Massage Therapist Job Info: Misclassification of Contractors

In the massage therapy profession, the majority of jobs that are available are employee positions. It is very, very, very, very rare that a massage therapist would be correctly classified as as independent contractor. This makes for some great confusion for many. It is a very complex process to figure out the exact specifications which is why an employer will need to hire an attorney and accountant to set things up correctly.

Why does this matter?

Many massage therapists are being taken advantage of when employers categorize knowingly or unknowingly classify workers who should be employees as independent contractors. They ask them to do things like stay in the office when there are no clients, attend meetings, work for free and other things that are really what an employee should be asked to do.

The many massage therapists who claim they prefer the IC position as they make more per hour, may lose out when it comes time to collect unemployment or collect social security. The employer will pay into these systems for employees but NOT contractors.

Misclassification of workers can result in penalties for unpaid unemployment benefits, the payment of worker’s compensation benefits, and health insurance which could put the business owner out of business.

Defining Independent Contractors

The term “independent contractor” refers to workers who, as a matter of economic reality, are not economically dependent on their employer for work and are in business for themselves. Such workers play an important role in the economy and are commonly referred to by different names, including independent contractor, self-employed, and freelancer. ~Employee or Independent Contractor Classification Under the Fair Labor Standards Act

An independent contractor is someone who is self employed and runs their own business. You don’t just get to say you want to be an IC and you are magically an IC. Just because you pay your own taxes and buy your own sheets does not make you an IC. A true IC position would advertise that you will be covering massage appointments from a specified time to a specified time, during a specific time frame. You would bid on the amount you want to be paid and you will send an invoice to the business owner after the work is completed or at agreed upon times.

The FSLA act uses 5 distinct factors in determining independent contractor status:

1. The worker’s control over the work.
2. The worker’s opportunity for profit or loss.
3. The amount of skill required for the work.
4. The degree of permanence of the working relationship.
5. Whether the work is part of an integrated unit of production.

Two of those factors—the nature and degree of the worker’s control over the work and the worker’s opportunity for profit or loss are most important in the analysis than any others.

The Department of Labor has created a series of 5 questions with the initial two carrying more substantial weight. Depending on your answer to the first two, will For each of these queries, you’ll find it necessary to .

If both Question #1 and Question #2 yield affirmative responses, the employment status is most likely an Independent Contractor.

If both Question #1 and Question #2 receive negative responses, the employment status is most likely Employee.

In the event of mixed responses, where one is affirmative and the other is negative, additional considerations from the subsequent questions come into play.

1. Does the worker exert substantial control over critical aspects of their work?
   • Does the worker establish their own work schedule?
   • Can the worker accept or decline job assignments?
   • Does the worker determine their attire, with safety protocols adhered to as necessary?
   • Can the worker tailor their services based on client preferences?
   • Is the worker obligated to follow specific client interaction protocols?
2. Does the worker have the potential for profit or exposure to financial risk contingent on their initiative, expertise, business acumen, and investments?
   a. Does the worker’s skill level impact their earning potential?
   • What is the worker’s level of training and certification? Do they secure repeat clients? Have they received any customer complaints? Are there client reviews pertaining to the worker’s services?
   b. Does the worker’s initiative affect their earning capacity?
   • Do they contribute to customer acquisition for the business, either for themselves or generally? How many clients have they brought to the business through their efforts? Do they engage in marketing and self-promotion through various channels like social media, their business website, or business cards? What role do they play in managing customer relations? Do they assist in appointment scheduling and confirmation? Do they maintain their appointment schedule? Do they send appointment reminders? Do they follow up with clients post-treatment? Do they handle client paperwork and maintain up-to-date client records?
   c. Does the worker demonstrate business acumen?
   • Do they comprehend the reasons behind treatment fees and payment structures? Are they aware of the business’s profit margins? Can they identify their own costs if they were to provide services independently? Have they offered thoughtful input and suggestions? Have they provided ideas to reduce costs or boost revenue? Have they contributed to marketing strategies? Have they made referrals or forged partnerships? Do they provide high-quality customer service, and how is this assessed? Have they demonstrated managerial skills, such as mentoring less experienced colleagues or assisting with the implementation of online booking systems and the creation of new treatment packages based on customer demands?
   d. Does the worker invest in facilities and equipment?
   • Do they cover some or all of the direct supply expenses, such as lotion and laundry detergent, and how are these costs determined?
   • Are they responsible for setting up and dismantling treatment spaces?
   • Do they manage their own bookings, or does the business provide reception services?
   • If reception services are provided, does the worker contribute to associated expenses, and how are these costs determined?
   • Do they pay rent to the business, whether as a flat rate or a percentage?
   • Has a breakdown of these costs been prepared and shared with the worker?
   • Does the worker’s payment encompass supplies, rent, utilities, janitorial services, marketing, support staff, bank fees, or other expenses?
   • Do they grasp the advantages and challenges of contributing toward these expenses while working in tandem with the business?
   • Is the worker’s compensation commensurate with the time, effort, and costs they invest?
   • If they contribute financially, does their payment accurately cover their expenses?
   • Does their profit margin align with that of the business?
   • Do they adhere to the business’s COVID protocols?
   • Do they play a role in developing these protocols?
   • Do they assist the business in staying updated with state directives?
   • Are they actively engaged in sanitation efforts?

If both questions received unequivocal affirmative responses, you may proceed with drafting an agreement that reflects Independent Contractor status. I strongly recommend crafting a comprehensive agreement that explicitly outlines the specific factors classifying them as Independent Contractors.

If both questions yielded definitively negative responses, the employment status leans towards Employee.

To be an independent contractor massage therapy position, it would have to fulfill these requirements:

• First, it would have to be a business that does NOT specialize in massage like a dentist or doctor.
• An IC will have a totally separate business name.
• IC’s set their own fees they charge clients and how much they business will pay them.
• You will bill the business you are subcontracting from.
• You need to have other work from other businesses
• You need to take time off every year and NOT work for the business to show you are independent of that business.

“Economic dependence” is best understood in terms of what it is not. The phrase excludes individuals who, as a matter of economic reality, are in business for themselves. Such individuals work for themselves rather than at the sufferance or permission of a potential employer, see 29 U.S.C. 203(g), and thus are not dependent on that potential employer for work. Section 795.105(b) therefore recognizes the principle that, as a matter of economic reality, workers who are in business for themselves with respect to work being performed are independent contractors for that work. ~Independent Contractor Status Under the Fair Labor Standards Act

Key Resources

Fact Sheet 13: Employment Relationship Under the Fair Labor Standards Act (FLSA) Revised March 2022

Independent Contractor Status Under the Fair Labor Standards Act A Proposed Rule by the Wage and Hour Division on 09/25/2020

Independent Contractor (Self-Employed) or Employee? (IRS)

US Dept of Labor: Wages and Hours (WHD )Wages and the Fair Labor Standards Act Misclassification of Employees as Independent Contractors

Employers who knowingly and voluntarily misclassify employees could face a fine of $5,000 to $25,000 for each willful misclassification.