APMA News - March 2012 - (Page S4)

SUPPLEMENT TO APMA NEWS YOUR APMA / PAGE 4 ENTERING THE WORKING WORLD: EMPLOYEE OR INDEPENDENT CONTRACTOR? By Harold G. Belkowitz C ongratulations! You are about to enter the working world. During this time, many young physicians ask whether they should be hired as an employee or an independent contractor. This distinction has important ramifications, such as compensation structure, taxation, and liability. What is most important, however, is to identify and understand those distinctions at the outset of the relationship so that both the hiring employer and the job candidate avoid problems down the road. Generally speaking, an employee is a person who is hired by an employer to engage in employment in exchange for wages, salary, or commissions. While state and federal laws impose some requirements on the relationship (e.g., requiring payment of a minimum wage), the relationship is essentially contractual, and the parties’ agreement sets the terms of employment. Independent contractors, like employees, provide services in exchange for compensation, but a key difference is that independent contractors are hired to produce a given result without being controlled as to how they attain that result. HOW CAN I TELL THE DIFFERENCE? A variety of tests exist to help you distinguish between employee and independent contractor status. Perhaps the most widely known test is from the Internal Revenue Service (IRS), which considers 20 factors.1 The IRS has consolidated its evaluation into three general categories: Behavioral Control: This category evaluates whether the employer “has a right to direct and control how the worker does the task for which the worker is hired.”2 Financial Control: Are the business aspects of the worker’s job controlled by the medical practice? (These factors include how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)3 Type of Relationship: Are there written contracts or employee-type benefits (e.g., pension plan, insurance, vacation pay)? Will the relationship continue and is the work performed a key aspect of the business?4 WHY IS THE DIFFERENCE IMPORTANT? Determining your classification as an employee or independent contractor is essential, because misclassification can have costly consequences for you and the medical practice. Your classification as an employee versus an independent contractor affects a number of important issues, such as income taxes, benefits, and malpractice liability. Taxes: How you are classified will determine how you pay your income taxes. If you are an employee, the medical practice will withhold income taxes from your salary, but if you are an independent contractor, you must pay income taxes yourself. Employee Benefits: Your classification also defines the benefits you receive. As an employee, you may be entitled to benefits such as workers’ compensation, unemployment insurance, and leave under the Family and Medical Leave Act. As an independent contractor, you would not. Liability: Finally, your liability for medical malpractice will depend on your classification as an employee versus independent contractor. If you are an employee, the medical practice may be held liable for your misconduct. On the other hand, a medical practice is generally not liable for the actions of an independent contractor. NOW IN JAPMA Have you read your latest issue of JAPMA? In the March/April issue: Clinical Efficacy and Safety of Tapentadol Immediate Release in the Postoperative Setting Radiographic Measurement of the First Metatarsal: A New Technique to Improve the Accuracy of Intermetatarsal Angle Measurement Dynamic Footprint Measurement Collection Technique and Intra-Rater Reliability: Ink Mat, Paper Pedography, and Electronic Pedography An Historical and Current Analysis for the DPM Acquiring an MD or DO Degree and Unrestricted Medical License For more, visit www.japmaonline.org, or check out your print issue. Your classification could also determine who is responsible for paying for malpractice insurance coverage. An employer is usually responsible for providing malpractice insurance coverage for its employees, while independent contractors are ordinarily expected to provide their own coverage. Despite your classification, payment of insurance costs is an issue you must address in your contract negotiations with the medical practice. CONCLUSION Before you accept any professional position, it is important to determine your role: Are you an employee or are you an independent contractor? Making this determination now will set your expectations and help avoid problems down the road. You can use this article as a guide for determining your classification, but it is important that you consult legal counsel in your state to ensure you are properly classified. Harold G. Belkowitz is an attorney at Ober, Kaler, Grimes & Shriver in Washington, DC, where he is a member of the firm’s Employment and Litigation practice groups. Contact him at hgbelkowitz@ober.com. 1 IRS Rev. Rul. 87-41 (1987). 2 Id. 3 Id. 4 IRS Publication 15-A, Employer’s Supplemental Tax Guide (Jan. 14, 2011). This article is for informational purposes only and does not constitute legal advice. Podiatrists seeking legal advice should consult with an attorney duly licensed to practice in their jurisdiction. http://www.japmaonline.org

Table of Contents for the Digital Edition of APMA News - March 2012

APMA News - March 2012
President’s Message
Contents
Joseph M. Caporusso, DPM: The Anything-is-Possible President
Meet the Candidates for the Board of Trustees
APMA By the Decade: 1932–1941
Profiles in Progress: Hospital Privileges
2011 Podiatric Practice Survey: First Year Associate Salary
Guest Editorial: Why I Want to Be a Podiatrist When I Grow Up
Federal Advocacy Forum
APMAPAC Chair Report
IT Consultant
Website Wisdom
Small Business 101
CPME Update
Sheer Scope: No Meeting Can Match The National
Annual Scientific Meeting Preliminary Program
Annual Scientific Meeting Registration Form
Annual Scientific Meeting Sponsors
APMA All Stars
In Short
Worthy of Note
Affiliates Corner
List of Affiliated Organizations
Insurance Advisor
New Members
Death Notices
APMAPAC Update
Development Update
Resolutions Submissions
Awards Nominations
Classified Advertising
Dates to Remember
Advertising Index
10 Questions
Your APMA

APMA News - March 2012