You dreamed of a career of massage. You researched how to earn a massage certification or license in your state. You attended school, spending hours studying and even more hours in the clinic applying newly-learned massage techniques. As you graduate, what feels like an ending is really a new beginning–the dawn of your new life as a massage therapist. One big question looms: Should you take that gig as an independent contractor, or aim to be hired as an employee? Or would you rather run your own massage clinic or spa? In any case, understanding the difference between employees and independent contractors will be critical.
This second of two blogs will review the advantages and drawbacks of working as an independent contractor. For more background information on business relationships, as well as the pros and cons of working as an employee, we recommend checking out the first blog in this massage career series.
Independent Contractor Considerations for Licensed Massage Therapists
If you’d like:
- To avoid being asked to do administrative, non-tasks for hourly pay
- To have the opportunity to set your own schedule, and
- To build your own business, with the option to work for multiple massage therapy clients,
consider independent contractor status.
Employers may require employees to sign non-compete agreements prior to being hired. LMTs may opt to take work as independent contractors because they would like to pursue other business opportunities and independent work.
Another benefit of being independent is that contractors can deduct operating expenses such as massage oil, travel to therapy sessions, and massage tables from their taxes. (Of course, this means you must pay for and maintain your own massage equipment.)
However–and this is the main takeaway that many new LMTs do not realize when agreeing to work as contractors–you must also pay your own taxes from your earnings, as no employer is deducting them for you. To be safe, many experts suggest setting aside at least 25% of what you earn for the quarterly tax payments that the IRS and state tax bureaus will expect. That means that if you’re working for $15 per hour, you actually only get to take home $11.25 per hour. Therefore, when setting your rates you’ll need to tack on the 25% for taxes, as well as any expenses you expect to accrue.
Finally, LMTs should remember that they will need to pay for any health insurance out of their own pockets, since no employer will be paying these benefits. Nor will any other employer benefits, such as sick days and vacation time, be covered. Therefore, it’s critical to carefully set your rates to be high enough to cover your benefits, insurance, taxes, bills, and expenses, while also being competitive enough to win contracts.
When Independent Contractor Relationships Go Wrong
LMTs who are hired for independent contract work have reason to file grievances with the state when they are treated as employees. A massage employee is typically hired at an hourly rate. During their scheduled hours, they may be required to do non-massage duties, such as laundry and covering the front desk. However, an independent contractor cannot be required to cover these tasks without pay. Nor can an independent contractor be required to linger around a massage clinic all day without pay, waiting for a walk-in client.
Pros and Cons of Contracting with Independent Massage Therapists: The Employer’s Perspective
For those LMTs who would like to expand their business, independent contractors can be of great benefit. Here are a few potential advantages of opting to work with contractors rather than hiring employees:
- Save money as you won’t need to pay for entitlements or the accounting needed to calculate taxes. Some experts estimate that businesses can save up to 30% by choosing to hire independent contractors rather than full-time employees.
- Increased flexibility with hiring, as independent contractors have fewer job protections and you can more easily cover short-term projects with short-term contractors.
- Added efficiency, as independent contractors are responsible for their own training, unlike employees who often need more extensive onboarding.
There are a few disadvantages of hiring independent contractors as well.
- Less stability. Independent contractors come and go with more frequency than employees. If you are especially fond of a certain LMT’s skills, it may be better to hire them as an employee as they will be more likely to stick around.
- Less control. In general, contractors are more independent about how work must be carried out. You may be able to write specific massage directives into your contract with independent workers, but otherwise you can expect more control with an employee.
- Liability for Work-Related Injuries. Few independent contractors pay for their own workers’ compensation insurance; therefore, when you hire an independent contractor you are opening yourself to the possibility of being sued for a personal injury lawsuit if a contract worker is injured while working for you.
For both employees and employers, continued education for massage therapy is important. For those looking to be hired, taking classes shows you are dedicated to improvement over time, and more likely to offer effective massage therapy techniques. Our Portland, Oregon massage school also offers classes on massage therapy business concerns. If you’re interested in sharpening your massage skills, navigate to our massage therapy continuing education site, or give us a call at 503-233-6500.