by over 18,000 for this year alone (the billings were over 50,000). When you belong to a network, you are not allowed to bill the client for the difference. The catch is that if you DON'T belong to a network, they do not send people your way, and they pay you at even lower out-of-network rates.

I do not make my staff wait on pay. They bill me every week for what they have done, and I pay them for it. I am the one sitting here waiting for the insurance company to pay.

I do not accept personal injury cases any more based on the fact that I have some on the books that are years old that still haven't been settled. I also do not accept WC. The state will not tell you how much they are going to allow, and in years gone by, I have billed WC for 1000 and gotten 300 bucks out of it, and again, you aren't allowed to bill the client for the rest, you just take what they give you, so I quit playing with them a long time ago.

• ▶ Reply

Permalink Reply by Allison Boehm on January 3, 2010 at 11:23am

So, if I am in fact an employee, then I am getting screwed because I am not having taxes, workers comp, etc taken out of my pay check. Does the S88 help clarify the grey line or what? Either way, my coworkers and I cannot be held "prisoner" for the rest of our lives. We are going to defy to rules this time and begin to make something for ourselves. (well, not all of us...but a few of us). I just plan to be a spokesperson against these types of relationships. In most of us, it has ruined our energy and excitement for the job we do.

Erica Olson said:

It depends upon the state you live in. I'd google "non-compete [state] agreement" and go from there. In Colorado, non-competes really don't hold water. As long as client info is publicly available, the spa/etc has no standing. Even if you sign to one, it doesn't matter. Of course, your mileage may vary and you should check with an attorney, etc. Having a good labor relations attorney on retainer is invaluable, IMO.

FYI, the be-all, end-all authority of IC-versus-employee status is the IRS; most state labor boards won't even touch the question. To determine between the two, the IRS has a form (the SS-8, if I remember correctly) that either you or your employer can fill out. Beware that in our profession, most IC contracts do not hold up under scrutiny; basically, the default is employee and one has to work especially hard to prove IC status.

Non-competes do not an IC make. Basically, if the owner feels that s/he has the right to determine how you work (whether or not s/he actually does), then you are determined to be an employee. Gut instinct tells me that in all reality, contract or not, you are probably an employee.

Allison Boehm said:

Hey everyone! You are all discussing a very important topic to me. At this time I am working for a business and when I said on my contract claimed me as an employee/contract labor worker. At the same time, we were all required to sign a non-compete. When a former therapist raised questions over the legitimacy of our standing contract my owner changed our title to strictly contract labor. The question that all of my co-workers are not sure about is will the non-compete still stand if we are now considered strictly contract labor? And to make everyone feel better, we get paid about 25%....definately not a therapist friendly situation. Please respond with any knowledge you have of this

• ▶ Reply

▶ Reply to Discussion

• ‹ Previous
• 1
• 2
• 3
• Next ›
• Page