Q: A cardiology fellow at my hospital is very good, and I would like to bring him into my practice when he completes training. However, I want to keep my options open, and he is unsure whether he will live in the area, so we agreed that he would start as an independent contractor. I am confused about where the line is drawn between that and an employee. I understand that my ability to control his work is critical, but since it is my practice, wouldn’t I have that by definition? We will both work in the office 3 days a week, alone 1 day a week, and split on-calls. He will be able to take 1 month of unpaid vacation, but will not receive any benefits and must purchase his own malpractice coverage (the cost of which I will factor into his compensation).
A: You are correct that the ability to control what a worker does is the threshold issue, but what is important is where that control is exerted.
A worker is considered an independent contractor if the person paying for the work controls only the result of the work but not how it is carried out. The fact that he will work alone 1 day a week and when he is on-call shows that you are not controlling how he practices medicine. Employers also typically provide benefits and a paid vacation, but you are not.
However, your consideration of his insurance cost could be an issue. If you are simply making sure to pay him well because you know that he will have a large expense, then that should pass muster; it would be no different than, say, taking into account the housing costs in your area. But if you are actually funneling him the money to pay for his insurance, then you are acting like an employer, which normally provides this coverage.
If you are unsure of his status, file a form SS-8 with the IRS, and they will determine his status. But submit the form as soon as possible because it may take several months to receive an answer.