Paying pathologists as a W2 vs. 1099

[MetroPath]

I’ve heard of some groups, not just in Pathology, pay their pathologists on a 1099. What are the pros and cons of this for the employee pathologist?

As a 1099, an employer can more easily fire a pathologist right vs if they were on a W2?

With a 1099, the employer saves a good chunk of money as they don’t have to pay taxes for their employee.

Anything else should one know before signing a contract where you will be a 1099?

If you are in a practice and you function just like an employee of any other group that gets a W2 (where you cover services, etc) how can one be classified as a 1099?

Thanks for any advice!

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[caffeinegirl]

1099 is usually reserved for independent contractors - usually in temporary or part time situations. Not sure about the other questions you have.

 

[MetroPath]

1099 is usually reserved for independent contractors - usually in temporary or part time situations. Not sure about the other questions you have.

I know of some groups where you are full time, practicing like any pathologist in a group would and still getting paid on a 1099. Not sure if this is a case of misclassification?

 

[mike-sheree]

I’ve heard of some groups, not just in Pathology, pay their pathologists on a 1099. What are the pros and cons of this for the employee pathologist?

As a 1099, an employer can more easily fire a pathologist right vs if they were on a W2?

With a 1099, the employer saves a good chunk of money as they don’t have to pay taxes for their employee.

Anything else should one know before signing a contract where you will be a 1099?

If you are in a practice and you function just like an employee of any other group that gets a W2 (where you cover services, etc) how can one be classified as a 1099?

Thanks for any advice!

If you function “just like an employee “ and get a 1099, that is illegal. Good luck doing much about it unless you like attys, fees, court system, jobs, etc. But given your premise, it is illegal.

 

[mike-sheree]

I know of some groups where you are full time, practicing like any pathologist in a group would and still getting paid on a 1099. Not sure if this is a case of misclassification?

It’s not mis-classification. It is getting screwed! And it is being done purposely and vigorously.

 

[RoachUSMLE]

Can't believe people are so desperate!

 

[cmz]

I am almost 100% sure that you can't do this. Think about how much money the employer saves on taxes...

I think the IRS would be interested in knowing so they could collect the money that they think they are owed. All you need is the company's EIN and the number to the IRS.

 

[Dave CX]

I'm a 1099 guy working for a gi practice. I can choose how much I put into retirement. But for a hospital based private group you should be W2

 

[scootad.]

This is done rampantly unfortunately. I've also seen this in several radiology groups in CA. You'd think the IRS would be all up on this, but they don't seem to care to penalize this (yet) or have bigger fish to fry.

 

[wholeheartedly]

This is done rampantly unfortunately. I've also seen this in several radiology groups in CA. You'd think the IRS would be all up on this, but they don't seem to care to penalize this (yet) or have bigger fish to fry.

Or people just don’t report it

 

[MetroPath]

I am almost 100% sure that you can't do this. Think about how much money the employer saves on taxes...

I think the IRS would be interested in knowing so they could collect the money that they think they are owed. All you need is the company's EIN and the number to the IRS.

This isn’t just pathology. My friend is getting paid on a 1099 in anesthesiology but they are equal partners.

I know groups in pathology that pay pathologists on a 1099 and don’t offer partnership. It’s one thing to be a partner on a 1099 but it’s another thing to be on a 1099 and never get partnership, especially if you are in a busy group, generating revenue for senior partners.

By saving money on taxes, I’m guessing that’s more money for senior partners in the latter scenario (groups with no partnership but paying a junior pathologist on a 1099). Am I getting this right?

I’ve done contractor work and was paid on a 1099. You come in when you want to do work that is given to you. You can dictate when you want to work versus when you don’t. The groups I’m seeing pay a pathologist on a 1099 aren’t like this. The pathologists are basically full time.

Yeah this can’t be legal.

 

[MetroPath]

My friend just mentioned to me he’s part of a group and the group contracts with the hospital and everyone is paid on a 1099 (independent contractor) and everyone is equal partner and apparently that’s legal.

 

[caffeinegirl]

Who's paying the malpractice? In my experience, 1099 workers pay for their own malpractice. If you're a 1099 working full time, I would recommend looking into creating an S-corp for yourself instead to shield your assets from liability.

 

[mike-sheree]

Who's paying the malpractice? In my experience, 1099 workers pay for their own malpractice. If you're a 1099 working full time, I would recommend looking into creating an S-corp for yourself instead to shield your assets from liability.

Excellent point. For the younger/newer folks here, Caffein’s posts are all very worthwhile.

 

[Nilf]

This isn’t just pathology. My friend is getting paid on a 1099 in anesthesiology but they are equal partners.

I know groups in pathology that pay pathologists on a 1099 and don’t offer partnership. It’s one thing to be a partner on a 1099 but it’s another thing to be on a 1099 and never get partnership, especially if you are in a busy group, generating revenue for senior partners.

By saving money on taxes, I’m guessing that’s more money for senior partners in the latter scenario (groups with no partnership but paying a junior pathologist on a 1099). Am I getting this right?

I’ve done contractor work and was paid on a 1099. You come in when you want to do work that is given to you. You can dictate when you want to work versus when you don’t. The groups I’m seeing pay a pathologist on a 1099 aren’t like this. The pathologists are basically full time.

Yeah this can’t be legal.

Does working remotely make a difference? Many (most?) pathologists that I know of who work remotely are 1099. But if you are coming in and punching 9-5 then 1099 is illegal and IRS should be on it.

 

[caffeinegirl]

Does working remotely make a difference? Many (most?) pathologists that I know of who work remotely are 1099. But if you are coming in and punching 9-5 then 1099 is illegal and IRS should be on it.

Remotely shouldn't be a difference - contractor/part time (1099) versus full time (W2). Lots of telehealth is 1099 based too - but that's because of the part time/contractor arrangement. Digital pathology and remote admin jobs are usually 1099 due to the varied hours and less responsibility. Most of the W2 jobs I see include day to day lab management on site.

 

[caffeinegirl]

An add: Many 1099 jobs are CPT code based payment (ie. you get paid a set $$ by CPT code), versus W2 are salaried.

 

[cmz]

My friend just mentioned to me he’s part of a group and the group contracts with the hospital and everyone is paid on a 1099 (independent contractor) and everyone is equal partner and apparently that’s legal.

This is OK. If you're in a group and everyone is a partner -- everyone SHOULD have their own S-Corp. There is likely another S-corp that manages things like billings, contracts, etc. and will pay the subcontractors S-corp for the work performed (i.e. this is your partnership distribution). It sounds like they have a parent company that manages the above items (since everyone is an equal partner).

 

[cmz]

This isn’t just pathology. My friend is getting paid on a 1099 in anesthesiology but they are equal partners.

I know groups in pathology that pay pathologists on a 1099 and don’t offer partnership. It’s one thing to be a partner on a 1099 but it’s another thing to be on a 1099 and never get partnership, especially if you are in a busy group, generating revenue for senior partners.

By saving money on taxes, I’m guessing that’s more money for senior partners in the latter scenario (groups with no partnership but paying a junior pathologist on a 1099). Am I getting this right?

I’ve done contractor work and was paid on a 1099. You come in when you want to do work that is given to you. You can dictate when you want to work versus when you don’t. The groups I’m seeing pay a pathologist on a 1099 aren’t like this. The pathologists are basically full time.

Yeah this can’t be legal.

Yeah that scenario you're describing is not legal. That company (find the EIN and report to IRS) will have to pay back taxes and penalties. Imagine if this went on for YEARS and with multiple employees.

In the above scenario, the employer issuing the 1099 is not paying FICA (SS/Medicare), federal/state unemployment tax, etc. 1099 workers have to pay the full boat (12.4% or whatever the percentage is) instead of just half of that amount.

The only good thing about a 1099 would be the possible tax write-offs/expenses and knowing you could walk away from the job at a moments notice. Though, the later thing may not entirely be ideal since the employer can decide they no longer require your services and can drop you from one day to the next.

If you're going full 1099, make sure you're acting the part (merc for hire instead of communist slave).

 

[mike-sheree]

I’ve heard of some groups, not just in Pathology, pay their pathologists on a 1099. What are the pros and cons of this for the employee pathologist?

As a 1099, an employer can more easily fire a pathologist right vs if they were on a W2?

With a 1099, the employer saves a good chunk of money as they don’t have to pay taxes for their employee.

Anything else should one know before signing a contract where you will be a 1099?

If you are in a practice and you function just like an employee of any other group that gets a W2 (where you cover services, etc) how can one be classified as a 1099?

Thanks for any advice!

there is is very distinct test-set of questions/criteria to distinguish between an employee and an independent contractor. Employers not infrequently try to take advantage of the situation by intentionally misclassifying employees as independent contractors because it is to their distinct advantage. lawsuits often result. if you function “just like an employee”- you ARE an employee and are being taken advantage of. How hard you choose to pursue that is legally fraught.