Have you ever wondered what the difference between being an employee vs. independent contractor is—specifically in the rehab world?
If you’re like I was as a new grad, you don’t even know that being an independent contractor AND a physical therapist is a thing!
My first job out of school was working as a full-time, salaried employee in an outpatient clinic, largely because I didn’t know what my other options were. I was also too concerned about finding a full-time job fast so that I could start putting a dent in my student loans.
But the truth is, you don’t have to work as an employee in a clinic to make your ends meet as an OT/COTA, PT/PTA, or SLP!
Being a contractor is not limited to the trade fields (plumber, electrician, etc.) or to seasonal retail workers. In fact, it’s sometimes easier to find contract therapy jobs than it is to find employee therapy jobs!
Depending on your individual situation and what your career goals are, you might find that working as a contract therapist better suits you. This might especially be the case if you are looking to gradually transition out of direct patient care.
But before you make the jump, you should know what the pros and cons of both employee and contract jobs are so that you’re best prepared to succeed.
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What’s the difference between an employee vs. a physical therapy independent contractor?
Let’s look at the main differences between working as an employee vs. a contractor.
1) Steady hours/paycheck
When you’re a salaried employee, you are guaranteed to be paid a certain number of hours per week, regardless of the number of patients that you have seen (i.e. 40 hours/week for full-time, 20 hours/week for part-time, etc.).
Keep in mind that some employee roles are hourly, so you might wind up getting flexed off if you’re an hourly employee.
2) Easy taxes
As an employee, your employer pays half of your Social Security and Medicare taxes. They also withhold your half of these taxes from your paycheck for you so that you don’t have to keep track.
Every year before tax season, you are sent the W-2 form, which details how much money was withheld. This makes it much easier for you to file your taxes (and hope for a refund!).
3) Benefits package
This particular perk is usually given solely to those who are full-time employees. If you’re really lucky, you might get benefits as a part-time employee.
A benefits package typically includes PTO and group health insurance (which often comes with lower premiums and/or more inclusive healthcare benefits).
Depending on the company, the benefits package will also include a 401(k) package, as well as dental/vision packages.
1) Less flexibility in schedule
As an employee, you generally don’t get to set the hours that you work. If your employer demands that you work 10 am – 7 pm, 6 am – 3 pm, or 8 am to 7 pm, you’re working those hours!
If you have to re-arrange your schedule for a pre-approved reason (such as a doctor’s appointment), you typically have to request it a certain number of weeks in advance.
You also have less flexibility in when you’re allowed to schedule your PTO, based on the rules your employer puts in place. The lack of flexibility can make it difficult for you to make time for other activities that are important to you, such as family commitments, hobbies, or exploring non-clinical OT/PT/SLP roles.
2) Lower hourly rate
As a result of the benefits provided and the tax work done on your behalf, your hourly rate is lower than it would be if you worked as a contractor.
3) Additional responsibilities/expectations
This varies based on your employer and the setting you work in, but is more pertinent if you are a full-time employee.
- In an inpatient rehab facility, on top of seeing a full caseload, an additional job duty at the end of the workday might be creating the team schedule for the next day (because you are more familiar with each patient’s remaining therapy needs for the week than the part-time employees/contractors). This can eat into your documentation time at the end of the day (assuming you have any), causing you to spend more time outside of work catching up on it.
- In a private outpatient setting, there may be a requirement (or at least an expectation) that you assist the company in marketing activities either during or outside your regular hours.
- In a SNF, if the end of the week rolls around and there are still patients who need to be evaluated, the company can make you stay and do it (with or without extra pay).
On top of all of this…any time you spend outside of normal work hours catching up on documentation that you were unable to get done is all UNPAID.
The point is this: If you work as an employee, particularly a full-time employee, there are more job responsibilities placed on you which frequently lead to you working extra hours that you won’t get paid for.
[Editor’s note: This could be a good thing for a non-clinical career, though. Those extra tasks you pick up are often “offered” (delegated) first to full-time employees, which means your non-clinical resume is more padded with relevant experience when you look to land a non-clinical physical therapy or non-clinical occupational therapy job.]
Contractor (Independent Contractor)
1) A lot more flexibility!
When you are a contractor, you get to set your own hours and how many hours you work. While there may be a minimum number of hours you are asked to work per week or month, you definitely have more control over your schedule.
This allows you a lot more availability to do other things that interest you outside of work, which can help offset the amount of burnout you experience as a clinician.
It also allows you a lot more freedom to explore non-clinical career options, while still getting your bills paid as you explore.
2) Higher hourly rate
Because your services are being contracted by someone else, you also have more say in what your hourly rate is, which means you can set a higher hourly rate.
And, because the person contracting your services doesn’t have to pay any of your taxes or other benefits, they are more willing to pay the higher hourly rate you set.
3) Fewer added responsibilities
As a contract therapist, the expectations of the job generally are confined to patient care. You may be in more charge of scheduling the patients that are specifically on your schedule, but you won’t have to do scheduling for the whole team or clinic.
You also have more say in whether or not you take on additional patients at the end of the week that still need to be seen. AND, you won’t be expected to assist in marketing for the business (unless you choose to write that into your contract with the company).
Sadly, documentation time is still unpaid, so if you work a full-time load as a contractor, you will still likely take paperwork home with you. But, without all the extra job responsibilities that employees have, chances are the number of extra hours spent on work will be less overall.
1) Variable hours/paycheck
As a contractor, you are not guaranteed to be paid a certain number of hours a week. You are only paid for the “jobs” that get done. As a therapist, “jobs” equate to the number of patients you actually see that week.
So, if a patient cancels and you don’t have the chance to fill that time with a different patient, you don’t get paid for that time. This leads to more fluctuations in your paycheck each week/month.
2) Self-budgeting for taxes
As a contractor, you don’t have someone else withholding taxes out of each paycheck for you, which means you have to do it yourself. You also don’t have someone else paying half of your Medicare and Social Security taxes. So, if you aren’t careful to set aside money specifically for taxes, you will be in for a rude awakening every April when you get your bill from the IRS!
That being said, you can help offset how much you owe in taxes by monitoring the business expenses you have for being a contractor. These expenses could include supplies that you purchase yourself for the patients you work with, or the extra gas you pay for if you are a home health therapist.
You may be able to get tax deductions if your expenses reach a certain amount of your total income.
3) No benefits package
As a contract therapist, you don’t get any paid time off, no 401(k) assistance, and you are (generally) on your own for healthcare. You might be offered a monthly stipend to go towards your healthcare premium, if you contract with a generous company.
But unless you are on a group plan through a spouse’s employment, you will have to apply for an individual/family plan, which often has higher premiums.
How do you decide between employee vs. contractor?
If you’re like me, you are here because you want to know what ALL your options are for using your hard-earned therapy education.
Perhaps you are only a few years into your therapy career and are already suffering from major burnout working as a full-time clinician. You feel like no matter how much of your time and yourself you sacrifice, it’s never enough. You don’t know how you’re going to make it through another year in the clinic, let alone another 30 years.
Or maybe you’ve been a clinician for the last 30 years, and you no longer enjoy clinical care the way you did when you first started. Between the constant healthcare changes, the constraints being placed on you by the “business” side of clinical care, and the fact that your body isn’t as young as it used to be, you’re wondering what else you can do to finish your career on a high note before you retire.
Maybe you’re somewhere in between. You aren’t yet ready to leave clinical care entirely, but you can see that you may not want to do it forever. So, you want to know if you can keep one foot in the clinical door while you dip your toes into something new and different, thereby keeping things exciting without taking a huge plunge.
Regardless of where you are on the spectrum, the good news is this: you have OPTIONS!
If you’re considering a transition out of clinical care, you don’t necessarily have to go straight from a full-time employee clinical role to a full-time non-clinical role in order to expand your horizons.
In fact, you might find bridging the gap with a clinical contractor job gives you more of the flexibility you need to investigate what non-clinical option is best for you!
How can I use my time most effectively to explore non-clinical roles?
You might find that working as an employee is a necessity for you because you need the benefits or steady paycheck. If that’s the case, try to build your non-clinical skills whenever possible! If you’re able to work contract jobs, use your non-working hours wisely! Set up informational interviews with inspiring non-clinical rehab professionals, and be sure to attend plenty of networking events so you can get your name out there!
Editor’s note: If you’re considering going into a 1099 (independent contractor) role at some point, definitely explore ITA: Independent Therapist Alliance. This is an interdisciplinary platform created by a non-clinical OT named Connie Sakellaropoulos (and her two co-founders). You can learn about taxes, liability insurance, billing, documentation, and all sorts of other must-know information for 1099 therapy professionals!
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No matter where you are in your journey, keep your chin up and be sure you consider ALL the avenues that are available to you to get where you want to be!
17 thoughts on “Employee vs. Physical Therapy Independent Contractor”
Thank you so much for this information. It’s as if you read my mind! 4yrs into full-time work I’m feeling the burn out and have been looking into contract home health, but was really confused! This article has helped answer some questions, thank you. Do you know of any articles/spread sheets/info anywhere that can help us work out full-time hourly vs contract hourly rate, and specifically how to work out how much money to set aside for taxes, please? Thx.
Thanks for the comment! I am so glad you enjoyed the article. I’m not familiar with any spreadsheets for tax planning offhand, but I will do some digging and post them in these comments if/when I find ones that look like they’re helpful 🙂 Thanks again for your kind words!
I recommend as a safe option check the tax bracket on the IRS website for your potential salary. Set aside that percentage in a separate account to ensure you have the funds to make quarterly or annual payments.
Hi Eric! That is very prudent 🙂 Thank you for sharing that…it’s important info to have! Cheers!
How can a therapy assistant qualify as an independent contractor, when they have to be supervised? Definition of 1099 seems to directly contradict that being possible
This is a good question! I’m going to ask my good friends at ITA Excels to weigh in! Stay tuned 🙂
Hi Clint – I’m one of Meredith’s friends at ITA and wanted to reply. The short answer is “yes” absolutely assistants can work as 1099 contractors! Here’s why. Supervision requirements apply whether the work is done by an employee, PRN employee or IC. They are based on clinical practice guidelines and state practice acts. The classification of an Independent Contractor is separately regulated and defined by the IRS and relates to how the worker is paid and the terms of how the work is performed. So… licensure defines supervision but we can decide whether we meet those supervision requirements through employment, contract or freelance! Let me know if you have any questions – we are here to help!
Thanks for the article. Im in the exact predicament as you described in your article. Im thinking of being a part time Independent contractor. Im a full time OP clinic PT. But don’t know how to start. What licenses i need to get and how to het accredited with insurance companies. Im here in Sunny Florida as well.
Ty, that was informative.
Would appreciate more information on PTAs and COTAs pursuing this type of career.
Very insightful article. Thank you for sharing!
Thank you so much, Elana!
I would like to get as much info as possible about this. As for as how to arrange it anyway. I’ve been a PT for ~ 11 yrs now and this idea has always appealed to me.
Thank you so much for the great information.I have about 5 years experience as a Independent contractor in a clinical role and the pros and cons of this article are very on point. I only hope to get more into the business side , with marketing , sales or recruiting. I am also hoping to do some contracting work in a related marketing or sales role. I hope to use my skills from 15 years of therapy experience in the clinic to help out.
Hi Jennifer! Thank you so much for your comment! There is a new website launching soon that’s designed for independent therapists looking to build business skills! I’ll be announcing it soon in my networking groups, etc., because I really believe in its mission and want to spread the word. Stay tuned! If you’re not in my networking group (it’s free), here’s a link! Keep in touch! – Meredith
One other option to consider is that if one is a full-time contractor, to look at incorporating. As an individual working on 1099, you are taxed at the personal rate on the entire amount, whereas if your corporation is what gets paid, it’s taxed at the corporate rate which is considerably less; plus you get to pay your job-related expenses directly out of the corp and only pay personal taxes on what you take as a draw to cover what you can’t justify as a corporate expense; so you might end up in a much lower tax bracket because your personal income is only what you take as draw (which could be good to put you in a lower income bracket for health insurance, but may not be so good if you are trying to get a mortgage);
Anyway, this may or may not work for you, but Is say it is worth looking into and seeing if it does – meaning speak to your financial person and see based on your situation if it makes sense to do or not
Hi Chris! Thank you so much for sharing your tip here! I definitely agree that asking a financial expert is best, but it’s great to know there are creative options like this one on the table! Cheers 🙂
Your article was just what I was looking for. I couldn’t put into words what I was feeling. I am an PTA and OTA and would like to be a freelancer. Do you know how I would do this in Ontario, Canada?