In this episode of the Profitable Practice Podcast, I’m going to go over the real legalities of being an Independent Contractor, since the last episode I have been in and dated by people who know that they are not treated as Independent Contractor. Let’s find out, Stay Tuned!
THE LEGAL RIGHTS OF BEING AN INDEPENDENT CONTRACTOR SHOULD ALWAYS BE ACKNOWLEDGED
If you signed as an Independent Contractor and you feel like you are treated as an employee, then you need to pay attention to this. Keep in mind that there is a huge difference in legal rights and responsibilities between signing a contract as an employee and as an independent contractor.
If you are a business owner, make sure to review the rules with what type of contract you signed with the practitioner; there will be a massive issue of taxation if the government would find out your wrongdoings. So better be fair and stay in line with the contract and/or agreement.
Stay Tuned to learn more!
In This Episode:
[0:49] Introduction and context for today’s episode – the legalities and rights of being an independent contractor with a business/clinic owner.
[5:01] The rules and regulations, and the legal rights of being an independent contractor and an employee.
[9:06] What ensues to the business owner if you came to the government with the issue of mistreatment as an employee.
[10:30] Get to know: Top Three Ways to easily determine an Independent Contractor and an Employee.
[16:32] Remember: “You have the luxury of working out of somebody’s space who has traffic, but it is still your business, your entity, and full responsibility.”
[18:06] How does my employee contract work and what does it look like?
[20:10] One final aspect of the employee contract that I was unaware of.
[23:38] If you are looking for more mentorship, support, and business experience, you should search out for employeeship!
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So since our last episode, I have been in and dated by people who know that they are not being treated as an Independent Contractor, despite the fact that that’s what they signed on their contract and I’m going to go over the real legalities on this, coming up next!
Hey Everyone! Welcome to another episode of the Profitable Practice Podcast and this is kind of going to be a part two of Episode 156 where I had Caitlin Fanning on and we’re just talking about her journey from being an employee of the clinic, to an independent contractor, to now owning her own business. And there is a really important piece that we talked about in the middle of that Podcast and that is what spurring today’s episode because that night, I was so fired up and inspired to share what we talked about on Instagram, my Instagram is @AndreaMaximND and I did a one minute video just highlighting the difference between an employee and an independent contractor, and I had people DMing me, I had people messaging outside of Social Media, I had even personal trainer said he watched the video and he was kind of really questioning what his contract was actually whether it was legal or what. And so, I’m going to go deeper into this conversation so that you have all of the knowledge that you need to know.
Number one; protection as an independent contractor, and number two; if you are a business owner and you are hiring independent contractors and not reading them the way that you should be, then let this be your warning. So this was a big debate that I had when I decided I didn’t want to work in Caledonia any longer, I, of course, loved the idea of having an independent contractor but after doing that year membership or mentorship with Alex Sharkfin and learning all of the ways that you need to show up as a leader and how do you run and manage a team properly.
I knew that the way I wanted anybody to work with me inside of my business, I couldn’t hire them as an independent contractor, it had to be as an employee and I know when we graduate school as practitioners we love the idea of being our own boss and we love the idea of running things our way, and the independent contractors seem more lucrative because there’s no sealing to it, if you’re on a split you can always make that split, if you pay flat to rent, you can always make up that flat rent. But, considering the situation that we’re in now and considering how you feel when you graduate.
I strongly believe that becoming an employee for another practitioner is a fantastic way to gain the confidence that you need to, to understand how the business works, to learn those ins and outs about just how to do your day to day thing, plus you’re gaining inherent mentorship from your employee, while you may not take home as much or perceivably so but now you have guaranteed income and you’re getting all of those business pieces like almost like pseudo MBA by being an employee for a year, two years, three years however long you want to, without having to worry any of the headaches that come with running your own business, most of us do not graduate entrepreneurial it just isn’t in our wheelhouse, it isn’t something that we ever wanted to do, we just want to heal people, so this a beautiful way for you to get a bit of that business experience, get a bit of that business knowledge without getting into a bit of a hole where that can happen very easily when you start up your own business, there’s a huge amount of investment that goes into starting your own business and as an employee you don’t have to worry about any of those things, plus most contracts will offer perks, and I’ll take about kind of the way our contract works for our employee at one of my offices.
But ultimately, let’s get right into the legalities around this, so you absolutely have rights as an employee, we’re all familiar what those rights are, what those rules and regulations are, and as an independent contractor, we forget that there are also legal rights to your ability to run your business as an independent contractor, not as an employee. And one of the biggest reasons why clinic owners like to hire independent contractors is because there’s a massive tax break, you don’t have to pay EI, you don’t have to pay CPP, you don’t have to pay whatever you need to pay all of those extra taxes to keep that person on the payroll, with an independent contractor you sign a contract you get a certain percentage of everything that they make or a flat rent and maybe some incentives on top of there, there might be like a commission scale if you make so much then you can actually change your split for a certain percentage or a certain dollar amount or whatever, I mean you can create those contracts however you want to.
The problem becomes when you sign that contract, you don’t know any better and you’re actually being treated like an employee but the business owner is getting all of the benefits of having you as an independent contractor and this is the part that you really need to pay attention to. So I made notes just before this episode because when I was going through getting incorporated I also talked to my lawyer about you know, if I want to hire somebody in my office this is how the dynamic is going to be, we’re going to have team meetings that she has to attend you know, the prices are what they are, I’m going to have them come in for certain days and certain times of the week that cannot be changed, all of those things are red flags for an independent contractor, there’s no legal way that I could hire this person and without having them be an independent contractor.
Because I learned how to be a great leader, because I learned how to be a great business owner and a boss, our relationship is very much, I would say linear like it’s not like I’m above her, there’s a ton of mutual respect she’s getting a ton of learning out of the whole experience that business mentorship, she’s seen how running a successful business looks firsthand without her having to do the work, I’m still doing all of the marketing, trying to fill up her schedule for her, she just shows up, sees the patients and then we track everything, we track all of the matrix and all of the data. We have quite a number of podcasts on this including the one where I interview Meaghan and I will refer to that in the show notes. But the only way I could legally hire her is as an employee, because of the way I wanted it to be set up, because of the way I wanted it to run.
And I think a lot of the business owners are just like ‘Well, I’m going to create this dynamic and just see what happens.” The issue becomes, and I am talking to this with my personal trainer today, is when you want to keep that job you’re obviously not going to start a rift between you and the business owner while you’re at that location, you’re not going to say “Hey! By the way, you’re breaking all of these laws and I’m going to tell the government about that, but I need you to keep me on as an independent contractor.” you know there are issues that of course can come up when you start bringing these things up, however, what I’m going to suggest is if you know something isn’t right and the people that I’ve spoken to since I made that one minute video on my Instagram, they knew something was not okay, they knew that things weren’t conducted on their favor and when they left and reflected on how things are actually going they saw very clearly that it was not set up properly and was actually illegal they’re being treated as an employee and not as an independent contractor.
Now, if that has happened to you, you have every right to go to the government and put in the claim of about that, and what will happen to the business owner, so again this is my warning to business owners who are not treating their independent contractors correctly, is that they will do an audit and if they find that the independent contractor is in the right, you will actually have to pay back all of the taxes that you would’ve while they were working for you. So it’s a huge issue if you get caught, plus you’ll be forever red-flagged and you will pretty much not have an independent contractor join your practice again. Once you start hiring employees like you can’t have, I’m sure there’s a way around this, but usually either a business is run all on employees or it’s run with independent contractors.
There is a way to do both and we certainly have both running but if you get flagged, you will never be able to have an independent contractor for a long time, because the government is going to be watching you very very closely. So if you think you are doing things incorrectly as a business owner, I strongly encourage you to review the rules and make sure that you’re treating everybody correctly as an independent contractor just remember that you have rights. And here are the top three ways that we can determine very easily what an independent contractor is and what an employee is. The first one is; as an independent contractor your hours cannot be dictated, you can agree to what your hours would be on your contract, and you can say I’m going to show up on these days that’s just part of your rental agreement so that the business knows when you’re going to be there and when you’re not going to be there.
That’s a different conversation than me telling you, you have to show up Mondays 6 to 12, you have to show up from 8 to 2 O’clock, you have to show up on Fridays from noon to 8 PM and then every other Saturday from noon to 4, there’s totally different dynamic there, so if I’m telling you what your hours are, I’m certainly treating you as an employee. If you are agreeing to when your rental hours are in the contract that’s totally different so let’s just be clear about that, as an independent contractor you could also cancel your day any you want to, you can leave early whenever you want to you don’t have to ask permission to do any of those things, it’s always customary to give the clinic a heads up because that’s a huge stress on everybody that you leave for a week or cancel your day including your patients or clients, but the point is you don’t need to file like a holiday request, you get to do whatever you want to with your time, you’re an independent contractor, you’re not an employee of the office.
So in some cases they may say, you know if you’re going to sign up we are expecting you to be at the office during your shift and that’s just more good business sense but they can’t mandate that that’s a big difference nor can they offer mandatory meetings or make anything mandatory when it comes to your time that is not part of being an independent contractor. The other one is that you must provide all of the tools that you need to run your business as an independent contractor, now, of course, they can offer you things, they can give you the furniture, they can do all of that, that’s great. But, you still need to be showing up all of your medical tools, any devices that you need.
You need to purchase all of the machines that you need or get some sort of agreement where you can use the clinic’s machine, but if again this is your business. You’re an independent contractor so you have to show up with all of the tools that you need to run your business, okay? So if the clinic provides you things that are great, but that is also not part of their liability as a business owner unless you’re an employee. If you’re an employee then the business has to provide you with all of the tools that you need. With our associate, we agree that she just use her own medical tools because she has them but I purchased all of the acupuncture needles, all the linens, all of the supplements, all of the lab test, all of those things are things that I provide to her because that is my role as the employer and you could go so far to say any lab equipment or technology that she needs. She needs a laptop, I technically need to provide that to her.
She agreed that she’ll be fine bringing her own laptop and using that plus we have a clinic and a computer on-site but all of those things are your requirements as an employee not as an independent contractor. As an independent contractor, I don’t need to as the owner provides you with anything, so if you run out of acupuncture needles you go and buy some. If you run out of any of the tools that you need you to have to go out and buy them. If your machine breaks then you have to fix it. That isn’t on me, so just be very clear about that too, and then finally the overall operation of your business. So as an employee they inherently will adapt all of our standard operating procedures the hours are what they are, receptionist when they’re in, our prices are what they are, our website is this or social media is that like these are the things that you have to use as an employee of my business.
As an independent contractor, you are again running your business inside of somebody else’s clinic so you have full access to your own website, your own social media, your own email list. You get to keep a list and tabs on all of the patients and clients that you see. The clinic cannot make that a part of the contract where you can only promote yourself on their items. It’s a great idea for you to do that just as a show of good faith that you want the business itself to be more profitable but it is your business and that is probably the biggest place where I see the lines are very blurred is I heard of other practitioners where part of their contract was you are not allowed to have your own social media as long as you’re working here. If you want to do anything it has to be with our website, our social media, our emails.
You cannot collect your own data, you can click other people’s emails, that is not okay, okay? So if this is happening with you, you need to have a serious talk with either a lawyer or talk with the business owner and say it looks like these are the rights that I have as an independent contractor and you are not allowing me to function as one so you know here’s your warning. So many of these things are not in your favor as a contractor then I strongly encourage you to re-evaluate the contract and or the space that you’re working in. always remember and I say this all of the time is you have the luxury of working out of somebody’s space who has traffic, right?
But it is still your business, your entity, and your full responsibility which also goes to the other things right? So you wanted to grow? You have to make it grow. You want patients to work with you? You want new patients and clients to book in with you, you have to go out and find them. So because my employee, my associate, only has time to do the day to day things, I know that part of her role is not to find new people outside of the office. It is not on her expectation to do seminars, webinars, things like that unless it’s within office hours and she agrees to do it. What we’re hoping from her is she’ll make more money for the clinic with upselling so labs., supplements you know other services in the office and of course word of mouth referral and all of those things we track but as an independent contractor again your business, your responsibility you cannot rely on the business to be doing all of those things for you right? So there is a lot of giving and take that’s involved here but the most important thing is, that no one is taking advantage of you and to my business owners make sure that you are treating everything on an up and up because if somebody flags you, you are in big trouble.
So let me just explain how my employee contract works and what it looks like. If anybody is thinking that hiring an employee is in your favor so we have her on an hourly wage or salary. She’s only currently part-time so twenty hours a week which gives her the opportunity to run her own business on her own time so I have no problems with that. It’s actually really important I think for anybody I work with to be able to compare and contrast and to have a little bit of their own knowledge of running a business while they’re getting all the mentorship with me. That’s fine. Then we offer extra incentives for her to make more money, so we offer profit sharing. We’re doing ten percent profit sharing, so when the clinic is profitable she gets a piece of that which is a great incentive for anybody to then make the business grow and find ways to make more money for the business.
We also just release our online program so she gets fifty percent of any sales that she makes with her own patients so that’s extra money in her pocket. So there’s a lot of great incentives that way for her to increase her wage because this is one of the big objection a lot of practitioners will say is I can’t make as much as an employee but if you can negotiate ways that you can make more money then really there is no ceiling but you have to do the work. You have to make sales. You have to help the business grow so if you don’t want to do the work they don’t expect the money and that’s kind of what entrepreneurship is all about. Anyway, there are no free hand-outs on either side. What we also include is she gets a health spending account so she has health, yeah, basically not health insurance but health stipend that she gets every single month and she also gets all of her continuing education paid for. So there is all other costs that you don’t necessarily think about from an employee perspective that the business might actually pay for you, right?
So I wanted to just kind of elaborate on this a little bit more. Now there’s one final aspect which I was completely unaware of and this is again about an employment contract is that there are three steps that go into a legally binding employee agreement and the first one is you must offer, so you must do your offer letter saying I would love to offer you the job here’s a summary of what it entails, signature, when they approve the offer letter then you would actually offer the contract and you’re looking for acceptance so once that contract is accepted again by signature and date then technically they are now a legal employee of your business.
All of those signatures must happen before their very first day of working with you. So if their first day is let’s say July 10th, you have to get those signatures done by July 9th at the very latest, so the offer comes first then the contract acceptance and then they can actually start working. I had no idea that that was a requirement. I was just sort of well I just got them to sign their contract on their first day and us kind of got off to the races but that actually was a non-legal binding way of doing things. All of the signature and all of the acceptances have to be done prior to their very first day so again for those of you that are thinking of hiring an employee in any capacity, whether be reception or administration or as an admin assistant, the offer letter comes first offering the job and they must review the contract and either accept that job or not and those signatures must be completed before their first day so keep all of those little things in mind.
As much as we hate following rules and regulations and legal things, these are all in place to protect us, even this whole debate on whether to wear a mask or not look, the bylaws are there, the rules and regulations are there whether you like it or not you just have to follow it. They’re there to try to keep us as safe and protected as much as we possibly can and that’s why even with my contracts it will outline every possible positive or negative outcome so that both I am protected and whoever I send that contract with is also protected and these things are just there that while everything is good here are the rules that we agree on.
So when sh*t hits the fan we remember what those rules are and there’s a lot of protection on both sides. So you know what sucks and yes an employee may cost you with a little bit more money with regard to taxes but the security to know that you’re running your business correctly and the relationship that you start to cultivate now with an employee because I have Meagan’s back every single day. I’m constantly thinking about how I can teach her, how can I make her a better practitioner, how can I make the business grow for her like I tried to grow her business more than I tried to grow my own practice and that’s because the relationship is different. With an independent contractor, I’m sort of like, well it’s your job to grow your business.
I will give you space, I’ll support you as much as I can but it is not my responsibility to grow your bookings so sometimes if you’re looking for a little bit more of that mentorship, a little bit of that support, a little bit more of that business experience maybe you should be searching out employee-ship and not an independent contract-ship or really make sure that it is outlined in the contract what your relationship is going to look like and hold those people to it. I would love to hear from you with regard to this topic. I want to hear horror stories. I want to hear what’s working for you. I want to hear all of these things. Drop them in my DMs @andreamaximnd or send me a message, like an email, go to https://www.maximizedbusiness.ca/ and just fill out the contact information there and we can have a really honest conversation about what’s going on and how would I approach the situation or what I would change or what is right and isn’t right because a lot of horror stories have been presented to me in the past of a couple of days so I also want to say that you are not alone in this whole issue that a lot of people are trying to take advantage of the system because they’re just hoping that they don’t get caught and it’s not just the right way to conduct business.
If you have any other concerns or you need extra business mentorship or support, I would love to offer that to you. The best place for you to start is my free master class and the free master class is all over the home page on https://www.maximizedbusiness.ca/ and we will link directly to the registration page there. That will give you the best insight into how I work and what my style is like. What the maximize practitioner program is all about and then of course if you want to up-level that to hire my team and then get that one on one coaching we can always talk about that too. I look forward to hearing from you in all capacities and I also hope that this is a bit of an eye-opener for you and you start showing up to your business in a little bit of a better way and or make some serious changes that need to be made and now is the time to do that. I am Andrea Maxim, this another episode of the profitable practice podcast and I’m out.
You guys are killers, thank you as always for listening to profitable practice podcasts. Leave me a comment and if you have already I would love a review in iTunes. Definitely subscribe to this podcast and leave me a quick review. For those who already tune to maximize your practice contact me at https://www.maximizedbusiness.ca/