With talent shortages since COVID-19 began, it’s been challenging for many health care organizations to get staffed and running smoothly. If you’re the owner or administrator of a home care or home health agency or a senior care or skilled nursing facility, you may be spending large chunks of your time hiring and onboarding – on repeat.
If this sounds familiar, you have probably thought about – or even have – employed contractors. With that said, it’s important to keep in mind how to properly classify them to ensure you stay in compliance with FLSA regulations.
Unfortunately, workers are can sometimes be mistakenly classified as independent contractors or 1099 workers instead of employees. These mistakes can be costly because the putative employer is not paying payroll taxes, workers’ compensation premiums, nor unemployment insurance for workers classified as 1099.
Wage and hour rules (e.g., overtime pay), employment laws (family and medical leave), and benefit requirements (e.g., offer of insurance coverage) are also disregarded – incorrectly – when companies misclassify workers as independent contractors.
So, how can you differentiate between the two?
According to IRS rules, “anyone who performs services for you is generally your employee if you have the right to control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.”
Meanwhile, someone is an independent contractor if you “have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.”
In other words, it comes down to control. Specifically, you need to pay attention to three factors to make sure you don’t treat an independent contractor like an employee:
To help you avoid misclassifying workers, below is a list of questions adapted from the IRS. Although they are no longer used by the agency as official measures of worker status, they can nonetheless help you make informed determinations:
The more “yes” answers, the more likely that the government would consider the worker an employee, in which case you should rethink how you hire and pay people. Independent contractors can still be a valuable part of your staffing plan. Just make sure that they aren’t really employees in disguise and consult with your legal counsel to be certain; some states also have their own guidelines for establishing 1099 vs. employee status, so be sure to be familiar with the rule in the states you operate in.
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