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Help with becoming an Independent Contractor

RozRoz Boss ofInternetRegistered User regular
Hey guys,

An ob/gyn office has been trying to actively recruit my wife to work there for the last 6 months. She's finally gotten fed up with her current job and is thinking of switching. She knows some of the doctors there already and everything seems on the up-and-up, the only problem is that they want her to join as an independent contractor. We're both unfamiliar with IC work, and want to make sure we have a fuller picture before we agree to anything. So far they've told us that she won't be getting a 401k through them, or health benefits. We're on my company's health plan anyway, and we can roll her 401k into an account through another provider, so those don't seem like huge issues.

They are going to pay her per patient, which seemed a little iffy, but we checked with two people who work there and they say that the work is steady.

Is there anything else we should be aware of? Any tax concerns or other "gotchas" we might be missing? It seems like a really good opportunity for her, but we don't want any negative surprises 3 months down the road.

Thank you for your help.

Posts

  • DevoutlyApatheticDevoutlyApathetic Registered User regular
    So go ahead and calculate what a steady workload of patients over a normal week turns into for an hourly rate.

    If it isn't like 150% of what she's currently making they're screwing you over.

    You're responsible for your own payroll taxes and employer contribution, so SS and medicare are like a 15% thing instead of a 7.5% thing. Now add in lack of health benefits or retirement benefits, no sick days, no vacation days and then add on top of this Sunday that if they just stop giving you enough work you're just sorta screwed as far as UI goes (I think, not sure on this last bit.)

    Now ask if she'll set her own hours, provide her own computer, medical software, charting and all that jazz. If the answer is no, she's probably not legally an IC, if the answer is yes that's even more money you're paying for the Doctor's business.

    Really the 150% is just a complete bullshit sniff test. If it isn't there it's not an offer but an insult. Even well above that it could be a horrible idea depending on the benefits she would normally get.

    bowendavidsdurionsShadowfireMichaelLCschussDoctorArchTofystedethSo It GoesDelmainkimeDerrick
  • bowenbowen How you doin'? Registered User regular
    edited October 2015
    Yeah you should easily be pulling in 150% of your salary if you're a 1099 IC.

    Roughly 25-40% of your income immediately is taxed, depending on how much you're making, because you now have to cover all the employer side taxes, also your own taxes. You also have to pay taxes quarterly. 40% should cover 'both'. Then you need your own health benefits (find out what the most comparable to your current is on the exchange and figure that into the monthly income). Most 'good' health insurances through the exchange are something like $300-600 a month (gold/silver plans).

    If you're making $30,000 now, as a 1099 you should shoot for roughly 70k to have the same standard of living.

    Contractors also work based on goals. You should lay out exactly how much work you expect from them. If they're paying you per patient, she should say how many patients she expects to get a week at a minimum, and how much she expects to get paid per patient, at a minimum. Going over is fine, going under means her obligations to the contract are null and void. This will let you set the expectations to meet that minimum salary to stay where you are. Edit: also she needs to be setting her own schedule, so while they supply the work load, the wife gets to decide when and how often she works, so long as she meets the minimums. She should also be available during the day, even if she's not working, in case there's meetings or phone calls.

    If they balk at any of this, they're trying to screw you guys over.

    bowen on
    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
    davidsdurionszepherin
  • RozRoz Boss of InternetRegistered User regular
    This is really great info, thank you guys so much. Is the health care plan mandatory? If she's on my health insurance does she still have to purchase a plan?

  • bowenbowen How you doin'? Registered User regular
    Depends on your state and the rules on the health insurance. It may require her to get her own and have yours act as secondary.

    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
  • DevoutlyApatheticDevoutlyApathetic Registered User regular
    That sounds super weird Bowen but I really don't know.

    The reason I was talking about health insurance is because employer provided insurance is absolutely part of your pay. Places that are being honest would pay you if you don't use their health insurance as it does save them money. (It isn't a 1 to 1 thing as employers get tax benefits for health insurance but it is still a part of what they spend to employ you.)

  • bowenbowen How you doin'? Registered User regular
    That sounds super weird Bowen but I really don't know.

    The reason I was talking about health insurance is because employer provided insurance is absolutely part of your pay. Places that are being honest would pay you if you don't use their health insurance as it does save them money. (It isn't a 1 to 1 thing as employers get tax benefits for health insurance but it is still a part of what they spend to employ you.)

    Some health insurances in NYS require your spouse to have their own insurance through work first before they can be added on to your own.

    Not sure if that's applied to every state, but my insurance specifically requires it.

    Thanks HDHP!

    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
    zepherin
  • zepherinzepherin Registered User regular
    edited October 2015
    To be fair Bowen you have the worst insurance I've ever heard of.

    I've done 1099 work before, and you should be able to set goals and never clock in and out. If they have their contractors punch in and out, that is tragic. Same with telling contractors how to do their job and when to show up. Treating employees as contractors is a dangerous proposition. That company is one disgruntled employee/contractor away from bankruptcy. 5 years of taxes unemployment insurance overtime minimum wage requirements penalties fees. The longer they are in business the more at risk they become. It only takes 1 call to the state labor board and a follow up from a bored Govt worker and everyone loses their job. There is a huge risk as a 1099 more than just the usual if your fired you have to fight for unemployment.

    zepherin on
    bowenKakodaimonos
  • JasconiusJasconius sword criminal mad onlineRegistered User regular
    any business that would ordinarily have employee staff and has arbitrarily decided to instead turn people into IC's is just trying to dick over their employees. period.

    as many have pointed out, signing on to be an IC should come with a massive pay boost for what you're giving up in terms of stability and benefits.

    GaslightbowenDevoutlyApatheticzepherindavidsdurionsLostNinjaSo It Goes
  • zekebeauzekebeau Registered User regular
    Also, your wife wouldn't be getting workers compensation coverage, so on the job injury is entirely on your pocket book.

    As mentioned, you also immediately become ineligible for things like unemployment benefits if they decide to stop sending her patients.

  • tinwhiskerstinwhiskers Registered User regular
    Jasconius wrote: »
    any business that would ordinarily have employee staff and has arbitrarily decided to instead turn people into IC's is just trying to dick over their employees. period.

    as many have pointed out, signing on to be an IC should come with a massive pay boost for what you're giving up in terms of stability and benefits.

    Someone, I think SKFM, mentioned in another thread somewhere that it is pretty common for doctors to do the IC thing, because it allows them to abuse some sort of 401k/IRA contribution limit loophole. So you know, if they are offering her like 200k+ a year, maybe the IC thing is for her own good.

    6ylyzxlir2dz.png
  • bowenbowen How you doin'? Registered User regular
    Jasconius wrote: »
    any business that would ordinarily have employee staff and has arbitrarily decided to instead turn people into IC's is just trying to dick over their employees. period.

    as many have pointed out, signing on to be an IC should come with a massive pay boost for what you're giving up in terms of stability and benefits.

    Someone, I think SKFM, mentioned in another thread somewhere that it is pretty common for doctors to do the IC thing, because it allows them to abuse some sort of 401k/IRA contribution limit loophole. So you know, if they are offering her like 200k+ a year, maybe the IC thing is for her own good.

    Something tells me it's more like, "We're willing to offer you $20 an hour, since you're making $15 an hour, we feel this is a sizable and fair offer"

    But as a 1099 worker, $20 an hour is more like $8.

    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
  • DevoutlyApatheticDevoutlyApathetic Registered User regular
    edited October 2015
    Jasconius wrote: »
    any business that would ordinarily have employee staff and has arbitrarily decided to instead turn people into IC's is just trying to dick over their employees. period.

    as many have pointed out, signing on to be an IC should come with a massive pay boost for what you're giving up in terms of stability and benefits.

    Someone, I think SKFM, mentioned in another thread somewhere that it is pretty common for doctors to do the IC thing, because it allows them to abuse some sort of 401k/IRA contribution limit loophole. So you know, if they are offering her like 200k+ a year, maybe the IC thing is for her own good.

    I think that was the Doctor himself was technically a IC at their own practice.

    DevoutlyApathetic on
    Kakodaimonos
  • RozRoz Boss of InternetRegistered User regular
    bowen wrote: »
    Jasconius wrote: »
    any business that would ordinarily have employee staff and has arbitrarily decided to instead turn people into IC's is just trying to dick over their employees. period.

    as many have pointed out, signing on to be an IC should come with a massive pay boost for what you're giving up in terms of stability and benefits.

    Someone, I think SKFM, mentioned in another thread somewhere that it is pretty common for doctors to do the IC thing, because it allows them to abuse some sort of 401k/IRA contribution limit loophole. So you know, if they are offering her like 200k+ a year, maybe the IC thing is for her own good.

    Something tells me it's more like, "We're willing to offer you $20 an hour, since you're making $15 an hour, we feel this is a sizable and fair offer"

    But as a 1099 worker, $20 an hour is more like $8.

    Well, just as an example, if she makes 40 dollars an hour, they are willing to pay her $50 a patient. She can do one patient in 30-45 minutes typically. I'm trying to get them to write in a minimum amount of patients per week, and they seemed agreeable to it, though it was only 25-30. That said, from the information I've gathered, it is a busy office. She could consistently have 10-12 patients per day but they aren't willing to guarantee that high.

    They've also included a non-compete provision in the contract that I really don't like and I think it's overly broad. I'm going to hire an attorney to see how enforceable it is and to get better language. I can understand them wanting to protect themselves so that she doesn't induce other people to leave the company or steal business from the employer, but at the same time, she can't help it if her patients want to follow her should she go to another practice.

  • schussschuss Registered User regular
    edited October 2015
    From what I've seen, non-competes are a red flag around IC's as it means they aren't really independent Contractors. The entire point of the status is that you can work for multiple entities, so if they're saying she can't do that, she's an employee, not an IC.
    EDIT: Also, based on the numbers, they're lowballing her. If she makes 40 an hour now, she'll need to roughly see 13-15 patients a day to equal an 8 hour workdays pay as an employee. So to equal her 8 hour salary, she'll probably need to work 10 hours a day there.

    schuss on
    bowenDevoutlyApatheticSo It GoesAiouadavidsdurionsLostNinjaASimPersonDoctorArchPacificstar
  • bowenbowen How you doin'? Registered User regular
    edited October 2015
    She's getting fucked.

    It should be $150 a patient and 10 patients a day, minimum. If they can't guarantee it, then it's $200-250 a patient.

    Non compete is a no go, do not sign a contract with a non compete.

    NDA and HIPAA are okay, non compete makes you an employee.

    http://www.strasburger.com/independent-contractor-sign-noncompete-never-ever/?utm_source=Mondaq&utm_medium=syndication&utm_campaign=View-Original

    bowen on
    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
    Aiouadavidsdurions
  • bowenbowen How you doin'? Registered User regular
    edited October 2015
    Remember what we said, you have to cover allllllllllll of the employer side taxes and costs yourself now.

    That means 25% comes immediately off the top of the income. $50/hr means she's really only making about $30 an hour, and that's before you even factor in costs like computers, electricity, pens, paper, health insurance, retirement contributions, your actual taxes, etc.

    bowen on
    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
    Aiouadavidsdurions
  • DevoutlyApatheticDevoutlyApathetic Registered User regular
    Yup. The non compete isn't just a red flag, it's a fucking laser light extravaganza complete with fireworks and a Blue Angels flyby. It's also a strong indication that they'd fail the IRS checklist as one of the steps if you can't be economically dependent upon them. Basically if they're your sole source of income as an IC it's a big red flag. She wouldn't be running her own business, she'd be an employee with lots more risk and pay that doesn't seem to match up with what her skills on the market demand.

    Normally I'd say negotiate but it's clear the practice is just setting itself up to get utterly fucked on taxes if the IRS ever gets involved. I would not want to hitch my wagon to them.

    bowenAiouadavidsdurionsMichaelLC
  • bowenbowen How you doin'? Registered User regular
    Might actually even be a good idea to report them to the IRS because there's a good chance they have other 'employees' they're fucking over with this.

    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
    davidsdurions
  • AiouaAioua Ora Occidens Ora OptimaRegistered User regular
    Never, ever, ever, ever sign a non-compete unless its the difference between you eating or not.

    Ask me how I know.

    life's a game that you're bound to lose / like using a hammer to pound in screws
    fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
    that's right we're on a fucked up cruise / God is dead but at least we have booze
    bad things happen, no one knows why / the sun burns out and everyone dies
    bowendavidsdurionsGonmunzepherin
  • DaimarDaimar A Million Feet Tall of Awesome Registered User regular
    Since your wife has a job now and isn't desperate for work she should just tell them to maker her an offer as an employee or nothing. They're not approaching the IC situation correctly and it will be much more headache than it is worth in this case. If they don't then you've lost nothing and they can carry on abusing their current ICs until they get their hand slapped.

    steam_sig.png
    twitch.tv/kragaar
    bowena5ehrendavidsdurions
  • davidsdurionsdavidsdurions Your Trusty Meatshield Panhandle NebraskaRegistered User regular
    It sounds like someone at that office went to a free lunch conference at a hotel conference room and came out with the idea that it would be great for their bottom line if they do IC at lower rates than regular employee costs.

    I agree with the thread, that I wouldn't do IC unless they can provide appropriate compensation and then really only if she is also wanting to do IC elsewhere, otherwise it's just not worth the headaches. If they balk at compensating enough then I guess they really can't afford her services.

    PwH4Ipj.jpg
    bowenMichaelLC
  • bowenbowen How you doin'? Registered User regular
    @Roz what does your wife do, RN or something?

    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
  • RozRoz Boss of InternetRegistered User regular
    She does ultrasound work (I think the official title is Ultrasound Technician). She currently works for a large hospital chain out of what was once a private practice. When she first joined she loved it. But the owner sold the business last year to MegaCorp and now she's in a completely different environment with a manager that she does not get along with. It's starting to stress her out and she's not the best at handling that kind of conflict (if you're reading this dear I love you and mean in this in the nicest way possible).

    She was looking at a couple of different job opportunities and this IC job was something offered to her back in feb/march. She turned it down initially. But with the way work was going she was considering it. Now with all of your feedback, I get the sense that this is not right for us at this time. The money doesn't seem worth it given all the other factors. I'm going to encourage her to not take this position and hopefully we can find something elsewhere.

    Thanks everyone!

  • bowenbowen How you doin'? Registered User regular
    Yeah I mean, theoretically, they should be paying more per patient for an IC technician like that, rather than an hourly employment (job instability and all that).

    But there is no way that kind of employment is even close to something an IC would do. She doesn't provider her own schedule, she doesn't provider her own tools, etc.

    I would feel terrible if a lot of people lost their jobs, but, that's something the IRS should find out about, because holy fuck.

    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
    zepherin
  • MichaelLCMichaelLC In what furnace was thy brain? ChicagoRegistered User regular
    edited October 2015
    bowen wrote: »
    Yeah I mean, theoretically, they should be paying more per patient for an IC technician like that, rather than an hourly employment (job instability and all that).

    But there is no way that kind of employment is even close to something an IC would do. She doesn't provider her own schedule, she doesn't provider her own tools, etc.

    "OK, so you'll need to bring your own ultrasound machine, you can use the service entrance..."

    You (she) should run away and not look back. Either they're incompetent or malicious; neither makes a good employer.

    MichaelLC on
    Jokerman wrote: »
    If sigs were still a thing this would be mine.
    bowen
  • bowenbowen How you doin'? Registered User regular
    Yeah 100% what @davidsdurions said.

    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
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