Intro to contract/1099 physical therapist employees
Individual contract physical therapists are beneficial for most practice owners. Their services are frequently used when PTs are sick, vacationing, or just unable to work. The added flexibility of individual contractors also referred to as “1099 physical therapists” or “per-diem physical therapists,” boasts financial and skill-based advantages that can increase productivity in any practice.
However, hiring per-diem PTs is vastly different than utilizing regular employees, and comes with unknown caveats. After sorting through legal considerations, other disadvantages such as salary and patient care become evident.
This article will explore the various pros and cons when employing individual contract physical therapists, so practice owners can confidently make hiring decisions.
Pros of Hiring Per-Diem Physical Therapists
What value can contracted physical therapists bring to the table? Quite a bit, and when correctly used, practice owners turn short-term employment into long-term benefits.
Here are some of the pros associated with hiring per-diem physical therapists:
Flexibility at its Finest
Contract physical therapists provide unparalleled flexibility in the workplace. Regular employees, everywhere in the US, will take paid time off, get sick on occasion, and just flat out not show up to work for personal reasons. The best insurance policy is hiring somebody for a short time to cover their workload, which will keep the practice running without a hitch and prevent staff from taking on an aggressive workload.
No Payroll Taxes for Contracted Physical Therapists
It has been stated nothing is certain in life, except death and taxes—not so fast. Employers are not responsible for payroll taxes when employees are labeled as “individual contractors.”
Practice owners in 2020, according to the Federal Insurance Contributions Act (FICA), can expect to pay 6.2% for each employee for Social Security and 1.45% for Medicare, totaling 7.65% in contributions based on their total salary. Eliminating these contributions can prove quite profitable in the long run. The average physical therapist in the US, according to Indeed.com, makes $93,011 a year, so hiring a per-diem PT at this rate could save almost $600 a month on payroll taxes alone.
Add New Skills and Abilities to the Roster
Per-diem PTs can bring a fresh perspective into a clinic with a wide variety of skills and abilities. It isn’t unusual for contracted individuals to work in a variety of environments, including hospitals, outpatient clinics, private practices, home health agencies, schools, nursing homes, and many more.
The ability to adapt and administer treatment to patients in various locations using different techniques gives these contractors a great deal of versatility in the workplace.
Skip Benefit Payouts
Benefits are expensive for full-time employees. Practice owners want to recruit the best talent for their practice by offering benefits such as:
- Medical, vision, and prescription insurance
- Life insurance
- Dental insurance
- Tuition reimbursement
- Short-term and long-term disability
- Paid Time Off
- Sick Leave
- 401K Matching
The average employer, as of December 2017, pays $11.38 per hour or just over 31% of total wages in benefits alone. Skipping these payments allows employers to save or splurge on their staff, equipment, and other costs associated with running their practice.
Cons of Hiring Per-Diem Physical Therapists
Unfortunately, there are also downsides to hiring 1099 physical therapists. Practice owners must consider the type of physical therapy, their staffing needs, and the business location, amongst other factors when making hiring decisions. Here’s the breakdown of potential negatives when employing individual contract physical therapists.
By eliminating benefits, payroll taxes, and other forms of employee incentives, employers must make it worthwhile for contracted PTs. According to the job search site Neuvoo, per-diem physical therapists made, on average, $24,141 more per year than their traditional physical therapist counterparts.
Overall, hiring outside help could significantly impact the practice’s financials. For example, if employers are using per-diem physical therapists while their staff is taking PTO, they would end up footing the bill for higher individual contractor wages AND paying the benefits for their employees on vacation.
Endangered Patient-Therapist Connection
Patient satisfaction should be a top priority at every practice. However, Individual contract PTs will be—for lack of better words, thrown into the fray on most assignments. The consistency with patient-loads, constant catch-up with background notes, and unfamiliarity with patients can cause a rift in the patient-therapist connection.
Per-diem PTs, with some experience, are all-to-familiar with this inconsistency, but that doesn’t allow for perfect transitions into every practice. The shorter the assignment, the more stress is piled onto those relationships, causing a disconnect between therapist and patient.
Individual Contract Physical Therapists Own a Wide Variety of Skills and Abilities - Some of Which Lack Relevance
Contracted physical therapists possess a formidable range of abilities due to working in diverse settings. However, hiring a per-diem PT, fresh out of school, who’s been working in sports, fitness, and wellness facilities, might not be as competent in specific situations as a physical therapist who has experience with inpatient rehabilitation.
The diversity of practicing physical therapy lends itself to varied experiences and skillsets. And while it can be advantageous to have an “all-rounder,” it depends on the therapist.
Bonus Round | Legal Considerations - Individual Contractor Vs. Employee
It’s essential to define the scope of an individual contractor vs. employee when hiring contracted physical therapists. The IRS has a general rule stating, “An individual is an independent contractor if the payer has the right to control or direct only the result of the work, not what will be done and how it will be done.”
Furthermore, the IRS has three “deciding categories” that help employers identify if a worker is considered an individual contractor.
- Behavioral Control – Do practice owners control what per-diem physical therapists do or how the job is done? The IRS considers the types of instruction given, degree of instruction, evaluation of the PT, and training when labeling workers as employees or individual contractors.
- Financial Control – If PTs can work for multiple employers and aren’t eligible for reimbursement, all signs point to individual contractors. The IRS looks into whether PTs have financially made significant investments, have unreimbursed expenses, entertain profit and loss opportunities, enjoy market availability, and how they’re receiving payment.
- Relationship – Are these Individual contractors receiving paid vacations or on the payroll for an indefinite amount of time? If so, they might be considered employees by the IRS. This last premise is based on how both parties perceive each other and what written contracts, services, and benefits are on the table.
The Bottom Line
Hiring individual contractors is beneficial when done in the correct setting for an appropriate amount of time. Per-diem PTs can pick up responsibilities when a practice needs more staffing and even bring some useful experience.
Financially, it can be beneficial when weighing the needs of practice owners, but some want to avoid the price tag that comes with contracted therapy convenience. By assessing these pros and cons (and making sure the worker is considered an individual contractor), practice owners can enjoy the flexibility that comes standard with contracted physical therapists.