If you are considering working for a staffing company, it is important to understand the difference between independent 1099 contract work and W-2 employment. This distinction may seem trivial, but it is important to protect yourself and your livelihood.
The risks of incorrectly hiring or working as a 1099 independent contractor
Hiring or working as a 1099 independent contractor when W-2 employment is more appropriate is not without its risks. In fact, there are risks to both the contractor and employer. Independent contractors can risk tax audits and penalties to themselves personally, and they aren’t eligible for benefits such as paid sick leave.
On the other hand, W-2 employees (including Dietitians On Demand consultant dietitians) are eligible for employer-funded paid sick leave, plus benefits like professional liability and worker’s compensation coverage. To read more about the risks of inappropriate 1099 work, click here.
Organizations hiring 1099 independent contractors illegally can also be held responsible for paying back-taxes and interest on employees’ wages, as well as FICA taxes that weren’t withheld originally. Failing to make these payments can result in additional penalties and interest, which can quickly compound. Additionally, if the IRS believes a facility has intentionally misclassified workers, the facility may face criminal and civil penalties.
Why is a registered dietitian a W-2 employee, not a 1099 independent contractor?
In the world of clinical nutrition, registered dietitians working in a medical facility are not 1099 independent contractors. They are W-2 employees, and according to the IRS, here’s why:
- They are expected to communicate with the facility as to when they will be on the premises and usually work set hours.
- They perform services that can be controlled by an employer and are required to be carried out in a certain order, such as patient nutrition assessments.
- They are required to submit reports, in the form of charting.
- They work onsite at the medical facility.
- They are paid an hourly, weekly or monthly rate rather than on a project basis.
To be classified as a true 1099 independent contractor, a worker must have complete autonomy. A few items the IRS uses to define autonomy include:
- The worker is not required to set a schedule.
- The worker performs tasks in any order they wish.
- The worker is not required to leave written or oral reports.
- Work is not performed on the company premises.
- A 1099 worker is paid on a project basis and at the project’s completion, not on an hourly or weekly basis.
How to decide if 1099 or W-2 classification is best
The IRS developed a test to determine if a worker is a W-2 employee or a 1099 independent contractor.
Meeting one or more of these criteria signifies a 1099 employee.
- Time: Works any hours they choose
- Duties: Work is performed in any order, at any time that the dietitian chooses
- Location: Work is done remotely, not on the premises
- Pay: Pay is on a project-based basis and at project’s completion
Meeting one or more of these criteria signifies a W-2 employee.
- Time: Work hours are set by a manager; worker is required to be at weekly meetings which are at set days and times
- Duties: Services are controlled by an employer and required to be carried out in a certain order (e.g., nutrition assessments, client visits, charting)
- Location: Work is performed onsite at a medical facility
- Pay: Pay is an hourly, weekly or monthly rate
At Dietitians On Demand, we work hard to do what’s best for our dietitians and our clients. This includes the correct classification of our consultant dietitians.
Dietitians On Demand is a nationwide staffing and recruiting company for registered dietitians, specializing in short-term, temporary and permanent-hire positions in acute care, long term care and food service positions. We’re dedicated to dietitians and helping them enhance their practice and excel in the workplace. Check out our job openings, request your coverage, or visit our store today!