Definition of "Independent Contractor"

[beaneek]

Hello,
Just curious...I work for a private practice who, legally, considers me an "independent contractor" (and therefore I receive no benefits whatsoever). However, the practice dictates the hours I work, and completely dictates how many patients I will see per hour. They pay me per day. Is this really considered an "independent contractor" position? Or am I really an employee?... (and therefore what they are doing is illegal??) I am a relatively new grad, so any input would be appreciated...

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[dotdash]

Hello,
Just curious...I work for a private practice who, legally, considers me an "independent contractor" (and therefore I receive no benefits whatsoever). However, the practice dictates the hours I work, and completely dictates how many patients I will see per hour. They pay me per day. Is this really considered an "independent contractor" position? Or am I really an employee?... (and therefore what they are doing is illegal??) I am a relatively new grad, so any input would be appreciated...

You'll want to check the IRS website, or a tax attorney. I think the definition depends on who dictates what work you do and how you do it and whose equipment you do it with. It sounds to me as if they are skirting the IRS rules (and not doing you any favors either), but you'd want to see a lawyer because each industry has its own quirks.

The IRS is *very* interested in identifying companies who are doing this, because they are skimping everywhere -- social security taxes, medicare, unemployment insurance, etc. If you point this out to them, it's possible they would offer you real employment, but it's also possible they will just find another person who will work as a contractor. Then you can call the IRS hotline and report them. That's always fun, but it doesn't pay the bills....

 

[socal2014]

Just curious, how many patients per hour do you see? Is your pay/salary dependent on how much you gross for the practice? If it is, your boss could basically just limit you to a certain gross (because of limited exams), thereby preventing any raises/bonuses.

 

[KHE]

Just curious, how many patients per hour do you see? Is your pay/salary dependent on how much you gross for the practice? If it is, your boss could basically just limit you to a certain gross (because of limited exams), thereby preventing any raises/bonuses.

That makes absolutely no sense. As an employer, why would I want to "limit" the number of exams my associate performs?

To the OP: This topic has been discussed ad nauseum on here. A simple search of this forum will give you the answers you seek but in a nutshell, you almost certainly do NOT meet the definition of an independent contractor.

However, if you go to your employer and ask to be paid as an employee what will likely happen is one of two things:

1) You'll be shown the door
2) They'll agree but they will pay you at a reduced rate to cover their increased expenses and you'll come out exactly the same.

 

[362.04]

Hello,
Just curious...I work for a private practice who, legally, considers me an "independent contractor" (and therefore I receive no benefits whatsoever). However, the practice dictates the hours I work, and completely dictates how many patients I will see per hour. They pay me per day. Is this really considered an "independent contractor" position? Or am I really an employee?... (and therefore what they are doing is illegal??) I am a relatively new grad, so any input would be appreciated...

As KHE mentioned, the job outlook and market for optometrists would dictate how you would proceed, unless the distinction you mention is just for academic interest.

In my nonlegal opinion, I think if someone wants to be a contractor then the IRS or the State won't unilaterally act. Either only acts when someone gets laid off or terminated and that person wants either severance or unemployment benefits. If someone wants unemployment benefits, then it's likely that no independent contractor will withstand IRS or state (in the case of an optometrist).

 

[orangele]

It is really up to you to decide whether the benefits of being an employee outweigh those of being an independent contractor.

Having worked as an independent contractor for most of my professional career, and having hired others to work for my corporation as an independent contractor, there is a detailed IRS publication on this subject.

Certain types of positions (physicians, CRNAs ) commonly work as indepedent contractors, so the IRS really does not give much scrutiny to such positions regarding whether all their criteria are being met. One of the primary criteria is that as an independent contractor, you should be the one determining exactly how you do your job. The issue of how many patients you see does not eliminate you from independent contractor status in my opinion. The number of patients you see is more related to what your independent contractor contract says regarding this issue.

There are many benefits to being an independent contractor, and I personally never intend to go back to being an employee. These benefits include being able to set up and manage how your retirement assets are invested. The ability to set up a defined benefit retirement plan which allows you to save MUCH more tax-deferred income than is possible as an employee. The fact that you can choose you own health insurance plan may be viewed as a postive or negative. More choice, but potentially less volume cost savings. I have purchased cars directly from pre-tax income (for business purposes) as well as many business related expenses (travel, hotel, food expenses (50% deductible), computer, internet access, lab coats, etc.

It is true that some companies may be simply calling you an independent contractor (while attempting to control your actual professional practice) to save themselves paying payroll taxes. Ultimately, it is up to weigh your current position against employee positions and go from there.