One of the most difficult business decisions you may be faced with is whether or not you are an employee or a subcontractor/independent contractor for someone you are working for.
The IRS website states that:
“The general rule is that an individual is an independent contractor if (the person for whom the services are performed) has the right to control or direct only the result of the work, and not what will be done and how it will be done or method of accomplishing the result.
People such as lawyers, contractors, subcontractors, public stenographers, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. However, whether such people are employees or independent contractors depends on the facts in each case.”
I find that there are many businesses hiring massage therapists as independent contractors to try to save money when they really should be classified as an employee.
It is the person who is hiring that is responsible for knowing what is the correct status because they are responsible for paying taxes if they are an employer and may be required to pay back taxes if they are found to be negligent.
Some of the things to consider when going to work for someone are:
- who pays the taxes
- what are the duties and responsiblities of each part
- Who pays for advertising, massage supplies etc.
- Do you pay a flat rate per massage to the business owner or pay a percentage? It may be illegal to charge a percentage and may be seen as a kickback (for example the law in WA State RCW 51.48.280
Kickbacks, bribes, and rebates — Representation fees — Criminal liability — Exceptions..) - Who collects the money from the client? If the business owner collects it and pays the person doing the massage does it mean they are an employee?
- Do you still get paid when a client doesn’t show up for an appointment?
- Do you have to be there at a certain time and day, wear certain clothes and do certain things? You may be an employee.
- This is from the Washington State Guide to doing business:
“Business owners frequently get confused about
who is an employee and who may be considered to be
an independent contractor.
An employee is generally subject to your control.
Control exists when the employer determines the start
and end times each day, which days the employee
reports to work, what the worker will do on the job and
how they will do it.
Independent contractors are customarily engaged
in their own independent occupation or business, and
are registered or licensed with the appropriate state and
federal agencies. They usually advertise their services,
are in a position to realize profi t or loss as a result of
their services, and usually have a signifi cant investment
in their business. They also keep business records,
report to the IRS as a business and usually have a
place of business from which they operate. You can
expect an independent contractor to provide everything
necessary to complete their job.”
I am not a lawyer and don’t know the legal aspects of all of this, but each case is different and needs to be analyzed by an attorney and a contract drawn up to eliminate any confusion. I recommend having a contract whether you are an employee or a sub-contractor just so you know what the rules are.
From what I have read on the IRS site and the Washington State website, anyone who is told what times to work and what to do is an employee.
This is one of the reasons I think it is just easier to rent office space from someone and run your own business!
I would like to actually hear more about others experiences with this issue and see if we can get a clearer answer and some more definite guidelines to follow when considering going to work for someone.
Resources:
Peick and Conniff - Am I an independent contractor or an employee? (Two attorneys hired by the WA State AMTA to help us figure this out.
Independent Contractor, Employee, Booth Renter: Which Piece Am I? By Ken Cassidy Originally published in Massage & Bodywork magazine, December/January 2002.
Success by the IRSÂ By Dixie Wall, Contributing Editor Massage Today
Related posts:
- Sub Contractor vs Employee One of the most difficult things to figure out is...
- Massage Independent Contractors Most massage jobs are usually massage independent contractor positions that...
- Employee/Subcontractor – Are we being taken advatage of? Working out a contract with an employeer is usually a...
- Working as an employee Working as a massage employee in a Spa or other...
- Creating Your Schedule Scheduling your time efficiently and effectively can be a challenge...
Good day to all who read this!
I’m a massage therapist, who is searching for answers in regards to becoming an independent contractor. I’m wondering if it’s worth it?
I work at a spa that takes care of pretty much everything. I thought I’d branch out on my own a little, and found a job at a sports clinic, but it seems I have to come up with my own insurance, license or permit, and I’m not sure what else? And they charge 80.00 for a massage, I would get 25.00
I can bring in my own clients, but I don’t have any yet, so I would have to work on marketing, and in turn I would make 55.00 and they would get 25.00.
I am a seasoned massage therapist, going on ten years. Just need a little advice…any suggestions???
thanks
Trisha
You really have to figure out if it is worth it for you depending on what you need to make and feel good about making. Will they keep your schedule full? Will there be insurance billing? if so who does it? Who makes the appointments and provides all of the supplies. Also as an independent contractor you pay self employment tax which is much higher than if you were and employee. You also have to look into kickbacks if it is a doctor at the clinic who is referring you patients and what the laws are in your state regarding that. It is illegal in many places.
What do you need and what feels best to you? Sometimes the only way to know is to try different things to see what feels best to you.
Julie
I am also thankful for this blog. I keep seeing reference to kickbacks. What about when the spa owner hires you as an independent contractor, but the spa collects the monies and writes you a check every week. When I first came to work at this spa, the split was 50/50 minus any credit card fees. All materials were provided for us including the table but I prefered to bring my own table, hot stones, oils etc. – all but the sheets. We also were able to do laundry there at the spa. The owner went to an IRS class and now we provide everything (which I don’t mind), but we are still paid the same. It is a busy spa and we are shuffled around which makes it difficult to always use your own stuff. We are moved around from room to room with no time in between to break down and move tables, hot stones and the like.
Now credit card fees are going up. And if we want to be considered an employee the percentage of pay goes up in favor of the spa. And laundry facilities are now considered an extra perk.
I am currently working on outside avenues, but am stuck with trying to do both until I can make enough to be completely on my own. But I want to learn as much as I can about this because I might have to partner up with someone from time to time because “couples massage” is a big thing in a resort town.
Is there anything you can do about a contract “after” you are already working in a place if you never had one to begin with, or do I just suck it up until I can leave.
Thanks
It is true that I dont’ have to work there. I worked for this Dr. at another location and helped build his practice when he left and started his own. I enjoy working for him and he has helped me along the way-I feel like we have helped each other-but it is time to really figure out what is best for my business and its growth.
I have the potential to see as many clients as I want and I do market every week to bring those clients in. There are hours that the Dr. is seeing patients that he needs a massage therapist to see the people he presribes massage to. These massages are paid by insurance that I can not bill for as a MT. That is why I have hours that I see no one because my boss does not want me to book cleints in those slots. But I still only get paid per massage. I try to market in these time or do something to better my business. This hasn’t been a problem until recently when my business has picked up and people want to be seen during patient hours.
It is such a mess and I admit that I got myself into it. Like I said it has not been a problem until recently when I have begun to be busy enough that this is a problem.
Now the questions I have to answer are what will I ask. I don’t even know how other therapists are paid in a chiropractic setting.
Thank you for your reply and suggestions.
While I am not a lawyer, it just doesn’t sound right.
I would suggest contacting a lawyer or do some asking at the dept of labor and industries in your state or whoever it is that regulates workers and see what happens.
Unless he is paying you as an employee I doubt that he can make you stay there but then again if you leave when you don’t have appointments, you’ll probably get fired.
You may want to approach him from the aspect that it may be illegal and he would be responsible for paying all of the back employee fees for all of the hours you work.
But the real question is why do you have hours that don’t have appointments? What are you doing to get massage clients? If you are just waiting for him to send you clients, you may want to be doing more to get what you need.
You also don’t have to work there although it is not always an easy choice or position to be in, but the clearer you get about what you will put up with or not, the more good things will come to you from what I believe.
Julie
I was so excited to see this blog. I am in a situation right now where I am being payed as an independent contractor but treated as an employee. I get paid per massage but am required to be there when I don’t have anyone. I work for a chiropractor and see his patients. He requires that I am at the office for the times he is open even if I only see one or two patients in that time. I don’t know how to go about getting paid fairly. I want to have a legal stanpoint or at least a majority stanpoint. Any suggestions?