Employee vs. Independent Contractor

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I have successfully run my own private practice for about 7 years. Now my lease is expiring and for many reasons I've accepted an offer to work for a salon in the same neighborhood. I asked if I could be treated as an independent contractor (IC / 1099) and the owner of the salon agreed, but I'm not sure what the best options are. Here's the little I do know:

Either way, they will charge $70 for an hour and I will get 50%. I am the only MT. I pay for nothing (supplies, laundry, utilities, etc.) although I brought my equipment and my many clients with me. I do not collect payment nor do the scheduling. I live nearby so I don't have to sit around the salon, just be "on call" when I have no clients scheduled. I do not have access to the building when the salon is closed, and I used to do a lot of Sunday or evening massage work.

Now, one of the salon employees (a manicurist) told me that she was an IC in another state for many years and that if I am regarded as an IC, the salon cannot, by law, collect my payments, but that clients should be paying me directly and I should be reimbursing the salon. This is one of the headaches I'm glad to be rid of, so I hope she's wrong.

Aside from that, I really don't know if I might be better off becoming an employee (the salon manager said it would "make things easier"); I honestly don't know what the difference would be, besides having them withhold income tax. Some people have told me that as an employee I would be required to sit there throughout my agreed-on shift and collect minimum wage during whatever time I am not with a client.

Any suggestions? Anecdotes?

Barbara
 


A couple things I know about this are that
1. An IC sets her own hours, but an employee must work the hours assigned
2.An IC sets dress code, an employee must wear what management wants
3. An IC decides what type of treatment or routine she uses; an employee must follow management's directives (think, signature massage)
4. An IC provides supplies and is responsible for laundering; an employee does not provide any supplies and may actually DO the laundering, but with the salon's machines and soaps etc.

It sounds almost like you aren't really one or the other. And WHY would you take such a drastic ay cut? (have you crunched the numbers to see if this setup is at least comparable to what you are leaving?

Ella
 
Fair percentage? was: IC vs Employee

Well, your info jibes with mine, generally, but they do wash the sheets at the salon; mine are mixed in with those of the estheticians, etc.

Rents in my area are extraordinarily high. I was paying nearly $800 after utilities for two basement rooms in an office park, and also in my county, massage is tightly restricted to certain areas. You MUST rent a space which is inspected and considered "suitable" even if you only have an outcall service! And massagin out of one's home is strictly forbidden and cause to lose one's state license.

I think that 50% plus tips is actually very fair. I come and go as I please, set my own schedule and do my own brand of massage -- mostly therapeutic with a few spa treatments thrown in, as well as Bowen Therapy. I no longer have to purchase the expensive creams or oils that I prefer, but the salon orders whatever I request. I have a sink and shower right IN my treatment room, which is a huge plus for me.

The only think I can't control is the music, as they have piped-in spa music on satellite radio.

What do you consider a fair perceneforum.xxxe?

bzb
 


That sounds like a good deal to me - especially taking into account that you are losing an $800 per month rent & utilities!

I have worked as an IC and never collected the money. The business set the fees and collected the money (as part of my contract), subtracted their % and reimbursed me on a bi-monthly schedule.

IC/employee status is not cut and dried, which is the reason for so much confusion. There is a list of things the IRS will look for to determine if one is truly an IC, but they do not require that *everything* on the list be the case at the same time. The contract may determine some specific requirements that both parties set forth. Having an actual contract is a huge indicator, which is not the same thing as signing that one read the employee handbook. From what you've said, you should have no trouble with being considered an IC.
 


Ella Menneau said:
A couple things I know about this are that
1. An IC sets her own hours, but an employee must work the hours assigned
But you can contract certain hours to be available
Ella Menneau said:
2.An IC sets dress code, an employee must wear what management wants
Again, you can agree to certain standards, including wearing logo apparel
Ella Menneau said:
3. An IC decides what type of treatment or routine she uses; an employee must follow management's directives (think, signature massage)
But you can be directed which products to use if they are essential to the treatment being performed.
Ella Menneau said:
4. An IC provides supplies and is responsible for laundering; an employee does not provide any supplies and may actually DO the laundering, but with the salon's machines and soaps etc.
Not necessarily. The spa can provide them so long as it stipulates a fee differential for doing so, then it become rent or purchase of supplies.

Ella Menneau said:
And WHY would you take such a drastic pay cut? .

Why do you assume there is a pay cut involved? Pay = Volume * Rate - Expenses. You only know the rate of the proposed job and know none of the factors of her current situation.
 
Employee vs. Independent Contractor

mommassage said:
Now, one of the salon employees (a manicurist) told me that she was an IC in another state for many years and that if I am regarded as an IC, the salon cannot, by law, collect my payments, but that clients should be paying me directly and I should be reimbursing the salon.

She is 100% wrong.

mommassage said:
Aside from that, I really don't know if I might be better off becoming an employee (the salon manager said it would "make things easier"); I honestly don't know what the difference would be, besides having them withhold income tax. Some people have told me that as an employee I would be required to sit there throughout my agreed-on shift and collect minimum wage during whatever time I am not with a client.

If you are an employee, you will probably be paid a lower %. But at the end of the day/quarter/year, it will work out to be very similar financially, so don't be put off if being an employee pays 5% less.

If you do not have significant self employment income (private clients) then it will probably be easier for you as well to be an employee. Just put your W-2 on your 1040 come tax time. If you are IC, you are self employed, should be filing quarterly taxes with both the state and the feds and have to track all of your business expenses, deductions etc. If this is your only source of income, you should probably be an Employee.

Employees may also have benefits of some kind. At the very least, as an employee you have Workers Comp insurance to protect from workplace injury. This is at no cost to you.

As an employee, you may be required to be on-site during scheduled hours. However, employers are NOT required to pay you minimum wage or anything at all for your time on site. They can even stipulate that your % of service covers your duties during non-massage time.

Also keep in mind, Minimum Wage is not always minimum wage. In many states, employees in heavily tipped industries (usually more than $30 per month in income coming from tips) there is a lower minimum wage than the state or federal standard. If I am not mistaken, in GA, there is NO minimum wage for highly tipped industries.
 


The owner's desire to have you be an employee could be a bargaining chip for you. "Easier" for them may be just to have their bookwork/taxes the same for everyone in the place. I can understand that! You could agree to go the employee route on the conditions that the rate doesn't change (or stipulate how low you are willing to go) and on the condition that you do not have to be on site unless you have appointments, or that if you are on site, you are paid a base pay during those hours. I would not be willing to sit around without additional pay, but for some people that works okay. It probably depends on what else you have going on. Child care costs far too much for that type of arrangement, but for those folks who love to hang out at work off the clock and just visit with their friends, it's very acceptable. Negotiating is worth a shot. If you don't like the employee terms, then stick to your guns and be an IC. You know how to do the taxes!
 


Ella Menneau said:
Just callin' it as I see it.

I think that the point that R&R was trying to make was that since you didn't have all of the facts such as how much overhead she had, what expenses she was paying and such as that, that it is impossible to know how much or even IF she was taking a paycut.

There are times and circumstances (and I know that this is heresy to some here) where someone is just as well off financially when working for someone else. In one business class that I took we were taught that IF someone does everything properly (taxes, insurance.......) then by the time that they pay all of their expenses (rent, utilities, advertising and so on) they should expect to clear about 55% profit. So, if one has a setup where they are an employee or IC making 50% and having no expenses then they are in the same ballpark profit as someone who is self-employed. Perhaps even better seeing how the employer has to pay for both portions of their SS taxes.

Angie
 


moogie303 said:
There are times and circumstances (and I know that this is heresy to some here) where someone is just as well off financially when working for someone else.

Heresy, indeed!

No one works for someone else if they could do better on their own. This is not to say all non-indies are failures or incapable of succeeding, it just means that for whatever reasons - it can be 1 or 100 - it just is not for the better.

Similarly, PT jobs or 2nd jobs won't earn you as much the primary work. If it did you would flop the jobs! That is not to say a PT MT can't make $70 an hour vs. $10 at some desk job. I am talking about total income. If you could make more as a FT MT, then you would!

moogie303 said:
In one business class that I took we were taught that IF someone does everything properly (taxes, insurance.......) then by the time that they pay all of their expenses (rent, utilities, advertising and so on) they should expect to clear about 55% profit.

On a good month. But profit is different than cash flow, and it is bad cash flow that kills most small businesses, not low profits.

moogie303 said:
Perhaps even better seeing how the employer has to pay for both portions of their SS taxes.

Payroll taxes - paid by the employer only - add about 10% to base labor costs. More in tax disasters like IL where state UI alone is 5%.

Throw in a week's paid vacation (2%), a bare bones HMO (7%), worker's comp (2-5%), comping/discounting unhappy clients due to cancellations/bad service (1-2%), and promotional discounts to get more clients for you to work on, and it is no wonder after tax profitablilty of even the most successful companies is in the low teens.
 


This is great advice, everyone. Thanks so much!

PS: I was very successful independently for several years and worked as much as I wanted to. My circumstances have changed and I'm glad to give over much of the business side of my career to someone else. If the law allowed me to work out of my house (as 100s of local MTs continue to do, illegally) I would jump on it, but paying the kind of rent I was paying, I'm definitely going to be making a profit by taking a 50% pay "cut".
 
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    🎉🍒JENNY’S SPA🎉🍒 ✅5170 DUNDAS STREET WEST✅ 👌ETOBICOKE ONTARIO M9A 1C4👌 ☎️( 647-893-5196)☎️Call or Text ☎️( 437-888-3759)☎️Call Only (ETOBICOKE) OPEN 10am to 9pm MONDAY to SUNDAY 🔥✅GRAND OPENING💯NEW GIRLS EVERYDAY🔥EXCELLENT MASSAGE + SERVICE QUEENS NOW AVAILABLE AT JENNY’S SPA FOR ALL YOUR MASSAGE AND SPECIAL EXTRA NEEDS🔥💯😘🔥❤️👌 🔥TWO BEAUTIFUL NEW YOUNG ASIAN GIRLS EVERYDAY🔥 💯REAL PICTURES OF ATTENDANTS💯 🔥TODAY’s ROSTER INCLUDES: Grace🔥😘A new alluring and skilled Asi
  39. Moneylee:
    All season wellness center : New Young girl big breasted beautiful buttocks charming temperament big boobs Gold ,young girl pretty face nice figure Thai deep massage Mia,Young girl big breasted beautiful buttocks charming temperament big boobs Vivi ,Young girl Big breasted saucy naughty Ella ,Enchanting sexy petite deep massage Sherry 🏠address: #5-30 Rambler dr Brampton ,Ontario L6W 1E2☎️4376655510 👄👄🦵🦵🈵🈵👅👅
  40. Moneylee:
    Full season wellness center: New Young girl big breasted beautiful buttocks charming temperament big boobs Ivy , Young girl pretty face big boobs nice figure deep massage Jessica ,Young girl Big-breasted big Big boobs big butts May, Young beautiful face sexy body and good deep massage Maggie,Enchanting sexy petite deep massage Mary . 🏠 2560 Shepard Ave Mississauga unit 1 ☎️ 4379857899 👄👄🦵🦵🈵🈵👅👅
  41. hiyamickey:
    We have 11 girls working at Reinella wellness, special: 45 minutes $45 , 60 minutes $55 90 minutes $85, 2 hours $100 , ☎️: 905-851-4888 Address: 6262 hwy7 unit #1 Vaughan
  42. AliceSpa:
    FRIDAY at 𝗔𝗟𝗜𝗖𝗘 𝗦𝗣𝗔, 4915 Steeles Ave. E, Scarborough 𝟰𝟭𝟲-𝟮𝟵𝟴-𝟬𝟴𝟵𝟴. Alice spa has 4 very hot girls today. Open 10am to 9pm: AMY (10am – 9pm) is a young, petite short & slim Taiwanese, former dance instructor, firm natural B Cups, pretty face, firm natural titis, super play good, bbbj, cim, rim, dfk, all services. ANNA (1pm-9pm) : is a hot & sexy curvy girl from Vietnam with C Cups
  43. HollywoodSpa:
    Friday at 🎭𝗛𝗢𝗟𝗟𝗬𝗪𝗢𝗢𝗗 𝗦𝗣𝗔🎭, 4578 Yonge St, Unit 100, North York, ON: TRACY & MICHICO. ☎416-222-5554☎ When you visit 🎭Hollywood Spa🎭, you will be treated with tender care and your visit will be a fulfilling one. Nice Massage, Young Pretty Girls. We have Chinese, Japanese, Korean & other attendants. TRACY is a slim, taller & pretty lady, very friendly with an extensive menu. MICHICO is a young slim, beautiful
  44. Soul Relax Spa:
    ✨ Looking for a relaxing escape? ✅ Meet🌸Mei🌸Kim🌸TinaCall us today for the best treatment and service experience. Click on our Username and FOLLOW US for updates ! Call now ☎ 289 - 298 - 5662☎️ Your ultimate relaxation awaits! ✨
  45. ForeverWarden:
    Friday at 🫦❤️🔴🟥♾️𝓕𝓞𝓡𝓔𝓥𝓔𝓡 𝓢𝓟𝓐♾️🟥🔴❤️🫦 2190 Warden Ave, Unit 201, Scarborough 𝟰𝟭𝟲-𝟴𝟬𝟬-𝟳𝟴𝟴𝟳 : Lisa, Mia & Sasa. Lisa is a young, slim, friendly & very beautiful Vietnamese beauty with a nice body, nice 34D boobs, slim waist, impressive booty, nice massage, great services. Mia is a Caribbean service queen temptress with incredible curves & very friendly attitude. She is able to bbbj like a queen
  46. HolidaySpa:
    Friday at 🌴😎🌅𝓗𝓸𝓵𝓲𝓭𝓪𝔂 𝓢𝓹𝓪🌅😎🌴3517 Kennedy Rd, Unit 4, Scarborough ☎️𝟰𝟯𝟳-𝟮𝟰𝟳-𝟭𝟭𝟵𝟵☎️: LINA & CINDY. LINA is very well known for her great services and her impressive shapely ass. Come and see why! You will be glad you did. CINDY is a slim & incredibly sexy lady with a smile that will melt your heart, & an ass that will fire up your spirit. Her services are among the best!
  47. SugarLoveSpa:
    Friday at ❤️💙 💜⎝𝗦𝗨𝗚𝗔𝗥 𝗟𝗢𝗩𝗘 𝗦𝗣𝗔⎠💖💗💘:ANA, ELLA, TIFFANY & TINA. 1270 Finch Ave W (at Keele St), Unit 18. North York, ON ☎ 𝟰𝟯𝟳-𝟯𝟲𝟱-𝟮𝟲𝟴𝟴 ☎ ANA is a young, short and sweet lady, 5’1 & 105 Lbs, very tight, with a small to medium booty. Ana is a versatile honey who provides great massage, & can accommodate your needs. ELLA is a lovely Thai sweetheart, 5’1” with C Cups, smooth skin and very pleasing
  48. Annie Spa:
    🎉🍒ANNIE SPA🎉🍒 ✅7-1001 SANDHURST CIRCLE✅ 👌SCARBOROUGH ON M1V 1Z6👌 ☎️ (647) 891-9688☎️ ☎️ (416) 291-8879☎️ (FINCH & MCCOWAN) OPEN 9:30am to 9pm MONDAY to SUNDAY 🔥✅NEW MANAGEMENT💯NEW GIRLS🔥🔥 🔥GORGEOUS NEW YOUNG ASIAN GIRLS - TODAY’s ROSTER INCLUDES: 🔥 Vicky🥰A new arrival at our branch 🎉👯‍♀️Vicky is a very young CBC part time student working for tuition fees and books, this bright young sexy girl is willing to showcase her eagerness to please AND be pleased. Busty 36DD boobs
  49. Golden Sunshine Spa:
    ✨Click on our Username and FOLLOW US for updates and special services ! ✅ Today🌸Alisa🌸Selina🌸Aletta🌸Nina🌸Cindy Call us ☎ 905 - 265 - 2158☎️ Your ultimate service awaits! ✨
  50. lotushubspa:
    Hi, Louts💋 recommends the best female masseuse to customers today, Anna💋💯 from China Coco💋💯 from Taiwan, Yuki💋 from South Korea, living at 10737 Yonge St Unit13. Please contact 9052375885☎️💋 or SMS 4163565876, 💋Thank you💋 lotushubspa Post #367 Jan 3, 2025 Forum: Toronto Massage Review
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