Massage Independent Contractors

Most massage jobs are usually massage independent contractor positions that are created by massage employers.  This topic is one that I have talked about frequently on my website and in the blog.  I am not a lawyer and in each situation you really should consult an attorney to help you figure out your correct status.  Even attorneys will have varying answers to the same situation.

Here are some references to what others are saying about IC vs massage employees so you can start to try to figure out what your status is.  (It is my personal belief that most IC positions should actually be paid employees with full employee benefits and that many employers are taking advantage of massage therapists.)  It is up to the employer to figure out the correct status as it is the employer who will be penalized by the IRS for back taxes and also the state unemployment taxes that would have to be paid.

Felica Brown says this from her article for Massage and Bodywork in 2003:

By definition, an independent contractor is a business (therapist) that works independently of the business, such as a salon, by which it has been contracted. What this means, more or less, is that the contracting business (salon) has a very marginal amount of control over the smaller independent business (therapist). This statement translates into a set of requirements (see box) instituted by the Internal Revenue Service to determine whether to classify workers as employees or independent contractors. For example, supplies, advertising and equipment should be provided by the independent contractor, not the salon. Additionally, uniforms, schedules and rules are not supposed to be required or imposed.

Ken Cassidy who is an advocate for spa professionals and also has a business kit for spa businesses to help them determine their status.  In his article for Massage and Bodywork Magazine” Independent Contractor, Employee, Booth Renter: Which Piece Am I?”

The alarming truth is 90 percent of all businesses in the beauty and wellness professions are operating incorrectly under the wrong classification, which can lead to trouble for both the owner and the renter when facing taxes, not to mention unemployment and/or disability.

In May 2000, the IRS published an educational pamphlet detailing the differences between an independent contractor, employee and booth renter (Publication 3518, Catalog 73164X). Regardless, many are still unknowingly operating illegally. Let’s take a closer look at the three categories in order to become more familiar with the similarities and differences.

Dixie Wall from Massage Today has this to say

The financial control category of an employee usually is seen as an extension of the employers set business structure. Independent contractors are more likely to have non-reimbursed expenses and an investment in the facilities he or she uses. Moreover, the method of payment from the business to worker is paid as a flat fee, rather than an hourly wage.

Future LMT at Massage Magazine has an outline of 20 things to consider to determine your status.  Massage and Bodywork Magazine has a short list of things to consider.

The IRS Website has a whole section on employees vs independent contractors.

The best description I have read is in the book “Therapeutic Chair Massage” by Ralph Stephens in which you can read the except at Google Books for free.

So with all of that how can you figure out what status you want and what you want to be paid?  What is a fair amount to make?  Is it legal to pay a percentage to an employer or to be paid a percentage of the massage fee by the employer as in IC?  I have heard so many different stories about different situations that arise.  It gets hard to make a decision when you need a job and money but going with your guts you will also be able to know if you think the offer is appropriate for you.  It is hard to pass up jobs that you have just an inkling that something that isn’t right.  If you have to take these jobs go into them knowing that you will be learning a lot and will have some difficult challenges ahead.  Take the time to figure out what it is that you really want to be getting out of a job or IC position and what you need to make to make a Great living or just get by until you find something better.   Here are some things to consider:

  • Who will provide things like the table, massage oils/lotions, pillows, sheets, laundry service, insurance billing?
  • Who will be doing what to get clients on the table?
  • Who does advertising, marketing and rebooking?
  • Who will book the appointments?
  • Who will collect the fees?
  • Who will do the insurance billing if any?
  • Who does the insurance money come to? You or the employer?  Who pays who what and when?
  • Who owns the chart notes and client files?
  • What do you need to make per hour?  How many hours do you need to work each week?
  • Who decides what hours you work?
  • Who pays taxes?

So being a massage independent contractor or being a massage employee is no simple answer.  Figure out what you want and then find a situation that you can live with.  I am also curious to hear more stories of different situations out there.  Post them here so others can learn!

It is the massage employers responsibility to actually figure this out as they will be the ones who will be penalized if they don’t have it set up right.  You can use that bit of info to your advantage.

Use this form at the IRS to determine Your status!
SS 8

5 thoughts on “Massage Independent Contractors”

  1. Hi Julie,
    This confusion over “worker’s status” is very near and dear to my heart and a business owner. In 2005 our wellness center was audited, not by the IRS, but by the EDD. (Employment Development Division). Their argument was I had the therapists categorized as ICs and they said they were employees.
    Over $40 k in back taxes, penalties and legal fees and two years of stress, I finally didn’t want to fight anymore for what I considered to be an erroneous classification of our workers, and conceded.

    Keep in mind, if the biz owner gets audited, the therapists will ALSO be interviewed and have to present their income statements, etc, so it is really important to know in advance what you are getting into.

    I hear of many massage businesses that call their workers ICs but treat them as employees. That is wrong!

    I wanted to be sure therapists were not treated as employees so we were extremely careful to let the therapists come and go as they wanted, do what they wanted, wear what they wanted, make their own hours, invoice us for services, etc… I even had them sign an agreement that they were ICs and agree they were responsible for their own taxes, permits, insurance, etc.

    These were the 3 main points the EDD used to determine that therapists were employees:
    #1. The clients paid us, not the therapist
    #2. Therapist had no ‘risk’ such as financial loss (time loss of sitting without a booking doesn’t count)
    #3. We provided all the equipment, and tools of the trade. (therapists brought their own music and lotion.)

    Because of this audit and not wanting it to happen again, but also not wanting the hassles and expenses of having employees, we have developed a completely different business structure. It won’t work for big spas and other organizations that truly should have their workers as employees because of the need for control, protocols, and consistency, but our business arrangement now, is one which for us works even better than either IC or Employee, plus we are making more money and have less over-head.

    It is extremely critical that you have it set up correctly so you don’t end up like me, paying thousands of dollars and spending hundreds of hours defending myself – even though I KNOW I was right!

    I am happy to answer any questions biz owners or therapists have regarding this whole continuing drama of worker’s status. (email: [email protected]

  2. The newest publication on employee or independent contractor (I give copies of this to students in my insurance billing seminars) is: Publication 1779 Revised 8-2008. Catalog Number 16134L. You can print this brochure off the website. The IRS phone number is: 800-829-3676 to order free tax publications.

    It seems very clear to me what constitutes an independent contractor vs. employee (at least in terms of what the IRS expects – and that IS what counts when you’re audited) – so I’m a little confused about all the … confusion.

    I have met with many LMTs in NYS (where I live and teach) who have gotten themselves into very “muddy legal relationships” – often with chiropractors and physical therapy practices — and come to my class unclear as to which of the two entities they are so I talk about this topic before we begin learning how to bill for NF and WC patients in NYS —- I don’t want to believe that these relationships are “intentionally vague” – but I’ve seen too many situations when LMTs who are anxious to begin their careers buy-in to whatever they are told – And when you look at the math around it all – it almost always seems to have been set up by the “landlord” where the LMT is renting space (which automatically makes them an independent contractor) to be one that clearly benefits the landlord. LMTs “allow” the chiropractor’s billing to staff to bill on their behalf … they set up agreements where the LMT is working for a % (which is ILLEGAL under NYS Guidelines) and has no set monthly rent … and other situations where the LMT’s work is being billed for him/her and the LMT never signs the bill — though their license number is ON the bill and that makes him/her legally responsible for the accuracy of the bill and the treatment codes assigned for dates of service. They also NEVER see how much their services are being billed for compared to what kind of hourly fee the may be paid —

    Many students who attend my workshops have to go back to clean up the legal relationship between their “landlord” or “employer” — particularly when it has become clear that the reason the relationship was so “vague” to begin with – is because the PT or Chiropractor are billing significantly MORE for a LMT’s services — then they are wiling to pay the LMT.

    Bottom line – you really can’t be a little bit of both … a little bit of an independent contractor and a little bit of an employee – and I wish massage schools did a much better job teaching this material to their students BEFORE they graduate and (once licensed) begin to negotiate some of the first contracts they will ever sign. ***This is particularly important because the age of the average massage student is so young now — and they are accepting employment (or independent contractor) for salaries that are WAY BELOW the industry standard —- mostly because they just don’t know where to get the information.

    I’m interested in this dialog —

  3. When I graduated from massage school 16 years ago most positions working for someone else were
    independent contractor positions. That was the way it was for several years afterward as well. I have not worked in massage for maybe six years, and I have been actively seeking a massage job for the last year and I see very few independent contractor job. I have been doing almost all of my searching on the internet, so I may be seeing the whole picture. Most of the jobs I see are pay for table hours, some pay by the hour worked not just table time. Many jobs are offering $15 to $20 per massage. The people who offer an hourly wage usually offer $25 to $40 an hour. There are occasional listings for independent contractor positions. I see more space for rent listing than contractor jobs

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