When considering a job opportunity there are many aspects of the position that may sway one’s decision. Typically the compensation we receive bears the most weight on our decision making process. Job culture, opportunity for promotions, and quality of services provided are also very important factors in any position we may consider. But how do you navigate it all? Perhaps the most pivotal decision we can make is what type of worker we would like to be. In the field of Behavior Analysis workers can select to become independent contractors or employees. The differences between these two can be vague and oftentimes confusing so we hope to clarify this for you today.
As an independent contractor Behavior Analysts and Registered Behavior Technicians (RBT) will be offered higher wages per hour than an employee. This is due to the expenses that employers incur from providing benefits packages to their staff. Independent contractors can expect to have a higher total income per year than employees, however they may have more expenses. This would render their net income (take home pay) lower. For example, employees typically have their company purchase toys, reinforcers, safety gear, and materials for their assessments or sessions. Rarely does an employee purchase items with their own money. Independent contractors are usually expected to purchase materials themselves.
Behavior Analysts and RBTs alike would need to purchase most reinforcers and materials for their session. In addition, employees may work out of a clinic and be reimbursed for any mileage or traveling expenses they may incur, whereas independent contractors may need to drive to several locations per day with no compensation for travel or wear and tear on their method of transportation. Furthermore, employees can be reimbursed for attending conferences, such as FABA or ABAI. Companies usually send staff to conferences with their typically salary in order to promote professional development and allow clinicians to obtain CEUs. Independent contractors would need to pay for their registrations themselves as well as see a reduction in their pay due to services being cancelled while they were away. It should be noted that all work expenses incurred by independent contractors can be deducted from income taxes, but this would require diligent paperwork and an impeccable record keeping system where every mile driven is documented and there are receipts for every item deducted in case of an audit.
Independent contractors will be expected to file their taxes differently than employees. An Independent Contractor will receive a 1099 tax form which states the total earnings amassed throughout the year. These workers can choose to file quarterly and pay estimated taxes throughout the year, or file taxes each April and pay a lump sum. Contractors typically pay 15% or more of their income in Social Security and Medicare taxes. This is usually higher than employees working for a company offering a benefits package since companies pay about half of an employee’s taxes. In addition, contractors may also have to pay self-employment taxes. According to the IRS 2016 withholding calculator, a worker who earns $80,000 a year, who files as “Single” and does not declare dependents, can expect to pay $13,190 in income taxes, even after entering $2,500 worth of itemized deductions for work related expenses. Given the amount of taxes most independent contractors need to pay out, these workers typically file the paperwork necessary and pay to become a corporation or limited liability corporation in order to deduct health insurance, mileage, and other work related costs.
ABA Therapy Employees
Employees typically do not have to analyze their taxes so critically. Employer’s deduct taxes from the employee’s paycheck and track how much staff have contributed to the different types of taxes we pay in the United States. Furthermore, employees receive a lofty refund when they file their income taxes.
In addition to the peace of mind that comes with easy taxes, employees have access to benefits packages that include discounted healthcare, disability insurance, and retirement plans. Remember that companies are already supplying employees with materials, reinforcers, and reimbursement for travel and conferences. Companies may also pay as much as 50% of premiums associated with medical insurances (medical, dental, and vision) and any disability insurance you may wish to purchase. Employers typically offer retirement plan and match a percentage of contributions made. This means the company is paying you to have a retirement plan and you get free money in your account. These benefits packages can amount to over $3,000 per year!
The Pros and Cons
Finally, independent contractors will be expected to perform different duties than an employee and will need to bill for them differently. Employers can dictate the hours an employee would need to be available, whereas independent contractors can make their own schedule. Flexible hours are typically one of the most appealing aspects of independent contracting. Workers can choose to work nights, weekends, and even holidays if their clients are available. This gives people more time to amass billable hours and receive higher pay.
However, typically working nights and weekends is not a choice for these workers. Depending on the company, independent contractors will not receive compensation for duties outside of direct therapy or supervision. Most report writing, phone consultations and drive time will be considered “non-billable” and the workers will not be compensated for those hours. Conversely, as employees, although we may be restricted to working Monday through Friday within the hours of 8:00 A.M. and 6:00 P.M., we are compensated for non-billable work. Any time spent on materials, graphing, or report writing that cannot be billed is included in employee’s salary or hourly wages. As an employee you are not hindered in your ability to prepare for sessions, make materials, or otherwise help your clients due to restrictions in compensation.
There are pros and cons to both independent contractor positions and employee positions. In the end, each workers needs to analyze the responsibilities of each and select what is right for them. At BCOTB, we have experienced Behavior Analysts who have held both positions and have chosen to stay as an employee due to its vast benefits. Have questions? Call us now!