Employee or Independent Contractor?


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Employee or Independent Contractor?

  1. 1. Module Twenty-Five Employee or Independent Contractor?
  2. 2. APNs as Employees <ul><li>Employer more likely to be liable for alleged acts of negligence under a doctrine called respondeat superior </li></ul><ul><li>as long as the acts of the employee are within the scope of employment. </li></ul>
  3. 3. Employees <ul><li>Have income, social security and Medicare taxes withheld from their paychecks. The employer is also responsible for paying unemployment taxes. Employers also issue a W-2 statement at the end of the year showing the total amount of taxes that have been withheld. </li></ul>
  4. 4. Employees <ul><li>Employees may deduct unreimbursed business expenses on their tax returns if deductions are itemized and those unreimbursed expenses total more than 2 percent of the employee’s adjusted gross income. </li></ul>
  5. 5. Independent Contractors <ul><li>Organizations with whom independent contractor works issue a 1099 form showing the total amount of money that has been paid over the course of the year. Independent contractor is responsible for paying his or her income and self-employment taxes </li></ul><ul><li>Business expenses are reported annually on income tax return and do not have to amount to any specific percentage of the independent contractor’s adjusted gross income </li></ul>
  6. 6. IRS Criteria for Independent Contractor <ul><li>Receives less extensive instructions about what should be done, but not how it is to be done </li></ul><ul><li>Individual has made a significant, substantive investment in the work that is being done </li></ul><ul><li>Individual is not reimbursed for some or all of business expenses </li></ul><ul><li>Individual realizes financial profits and losses </li></ul><ul><li>Individual does not receive benefits extended to employees </li></ul>
  7. 7. IRS Employer-Employee Indicators <ul><li>Organization provides extensive instructions on how work is to be done </li></ul><ul><li>Organization provides education and training regarding how certain policies, procedures, protocols, or technical skills are to be executed </li></ul><ul><li>Organization extends insurance, retirement, paid leave, or other benefits </li></ul>
  8. 8. At Will Employees <ul><li>Individuals working without a contract guaranteeing a specific position for a definite time at a designated pay rate. </li></ul><ul><li>At will employees can no longer be terminated for no cause and can seek retribution for wrongful termination </li></ul>
  9. 9. Implied Contracts <ul><li>Courts have occasionally sided with employees if an implied contract existed. Employer manuals, policies, past practices, promotions, commendations can be used as evidence that implied contracts exist. </li></ul>
  10. 10. Contracts <ul><li>These are promises or sets of promises that outline the rights and responsibilities of the parties </li></ul><ul><li>Breach is a break in that promise </li></ul><ul><li>Express contracts: promises agreed to in writing or verbally </li></ul><ul><li>Implied contracts: promises that are formed by the conduct of the parties </li></ul><ul><li>Quasi-contracts: Not considered contracts but are used to avoid unjust enrichment at the expense of the other parties. </li></ul><ul><li>Void contract: A contract that has been created without any legal force or effect. </li></ul>
  11. 11. Mutual Assent <ul><li>Mutual Assent is achieved when one party makes an offer and the other party unequivocally accepts the offer. </li></ul><ul><li>Unilateral contract: Makes acceptance possible by performing a specific act. </li></ul><ul><li>Bilateral contract: There is an exchange of promises </li></ul>
  12. 12. Contracts <ul><li>Execute them all in writing!! </li></ul>
  13. 13. Minimal Terms of Contract <ul><li>Effective date </li></ul><ul><li>Relationship and responsibilities of parties </li></ul><ul><li>Confidentiality </li></ul><ul><li>Conflict of interest </li></ul><ul><li>Compensation </li></ul><ul><li>Indemnification and subrogation </li></ul><ul><li>Dispute resolution </li></ul><ul><li>Term, renewal and termination </li></ul><ul><li>Remedies for breach </li></ul><ul><li>Notices </li></ul><ul><li>Modifying and assigning the agreement </li></ul><ul><li>Severability </li></ul><ul><li>Conflict of Laws </li></ul><ul><li>Legal authority </li></ul><ul><li>Force majeure </li></ul><ul><li>Covenant not to compete </li></ul><ul><li>Signatures </li></ul>
  14. 14. APN Contracts <ul><li>The APN agrees to provide services that are consistent with the scope of practice articulated in the nurse practice act in a particular state. </li></ul>
  15. 15. APNs as Independent Contractors <ul><li>Need to ensure that they are: </li></ul><ul><li>Properly credentialed </li></ul><ul><li>Have adequate liability coverage </li></ul><ul><li>Perform services within professional practice and ethical standards as well as local, state, and federal regulations, statutes and case law. </li></ul>
  16. 16. Confidentiality <ul><li>Some confidentiality provisions state that confidential, proprietary, and trade secret information not be disclosed to third parties. It is important to get the issues clarified so that potential breaches of confidentiality are minimized. </li></ul>
  17. 17. Conflict of Interest <ul><li>Used to ensure that both parties are acting in the best interest of the agreement and toward the mutual success of the relationship. </li></ul>
  18. 18. Compensation <ul><li>Delineates payment that will be rendered once agreed-to-services are provided. </li></ul><ul><li>With bonus payments it is important to decide whether they are coming from profit that is generated from services provided by APN, the productivity of the APN, the quality of care of the APN or some combination thereof. </li></ul><ul><li>Be sure bonus payments are reasonable, regularly audited and do not benefit one party over another. </li></ul>
  19. 19. Indemnification <ul><li>This is a promise extended from one party to another to hold each other harmless for the wrongdoing of the other party. </li></ul>
  20. 20. Subrogation <ul><li>Permits the substitution of one party for another. Both parties should have a right to subrogation. </li></ul>
  21. 21. Dispute Resolution <ul><li>When parties disagree there should be a process by which they resolve their differences. Sometimes this involves mediation or arbitration as an alternative dispute mechanism. The parties need to state if this arbitration is binding. This process must be concluded prior to filing a cause of action in court. </li></ul>
  22. 22. Renewal Clauses <ul><li>Typically require parties to notify the other party within a certain period of time if they do not wish to renew the contract. </li></ul><ul><li>Termination clauses usually have a time period of 60-90 days. Contracts may be terminated with or without cause and severance pay may or may not be incorporated. </li></ul>
  23. 23. Termination <ul><li>APNs are typically terminated for: </li></ul><ul><li>Commission of a crime </li></ul><ul><li>Breach of duty </li></ul><ul><li>Acts that compromise organization in the community </li></ul>
  24. 24. Assigning the Agreement <ul><li>Typically provisions prohibit the assignment of the contract from one of the parties to another party. </li></ul><ul><li>When assignment is permitted, one party may pass the contract on to a third party. </li></ul>
  25. 25. Severability Clauses <ul><li>Keep noncontested and enforceable provisions of the written agreement in effect. </li></ul>
  26. 26. Conflict of Laws <ul><li>Identifies jurisdiction within which the agreement was executed as well as the jurisdiction that governs contractual disputes that may arise. </li></ul>
  27. 27. Force Majeure <ul><li>Ensures that the contract will not be considered to be breached in situations in which an act of God prohibits one party from performing in accordance with the terms of the agreement. </li></ul>
  28. 28. Convenant Not to Compete <ul><li>Limit an APN’s ability to enter into any ventures that would compete with the interests of the organization. </li></ul>
  29. 29. Legal Authority <ul><li>Parties have the authority to enter into the arrangement </li></ul>
  30. 30. Other Considerations <ul><li>Proprietary Rights: Who owns tangible and intangible property? </li></ul><ul><li>Incentives: Do not enter into incentive agreements that deny or ration care such as limitations on number of diagnostic tests or drugs prescribed. </li></ul>