This week I received an email from the Florida Department of Revenue about classification of workers for tax purposes. With Labor Day upon us, I find myself wondering how your organizations make the decision about whether to treat their workers as W-2 employees or as 1099 independent contractors.
In behavioral health organizations there is often a mix of kinds of workers including licensed professionals, salaried and hourly workers. I am often confused when I hear a customer say that they have 14 counselors and two back office staff, and that they are all independent contractors. That does not fit with my understanding of what an employee and an independent contractor is.
I was surprised to learn that Florida (and many other states) have their own definitions of employee and contractor that are separate from the IRS definitions (additional IRS articles). There appear to be significant overlaps, but the email I received indicated that businesses should review their employment practices to make this determination. If someone believes they were your employee and files for Unemployment Compensation (Reemployment Assistance here in Florida) after you let them go, and you have not been paying those taxes because you have them classified as an independent contractor, you may find yourself with some explaining to do.
How does your behavioral health organization handle the employee vs independent contractor issue? Please share your comments below.
David Zachau says:
All of our therapists are classified as employees. This is a VERY tricky area. I recommend anyone who has a Practice with therapists working as independent contractors be sure they meet the criteria as listed by your state and the IRS. I would have an accountant verify the status of the therapist. This is NOT an area you want to be cavalier or sloppy about!
Kathy says:
I could not agree with you more, Dave. And just because you have a contract with someone saying they are an independent contractor does not mean your state or the IRS will not determine that they are an employee! Thanks for your comment.