I Need Help, but Employee or Independent Contractor?

Carolyn Buppert, MSN, JD,


May 21, 2019

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Can I Use an Independent Contractor?

A physician wrote, "I want a nurse practitioner or physician to cover one 8-hour slot per week in my urgent care office. I want this person to be an independent contractor. Am I on solid ground legally?"

Response from Carolyn Buppert, MSN, JD
Healthcare attorney

Probably not. The IRS, when determining whether an arrangement is one of employer/employee or independent contracting, looks at the degree of control that you (the boss) have and the independence that the hired individual has. The general question to answer is: Who controls the work? If you are telling the independent contractor when to work and where to work, that leans toward employment. An independent contractor generally works when he/she wants, where he/she wants, completes a specific project, and serves other clients. An independent contractor usually is paid a flat fee for a project and has the possibility of incurring a profit or a loss on a project.

The consequences of an erroneous choice could mean that the IRS and/or state taxing authorities could require you to pay taxes and fines. If the IRS or a state taxation office does an audit and finds that you are calling someone an independent contractor when that person, by the agency's definition, is an employee, the agency may assess civil penalties against you. They may require you personally to pay the employee's share of payroll taxes. They may assess fraud penalties. Criminal charges may even be filed. "Everyone does this" is not going to be a good defense.

For a detailed discussion of the differences between independent contractor and employee, see the IRS resource, Independent Contractor (Self-Employed) or Employee?

It's important to understand that tax liability and penalties for misclassifying an independent contractor fall on the employer. The clinician in this scenario isn't expected to recognize the appropriate classification, but you, the hiring individual, are.


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