As discussed in a parallel article, many therapists in private practice decide at some point to expand their practice by bringing in associates, either as independent contractors (ICs, a.k.a. 1099 workers) or as employees. If you have joined such a group practice as an IC, or if you’re considering joining, there are certain things you should be aware of. In a follow-on article, I list the benefits employee associates get at some practices.
First, as a disclosure, I’m neither an attorney nor an accountant so the following is general information, informed by my wife’s journey in expanding to an IC-based group practice, and now transitioning to an employee-based model. What I describe here can serve as a primer that points out the right questions to ask, but you should consult with an attorney and an accountant before making your own moves. We did.
The Business Context of Being an Independent Contractor Associate
Understanding the business context that affects your employment (or your business as an IC) is crucial in knowing what may or may not be fair. For example, I know of a group practice owner who holds mandatory meetings, requiring IC associates to attend and warning them that they'd be written up if they don't come. This flies in the face of the supposed independence of the IC, implying that should the practice be audited, the authorities would almost certainly deem that the associates there are misclassified as ICs when they are in fact treated as employees.
Here are some other red flags that audits look for:
- The practice schedules you for sessions at times you did not agree to in advance
- You're required to see clients at the practice location (this may make the most sense anyway, but as an IC you must be given the freedom to choose to see clients at any professionally appropriate location that's convenient to the client)
- You only see clients as an IC at the one practice (whether or not you're an employee elsewhere doesn't play into this test)
- The practice provides you with a computer, a phone, supplies, etc.
- You carry out duties that are central to the business of the practice (that's a hard one to avoid if you provide therapy to clients of a therapy practice)
While few of these and other tests are slam-dunk proofs one way or the other, audits look for a pattern that shows that you either do or do not have the intent to function as an independent business owner who signed a contract with the practice, as opposed to simply doing what the practice requires so you'd be allowed to see clients and get paid.
The Possible Consequence to the Associate of Being Misclassified
If you’re being treated as an employee, despite being paid as an IC, an audit should not affect you directly. However, if your group practice is audited and the owner is fined hundreds of thousands of dollars, she may be forced to shut down her practice, leaving you with no current source of income.
To avoid this, you may want to have a conversation with the practice owner to warn her of the legal risks so she either drops requirements that paint you as an employee or transitions her practice to an employee-based model. If she refuses to do either, you may want to consider proactively joining a different practice.