Increasingly, nurses are becoming more autonomous in their role of caring for patients and in healthcare management positions. The purpose of this article is to provide nurses and other allied healthcare professionals with the an increased knowledge of employment status in health care today.

BACKGROUND
Individuals frequently perform services for companies, non-profit organizations, individuals and others under a variety of different legal relationships. Whether the individual providing the services is classified as an employee is critical for a number of different purposes.

Under federal, state and local tax laws, "employers" (which may include for profit and not for profit companies, individuals, schools, government agencies and other entities) are required to deduct and withhold from their "employees" a percentage of wages to be paid to the taxing authorities to insure the payment of income taxes. Employers who fail to properly deduct and withhold the appropriate amounts and pay them over to the appropriate taxing authorities can be subject to a variety of penalties and interest charges for unpaid amounts. Employers are also obligated to withhold and deduct FICA (i.e., social security), unemployment and other taxes and charges. The Internal Revenue Service can, in certain cases, impose personal liability upon the "responsible party" at the employer that has failed to properly pay these taxes. Classification of an individual as an employee will also affect whether the hiring party is subject to federal and local wage and hour laws, employment discrimination and other laws.

Failure of an employer to properly classify a worker does not relieve the worker of his or her obligation to file an income tax return and pay the taxes owed. It makes no difference that the employer did not take and pay over the required income tax withholding.

Proper classification of an individual as an "employee" or "independent contractor" is critical. While the ultimate classification is a matter of common law principles as to whether the worker is subject to the control and direction of another only as to the result of his work (an independent contractor) and not as to the means (an employee), the Internal Revenue Service has established twenty factors it reviews to help determine the proper classification. The twenty factors are:

• Instructions to worker - A worker that is subject to instructions about when, where, and how to work is usually an employee.

• Training - An employee is more likely to be subject to training than an independent contractor.

• Integration into business operations - The greater the integration of a worker's services into the business, and thus the greater the business' control, tends to reflect an employment relationship.

• Requirement that services be personally performed - The greater the flexibility given the worker to designate who may perform services favors an independent contractor classification.

• Hiring, supervising, and paying for a worker's assistants - If the business provides assistants to the worker, as opposed to the worker providing his or her own assistants, this may indicate that the worker is an employee.

• Continuity of the relationship - Continuing, "on call" or similar long-term relationships, even if part-time, support classification as an employee.

• Setting the hours of work - An independent contractor usually sets his own work hours.

• Requirement of full-time work - Independent contractors, unlike employees, do not normally work full-time for one business and are free to work when and for whom they choose.

• Working on employer premises - If the business requires work to be performed at its offices, this indicates control over the worker (if the work could be done elsewhere).

• Setting the order or sequence of work - Independent contractors generally enjoy greater freedom to follow their own pattern of work routines and schedules.

• Requiring oral or written reports - Regularly required oral or written reports usually reflect an employee relationship.

• Paying worker by hour, week, or month - Employees are normally paid hourly, weekly, or monthly, while independent contractors are usually paid by the job or on a straight commission basis.

• Payment of worker's business and/or traveling expenses - This factor reflects a business' effort to control its expenses through an employee.

• Furnishing worker's tools and materials - Employees are normally provided necessary work tools and materials, independent contractors tend to furnish their own.

• Significant investment by worker - Employees are normally provided the requisite facilities by their employer, while independent contractors usually invest in and maintain their own work facilities.

• Realization of profit or loss by worker - A worker who can realize a profit or suffer a loss as a result of his services is generally an independent contractor. Of course, some employees may also realize a profit or suffer a loss, as a result of profit

• Sharing plans or investments in the company. In that case, the IRS will examine whether the worker's profit or loss opportunities are different from an employee's.

• Working for more than one business at a time - Employees usually work for only one company, while independent contractors frequently work for more than one business.

• Firm's right to discharge worker - An employer exercises control over its employee through the threat of dismissal, while independent contractors normally cannot be dismissed so long as they meet their contractual obligations.

• Worker's right to terminate relationship- Employees are usually entitled to quit at their leisure, while independent contractors generally must fulfill contractual obligations.

• Availability of worker's services to the general public - If the worker usually makes himself or herself available to the public to perform services, he or she is more likely an independent contractor.

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