http://massagemag.com/massage-blog/massage-collage/2008/03/28/the-independent-contractor/

Julie

It seems very clear to me what constitutes an independent contractor vs. employee (at least in terms of what the IRS expects – and that IS what counts when you’re audited) – so I’m a little confused about all the … confusion.

I have met with many LMTs in NYS (where I live and teach) who have gotten themselves into very “muddy legal relationships” – often with chiropractors and physical therapy practices — and come to my class unclear as to which of the two entities they are so I talk about this topic before we begin learning how to bill for NF and WC patients in NYS —- I don’t want to believe that these relationships are “intentionally vague” – but I’ve seen too many situations when LMTs who are anxious to begin their careers buy-in to whatever they are told – And when you look at the math around it all – it almost always seems to have been set up by the “landlord” where the LMT is renting space (which automatically makes them an independent contractor) to be one that clearly benefits the landlord. LMTs “allow” the chiropractor’s billing to staff to bill on their behalf … they set up agreements where the LMT is working for a % (which is ILLEGAL under NYS Guidelines) and has no set monthly rent … and other situations where the LMT’s work is being billed for him/her and the LMT never signs the bill — though their license number is ON the bill and that makes him/her legally responsible for the accuracy of the bill and the treatment codes assigned for dates of service. They also NEVER see how much their services are being billed for compared to what kind of hourly fee the may be paid —

Many students who attend my workshops have to go back to clean up the legal relationship between their “landlord” or “employer” — particularly when it has become clear that the reason the relationship was so “vague” to begin with – is because the PT or Chiropractor are billing significantly MORE for a LMT’s services — then they are wiling to pay the LMT.

Bottom line – you really can’t be a little bit of both … a little bit of an independent contractor and a little bit of an employee – and I wish massage schools did a much better job teaching this material to their students BEFORE they graduate and (once licensed) begin to negotiate some of the first contracts they will ever sign. ***This is particularly important because the age of the average massage student is so young now — and they are accepting employment (or independent contractor) for salaries that are WAY BELOW the industry standard —- mostly because they just don’t know where to get the information.

I’m interested in this dialog —

Keep in mind, if the biz owner gets audited, the therapists will ALSO be interviewed and have to present their income statements, etc, so it is really important to know in advance what you are getting into.

I hear of many massage businesses that call their workers ICs but treat them as employees. That is wrong!

I wanted to be sure therapists were not treated as employees so we were extremely careful to let the therapists come and go as they wanted, do what they wanted, wear what they wanted, make their own hours, invoice us for services, etc… I even had them sign an agreement that they were ICs and agree they were responsible for their own taxes, permits, insurance, etc.

These were the 3 main points the EDD used to determine that therapists were employees:
#1. The clients paid us, not the therapist
#2. Therapist had no ‘risk’ such as financial loss (time loss of sitting without a booking doesn’t count)
#3. We provided all the equipment, and tools of the trade. (therapists brought their own music and lotion.)

Because of this audit and not wanting it to happen again, but also not wanting the hassles and expenses of having employees, we have developed a completely different business structure. It won’t work for big spas and other organizations that truly should have their workers as employees because of the need for control, protocols, and consistency, but our business arrangement now, is one which for us works even better than either IC or Employee, plus we are making more money and have less over-head.

It is extremely critical that you have it set up correctly so you don’t end up like me, paying thousands of dollars and spending hundreds of hours defending myself – even though I KNOW I was right!

I am happy to answer any questions biz owners or therapists have regarding this whole continuing drama of worker’s status. (email: Irene@ DiamondWellness.com)