There are many times when health care practices may find it beneficial to have an independent contractor come into the practice who has specialized training in a particular field as opposed to hiring an employee.
If you are considering hiring an employee, keep in mind of the following:
- Employees may be entitled to bonuses or incentive payments based on their performance during their employment. All compensation paid to an employee will have the necessary withholdings deducted from their paycheck.
- Employees may be entitled to benefits, including health insurance, paid time off, reimbursement of business expenses, etc.
- Employees may have their professional liability insurance policy covered by the practice
- Employers can assert control over the employee, including, but not limited to, practice locations of where services will be performed, days, hours, the type of services to be performed, so long as it does not interfere with the professional judgment of the employee.
- Employees can be subject to non-compete restrictions for a period of time after the termination of their employment.
If you are considering hiring an independent contractor (IC), keep in mind the following:
- ICs are only compensated for services directly performed by them. They cannot receive any bonuses or payment related to the practice as a whole.
- ICs are not entitled to any benefits from the practice.
- ICs must pay for their own professional liability insurance policy.
- The practice cannot assert any control over the IC, including the days, hours and locations. This is based on the availability of the IC and mutually agreed upon between the IC and the practice.
- ICs are entitled to work at other practice locations and generally, there is no non-compete restrictions.
Overall, it is important to remember that the IC is being hired to provide a specialized service to the practice, and as such, the IC, whether an individual or a legal entity, is considered to be a separate practice during the duration of their contractor agreement. An IC may have their own employees, in which they would be responsible and held liable for those employees, including the necessity for workers compensation insurance.
If a practice is debating between hiring an independent contractor or employee, it is important to first speak to the accountant about the tax liability and the attorney to prepare the agreement to protect the practice accordingly.