Fee-For-Service (FFS) versus Salaried : What can an agency/company require for FFS positions?

[quickpsych]

Preface this by saying this is more a question of what can an agency/company actually mandate/enforce for someone who is not a full time employee when it comes to job requirements, service volume, schedule.

So like many I've had FFS jobs and salaried jobs. Currently I'm presented with an opportunity at my current employer to go FFS instead of Salaried. I can remain salaried or go FFS , various factors have me leaning to FFS and I just think I prefer it lifestyle wise (and calculated I technically earn more per service/hour with no cap).

Company offered FFS (as a W-2 so get unemployment eligibility, no self-employment tax) but says FFS must work at least X number of days per week and productivity wise see at least X number of services a week (a points system). Now I understand, and ethically and clinically makes sense, that it's reasonable to require showing up to a facility/practice/setting at least once a week. And this is more healthcare facility setting work (think more evals , brief follow ups, screenings) versus traditional therapy sessions so I understand they wouldn't want to send someone to a facility who only sees 3 people a day then goes home, when they could send a salaried person there and require them to meet certain productivity numbers.

They aren't saying FFS has to work certain hours or certain times of day, nor are they saying FFS has to engage in other work tasks other than of providing services and timely notes/billing.

However, from an employment perspective, it seems they are also saying FFS must work at least X days and must meet X productivity requirements. Common sense says, of course FFS clinicians have an incentive to work more (work more = earn more) but isn't that then up to the discretion of the FFS clinician not the agency/company?

Personally, it seems pedantic. At end of the day seems like a no brainer I would "make the productivity numbers" because more I work more I earn - but then as FFS isn't that my problem (and my freedom to choose how much or little I work)? The freedom and flexibility is a big reason why I'd ditch the salary.

So TLDR: If a FFS W-2 position falls below the threshold for what would reasonably consider "full time hours" and one is only paid for services rendered, can this company actually enforce or require FFS positions meet a "productivity requirement?" Especially if they aren't offering any benefits that cost them money unless they pay (ie 401k option). I can see how "salaried" they "must justify" the cost by demanding minimum productivity standards, but FFS I fail to see how (other than if the clinician is a dud in a facility and they could make more money off a salaried clinician at that facility, more their problem) they can actually mandate or enforce "have to see X number of patients over X number of days."

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[WisNeuro]

I think you may be confusing FFS in your position with a contractor. If you are an IC, there are certain rules you need to follow, as well as the employer. If you are a W-2 position, I believe that they can have benchmarks set in place.

 

[smalltownpsych]

They can put anything into the contract they want. Whether or not its enforceable is another issue and as Wisneuro states, this contract would pretty much designate an independent contractor as an employee. The requirements that they are putting in the contract seem to be pretty legit requirements for an employer to have for an employee ans in fact are making it clear that it is not an independent contractor position. How they compensate you is a completely separate issue from whether or not you are an employee. From my understanding, the big distinction between the two is whether or not you set your own schedule.

The real question in my mind is whether or not the compensation package makes sense and if the job requirements are an issue or not. I had a job that was based on production and I made 50% more and the only benefit I lost was paid vacation so it was a no brainer. Requirements were 8 to 5 schedule and a week of call every month. I also was able to take one afternoon off a week but I never did because I wanted the money and I used no shows afternoons as my early out. It’s not like I was punching a clock or anything.

 

[quickpsych]

I think you may be confusing FFS in your position with a contractor. If you are an IC, there are certain rules you need to follow, as well as the employer. If you are a W-2 position, I believe that they can have benchmarks set in place.

I may be it seems. I'm used to 1099 being pretty standard in FFS work, but thinking back I did have a brief arrangement with a small practice which was W-2. As I understand it, in 2020 there was a change to how 1099s are viewed tax wise (I got a bit of a surprise myself) and so I can see there is a benefit on my end as a service provider too in terms of potentially less tax and an unemployment eligible benefit. On one hand I would like a 1099 because can deduct commuting/transport costs as well as my own health insurance premiums. On other hand, maybe it's a wash because the W-2 means no self employment tax and such.

They can put anything into the contract they want. Whether or not its enforceable is another issue and as Wisneuro states, this contract would pretty much designate an independent contractor as an employee. The requirements that they are putting in the contract seem to be pretty legit requirements for an employer to have for an employee ans in fact are making it clear that it is not an independent contractor position. How they compensate you is a completely separate issue from whether or not you are an employee. From my understanding, the big distinction between the two is whether or not you set your own schedule.

The real question in my mind is whether or not the compensation package makes sense and if the job requirements are an issue or not. I had a job that was based on production and I made 50% more and the only benefit I lost was paid vacation so it was a no brainer. Requirements were 8 to 5 schedule and a week of call every month. I also was able to take one afternoon off a week but I never did because I wanted the money and I used no shows afternoons as my early out. It’s not like I was punching a clock or anything.

This is good info to have. It makes sense, especially the schedule part. On that, they aren't requiring set hours (in fact even the salaried positions don't have set hours) or necessarily even set days. They are requiring a certain base level of expectations (i.e. it's facility based so if assigned to a facility be there at least once a week on average, aim for at least X services a day/week). I highly doubt it's enforceable as much as a salaried employee , but I suppose if a FFS "employee" doesn't meet the requirements over time then they could end the employment contract. Seeing that if they commit one or two FFS employees to a facility who only want to see a few patients a day, the facility and the company do better with a FFS employee who sees more patients a day.

Pragmatically, I'd just assume most FFS providers have little issue meeting the "productivity" requirements since they have additional incentive to do so. For salaried employees they require 5 days a week, FFS 3-4 days per week (with option for more if wanted). The "days" just have to be X number of services not X number of hours but realistically to meet their requirements it's probably around 3.5-6.5 hours on site per day. In reading the paperwork, they do see FFS as part time employees it appears.

As for compensation, great question. I ran some numbers and based on the nature of the work and expectations, looks like it's actually a higher "split" of fees versus salary (as they follow the same "productivity per day" requirement as salaried). Running the numbers, if I did work 5 days a week FFS and met their daily/weekly "requirements" I'd make about 30-35% or more than salaried accounting for loss of PTO and additional expense of paying my own healthcare . Although I don't plan to work 5 days a week if I go FFS, so I'll likely earn less per year from them but work 1-2 days less a week. Minus PTO and health benefits, I can still access disability benefits and 401k. They also offer a bonus structure for salaried for when one exceeds the monthly productivity...running the numbers, if I did that FFS, no bonus but would earn more for exceeding productivity per month than if salaried.

A big factor is that "productivity" numbers are a necessary evil in many things (depending on who you ask), but I've never been a fan of it being tied to my health insurance and my salary. Plus I've learned some employers only see "productivity" as billable services but your job often entails many other responsibilities that take time but aren't billed. At least this current company offers something for some non-billable activities that come up. I'm happy to pay for my own health insurance for more freedom and time though.

I read somewhere that many salaried jobs in our field (especially therapy oriented) tend to come with very high caseload or productivity requirements to justify the salary...lessons learned over here. 🙂

 

[PsyDr]

It's a W2 position because they provide the instruments. That’s a big issue in Psychometrician work.

You want to make sure that your earnings do not go under the “commission” line for the irs form UNLESS you’re above $100k. This could be accomplished with a base + productivity, as commissions are taxed at a rate of 25%. Just make sure it’s not listed as a bonus, as the taxes in that are horrible.

Their business loan, PPP loan, and health insurance providers likely requires X number of "full time employees". Therefore, having you present for ~32hrs/ week allows them to say you’re “full time”.

 

[quickpsych]

It's a W2 position because they provide the instruments. That’s a big issue in Psychometrician work.

You want to make sure that your earnings do not go under the “commission” line for the irs form UNLESS you’re above $100k. This could be accomplished with a base + productivity, as commissions are taxed at a rate of 25%. Just make sure it’s not listed as a bonus, as the taxes in that are horrible.

Their business loan, PPP loan, and health insurance providers likely requires X number of "full time employees". Therefore, having you present for ~32hrs/ week allows them to say you’re “full time”.

Thank you for this info. It does make sense their end of the benefit for having it W2 with this. Although they aren't offering health insurance for FFS regardless of how many days/hours it appears. Not a deal breaker for me.

As for the base + productivity, it appears salaried employees do get productivity "bonuses." Not sure how they are classified on W-2 and thus taxes, the FFS folks don't get productivity bonuses offered regularly.