Classifying workers as W2 employees or 1099 independent contractors is a critical decision for businesses, with significant implications for both the company and the individual. This document explores the key differences between these classifications and the reasons why Overcomers Counseling has classified most clinicians as a W2.
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W2 Employees
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1099 Independent Contractors
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Description
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W2 employees are individuals who work for an employer and receive a regular wage. The employer withholds income taxes, Social Security, and Medicare taxes from the employee's paycheck. W2 employees are entitled to certain benefits and protections, including minimum wage, overtime pay, and unemployment insurance.
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1099 independent contractors are self-employed individuals who provide services to a business. They are responsible for paying their own income taxes, Social Security, and Medicare taxes. Independent contractors do not receive the same benefits and protections as W2 employees.
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Common Pay Structures (EXAMPLES)
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50% of collected fees, or $50/hr, or monthly salary
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~60 to 70% of collected session fees
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Differences
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Flexible Schedule
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✅
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✅
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Scheduling, Billing, Credentialing Support
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✅
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✅
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50% of Income Taxes Paid by Overcomers
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✅
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❌
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Workers Compensation
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✅
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❌
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Office Expenses
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✅
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❌
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Liability Insurance
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✅
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❌
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PTO & Paid Sick Leave
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✅
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❌
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Health Insurance (Medical, Dental, Vision, Life Insurance)
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✅
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❌
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EAP Services for Self-Care
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✅
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❌
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Bonuses:
Quarterly Bonus
End-of-Year Bonus
100+ Session Bonus
Google Review Bonus
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✅
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❌
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Professional Development Pay
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✅
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❌
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Attorney/Litigation Support
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✅
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❌
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Clinical Support
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✅
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❌
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Clinical Supervision of Licensure
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✅
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❌*
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*Exceptions can be made.
Colorado Counselors (W2) at Overcomers
While Overcomers provides the “best of both worlds” for therapists per Colorado Labor Laws, most therapists living in CO need to be classified as a W2. This is because:
- Control and Direction: Overcomers Counseling exercises a flexible degree of control over its therapists' work, setting client fees, and providing clinical supervision. This level of control is a characteristic of an employer-employee relationship. However, allowing therapists to set their own schedule does lean more into the 1099 model.
- Employee Benefits and Protections: Overcomers Counseling values its therapists and wants to provide them with the benefits and protections that come with W2 employment, such as health insurance, paid time off, and workers' compensation.
- Tax and Legal Compliance: Specific laws and regulations govern the classification of workers as W2 employees or 1099 contractors. Overcomers Counseling prioritizes compliance with these laws to avoid potential legal and financial risks.
- Company Culture: Overcomers Counseling fosters a collaborative and supportive work environment. The W2 model aligns with this culture by promoting a sense of belonging and shared purpose among therapists.
We can make exceptions to this rule on a case-by-case basis.
PMHNPs / RNs (1099) at Overcomers
While Overcomers Counseling primarily uses the W2 model, there are exceptions for PMHNPs or RNs who may be contracted as 1099 independent contractors if they meet specific criteria. These criteria include having a business name, an EIN, carrying their own business liability and professional liability insurance, having a workers' compensation policy, and marketing their services to other clients from other sources.
Outside Colorado Counselors (1099) at Overcomers
While Overcomers Counseling primarily uses the W2 model, there are exceptions for therapists that live outside of Colorado. These therapists may be contracted as 1099 independent contractors if they meet specific criteria. These criteria include having a business name, an EIN, carrying their own business liability and professional liability insurance, having a workers' compensation policy, and marketing their services to other clients from other sources.
The choice between W2 and 1099 classification is complex and depends on various factors, including the nature of the work, the level of control exercised by the company, and the desired relationship between the company and the worker. Overcomers Counseling's commitment to the W2 model for it’s Colorado based therapists reflects its dedication to providing quality mental health services while ensuring the well-being and legal protection of its therapists.