『Ep 4: Should You Hire 1099 Contractors or W-2 Employees as You Scale Your Group Practice?』のカバーアート

Ep 4: Should You Hire 1099 Contractors or W-2 Employees as You Scale Your Group Practice?

Ep 4: Should You Hire 1099 Contractors or W-2 Employees as You Scale Your Group Practice?

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Hiring therapists as 1099 contractors may seem like the simpler, less expensive way to grow your group practice. But if you’re managing them like employees, that decision could leave your business vulnerable to an audit, back taxes, and penalties.In this episode of The Therapist Business Growth Podcast, I’m breaking down what determines whether a therapist should be classified as a 1099 contractor or W-2 employee. It comes down to the working relationship, including who controls the schedule, caseload, tools, systems, and day-to-day expectations.I’ll also share the surprisingly useful “plumber test,” the classification mistakes I see group practice owners make most often, and why building a W-2 team can strengthen your company culture and the long-term value of your practice.What You’ll Learn in This EpisodeHow to Tell the Difference Between a Contractor and an Employee: The questions to ask about control, finances, tools, scheduling, and the therapist’s role within your practice.What Changes When You Hire W-2 Employees: How taxes, benefits, caseload expectations, workplace policies, and legal protections differ between the two classifications.Why Correct Classification Matters as You Scale: The financial risks of misclassification and how your hiring model can affect your culture, operations, and ability to sell the practice later.Episode Timestamps00:00 Introduction00:24 Why cost should not determine worker classification01:31 The three factors used to evaluate the working relationship03:20 How my first therapist became a W-2 employee04:54 Behavioral control, financial control, and the nature of the relationship07:37 Taxes, benefits, tools, schedules, and business expenses14:29 The financial risks of misclassifying employees18:50 Why buyers prefer practices with W-2 employees21:24 Common classification mistakes practice owners makeTop Takeaways on Hiring 1099 Contractors vs. W-2 Employees1. Classification Depends on the Actual Working RelationshipCalling someone a contractor in an agreement does not automatically make them one. What matters is how the role functions within your practice.If you provide the clients, set expectations for documentation, require specific systems, determine caseload requirements, manage schedules, and oversee how the work is completed, the role likely has many characteristics of W-2 employment.A helpful way to think about this is the “plumber test.” An independent plumber sets their own rates, brings their own tools, determines how the work will be completed, and operates a separate business. A true 1099 contractor should have a similar level of independence.2. Decide How You Want the Role to Function Before You HireHere’s how to start evaluating the role:Step 1: Consider the level of control you need. Do you want to require staff meetings, set minimum caseloads, approve time off, provide supervision, or establish specific documentation procedures?Step 2: Look at what the practice provides. Consider who supplies the clients, marketing, office space, EHR, clinical tools, training, and other resources needed to complete the work.Step 3 (pro tip): Evaluate the whole relationship. A contractor agreement cannot override the day-to-day reality of how someone works inside your practice. When the classification is unclear, consult an employment attorney who understands the requirements in your state.3. Your Hiring Model Affects the Practice You’re BuildingHiring W-2 employees involves payroll taxes, additional administration, and potentially offering benefits. It also gives you more ability to establish shared systems, create consistent expectations, and build a cohesive team.This becomes especially important if you eventually want to sell your practice. Buyers are generally looking for a stable business with employees, repeatable processes, and a team that is fully integrated into the company.Misclassifying employees as contractors can also lead to back taxes, penalties, and other costs if your practice is audited. Saving money upfront may create a much more expensive problem later.Resources✨ Instagram: @dranahitabanoo✨ Website: dranahitabanoo.com✨ Solo to Group Practice Accelerator✨ Freedom First Group Practice Accelerator✨ Get your free marketing audit to help fill your caseloadWork With MeReady to build a profitable group practice that gives you more freedom and time outside the therapist chair? Explore my Group Practice Accelerator programs above or reach out directly.🎙️If you’re wondering whether group practice life is right for you, hit subscribe and share this podcast with your therapist bestie!Disclaimer: This podcast is for educational purposes only and is not a substitute for therapy, supervision, or legal or financial advice.
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