Graduates and supervisees often ask about LMFT/LPC Associates being hired by private practices as W2s vs. 1099 (contractors).
Check out the comparative approach that the Texas Workforce Commission uses to determine if a worker needs to be classified as a W2 employee or 1099 contractor: https://efte.twc.texas.gov/appx_e_twc_ic_test.html.
In a nutshell
- An LMFT/LPC Associate working in a group practice or working for someone else (not in their own practice) is typically an employee under supervision and therefore cannot be treated as an independent contractor from a Texas Workforce perspective.
- Yes, your per hour rate may be higher if you are a 1099 contractor (vs a W2 employee). However, to truly calculate your net wages, you would need to see how much you need to pay in taxes to the IRS on a quarterly basis (typically 20-30% of revenue depending on how much you make), as well as how much you end up spending to purchase your own healthcare coverage, pay for your own vacation time, retirement etc.
- Your employer may engage in a form of tax evasion by not treating you as a W2 employee when you are not fully licensed.
- This W2 or 1099 classification is under the regulation and oversight of the Texas Workforce Commission and the Dept of Labor, not the Texas MFT Licensing Board.
Misclassification consequences:
- An LMFT/LPC Associate could also sue an employer who pays them as a 1099 contractor but treats them as a W2 employee.
- Practice owners who employ LMFT/LPC Associates as 1099 contractors but treat them as W2 employees (see linked document) may be liable to the Texas Workforce Commission (TWC). They might be fined if audited by TWC and asked to retrospectively pay the taxes they were supposed to pay for LMFT Associates as if they were W2.
- Below I share two more links to help you understand the potential misclassification of your work as an LMFT/LPC Associate if you are hired as a 1099 contractor.
https://katewalkertraining.com/private-practice-hiring-1099-vs-w2-lets-learn-the-law/
https://blog.dol.gov/2024/01/10/employee-or-independent-contractor-a-guide-to-the-new-rule
As you look for employment after graduation, please share these resources with future employers and ask them what their thoughts are. Negotiate a W2 position if possible.
Food for thought as you all explore our job market 🙂