How does being an independent contractor affect liability and taxes?

By | 2022-02-15T17:53:09-05:00 February 9th, 2012|0 Comments

Question:

Dear Donna,

I recently returned to work after raising children and was hired at a surgical center. I found out they are treating RNs as independent contractors instead of employees and giving them a 1099 at the end of the year. How does this arrangement affect professional liability, workman’s comp and taxes?

Lise

Dear Donna replies:

Dear Lise,

Your post is very troubling for several reasons. I don’t know how you could not have known this before being hired unless the employer deliberately concealed it. After getting one paycheck with no taxes or social security taken out, it should have been apparent to you that something was amiss. Didn’t you ask about benefits? Independent contractors (IC), usually do not get benefits, insurance, worker’s compensation coverage, paid vacation, sick time or liability coverage.

Also, an employer can’t simply opt to treat their employees as independent contractors. The tax and employment laws are very specific as to what constitutes an independent contractor (see online source below). Some employers may try to do this to avoid paying taxes, or contributing to social security and worker’s compensation. But if the job parameters don’t fit that of an independent contractor, it may be inappropriate for employers to designate the job as this. I am in no way suggesting that your employer is doing this inappropriately since I do not know the specifics about your work agreement or arrangements.

Being an IC rather than an employee changes everything for you. You may have to start paying estimated income taxes quarterly. You need to speak to an accountant about this right away. You should have your own liability insurance regardless of your employment status. A company typically has no liability for the negligence of an IC, whereas it would have liability for an employee.

Here’s an online source you may find helpful: http://legal-dictionary.thefreedictionary.com/Independent&#43Contractor. It explains the various differences between being an employee versus an IC. You may want to consult a nurse attorney for further advice on this matter.

Best wishes,

Donna

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