Textbook of Urgent Care Management: Chapter 21, Employment Contracts and Compensation

CHAPTER 21

Employment Contracts and Compensation

Adam Winger

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CHAPTER 21

Employment Contracts and Compensation

Adam Winger

RECRUITING AND RETAINING TOP clinical talent is a crucial step in establishing a competitive presence in the urgent care marketplace. To do so, an urgent care employer must offer an appropriate package of benefits and incentives while balancing the company’s overall performance objectives. This chapter addresses issues associated with the employment relationship between an urgent care company and its medical providers.

EMPLOYEE VERSUS INDEPENDENT CONTRACTOR

A threshold question in any discussion involving employment agreements is whether the individual rendering the services is actually an employee of the urgent care company. This determination is meaningful for both legal liability and tax purposes.

Legal Liability

Inappropriately classifying an independent contractor as an employee may result in the urgent care employer unnecessarily assuming all liability for the provider’s actions. In general, employers are liable for the negligent acts of their employees but not for those of an independent contractor. Although it is common for independent contractors to be added as insured parties to an urgent care company’s malpractice policies, there is no requirement that the company do so. Whether a provider is an employee or independent contractor for legal liability purposes is a matter of state law. Most states, however, analyze the issue by considering factors similar to those used by the Internal Revenue Service (IRS), which are discussed in the following section.

Tax Consequences

If a provider is classified as an employee for tax purposes, the urgent care employer must withhold income and payroll taxes (Social Security tax and Medicare tax from the provider’s compensation), and pay Federal Unemployment Tax on it. The taxes must be remitted to the IRS, and substantial penalties exist for the employer’s failure to