When getting ready to hire workers such as doctors, mid-levels or administrative staff, you might be wondering if you should classify them as an employee or independent contractor. The IRS, Fair Labor Standards Act and common law have helped to differentiate between the two and doing so is important as misclassification can injure both the hire and you as the employer.
Employee
The general rule is anyone who performs services for a business is the business’ employee if the business can control what will be done and how it will be done. Generally, employees receive a regular, fixed salary or hourly wage, are eligible for benefits and are directed when and where to do their job. Employers must withhold taxes from their employees’ paychecks and do not provide delegation rights to employees.
Independent Contractor
The general rule is an individual is an independent contractor if the payer 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. Generally, ICs receive payment per each project, are not eligible for benefits and are not directed when and where to do their job. Taxes are not withheld from payment and ICs generally have the right to delegate to others.
Degree of Control and Independence
To better aid in determining whether your hire is an employee or independent contract, weigh the below three factors:
- Behavioral – Does the business control or have the right to control what the worker does and how the worker does his or her job?
- Financial – Are the business aspects of the worker’s job controlled by the employer, such as how the worker is paid, whether expenses are reimbursed and who provides tools/supplies.
- Type of Relationship – Are there written contracts or employee type benefits? Will the relationship continue and is the work performed a key aspect of the business?
Contact the Florida Healthcare Law Firm.
