Should Your Physician Workers Classify as Employees?

This week we continue the discussion regarding employees versus independent contractors. Today’s discussion looks at how the independent contractor relationship applies to other physician workers within your practice. Watch the video to learn more!

Transcript:

We hope you’re having a fantastic week. Last week, we started kind of a quick video series on independent contractors and employees and how that structure impacts your practice. We talked briefly about the 11 factors that the IRS considers when they look at these issues and what you have to look at as you begin to classify the workers that are part of your practice. This week, I want to talk about some more baseline. We’re talking about the factors in future weeks, but today, we want to kind of talk about this, this baseline premise that exists as we look at independent contractors and employees, and really how it impacts, potentially, the other physicians, and workers in your practice. So this is really what it comes down to, if the person who is paying, so if you’re the person who’s paying, if you have the right to control or direct only the result of the work, then we’re talking about an independent contractor, so the result of their work, but an employee really comes down to if you have the ability to control, not just the result of their work, but what will be done and how it will be done. So what will be done and how it will be done if you have that much control? And we’re talking about employees. If we’re talking about just the end result, then we’re talking typically about potentially independent contractors, with one major exception, and that’s other physicians. The healthcare setting and other healthcare providers potentially start to bring in some more ambiguity and create some challenges in that regard.

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Now, what does that really mean? Well, what that really kind of means is that, as physicians, it could create some challenges, because you think about it, you think, well, the end product and what’s done and how it’s done, that’s actually your professional responsibility in regards to the patients. But when we start looking at the business operation, that’s when things change and things shift, and really what the IRS looks at in regards to healthcare, okay? So first, what I’m saying is the IRS leans more to the business side of things than the physician’s responsibility of the patient side of things, okay? And that’s really incredibly important to understand, because really, we’re talking about the end result, and not necessarily somebody else controlling what you do, because you’re the one who’s doing the exam and determine the treatment plan and working with the patient to ensure the greatest amount of health, right? But when we start talking about the business operations, that’s really what the IRS begins to look at, right? So they want to look at, you know, the manner of payment. You know, can the physician worker employ substitutes?

So, for example, if they want to go on vacation, can they themselves hire a substitute? If they’re an independent contractor, they should be able to do that right. Who pays that substitute worker? So if they have a locum tenens, worker who’s going to actually pay them, the person that’s going on vacation, or you as the person who pays that independent contractor, or the independent contractor that probably, in those cases, if you’re paying it, maybe should be considered an employee. Can a physician worker engage in their own practice? In other words, can they, can they duck out and go practice at another practice, maybe in a locum tenens type situation, or, you know, in another factor, or just maybe they’re working in more than one place? Do they have that freedom to do what they want to do, or are they exclusive to your practice? Do they have, what about compliance with policies? And this gets really, really crazy, because we talk a lot about compliance, you know, but you have policies in your practice, and are they required to follow your policies, or do they have to have their own? That’s a consideration a lot of those things, and these are factors that really do make a difference when considering whether or not a physician is an independent contractor or an employee.

Another one is, do they have the same rights and privileges. So in regards to benefits and other factors as your employees have, if they have those same rights and privileges, then, pretty much at that case, then they’re going to be employees. When you look at all of these factors and time in really, what the IRS has stated about healthcare professionals is that really control and supervision in a medical practice is determined by those things that we just talked about, right? It’s basically determined by the degree to which the physician worker is integrated into the operating organization of the business. In other words, how integrated are they? Are they critical to the business operation? Are they important to that business operation that you have? And the more integrated they are into your practice, then the more likely that they’re simply going to be employees. If you’re having gathered over these first two videos, it’s a bit of a challenge to really, truly have an independent contractor. Really, if you want to look at that baseline, if you have an arrangement that is different than simple-rent, then you’re getting closer, if not, crossing over the line from independent contractor to employee, and then all the penalties that we talked about last week are going to come into play. So these are all factors that you need to consider in regard to physicians. But here is the important part I also want you to hear is that when we start talking about all of the other factors that apply to everyone, not just the other physicians in your practice, but maybe you have other healthcare workers that you’re hiring or bringing in as independent contractor or as employees, and it’s important to know what those factors are and what the IRS looks at, so you can avoid the penalties that we talked about last week. We’ll catch you next week.