It can be intimidating to change job settings and venture into teletherapy. Now add educating yourself on the difference between being a W2 employee versus an independent contractor in the virtual world, and you are left wondering if you’re doing this correctly. In this post, we will attempt to break it down clearly so you are left feeling confident in whichever role you are in (and provide the websites you can go to for more detailed information). 
The most important thing to note is that you are either a W2 employee or a 1099 contractor. You cannot be a 1099 employee to any teletherapy company (some companies out there blur these lines). Do not allow yourself to be treated like an employee (e.g., with strict rules of how you are to do your job) as a 1099 contractor (e.g., without the perks like health and retirement benefits).

The ABC Test

You are considered a 1099 independent contractor if you can say YES to ALL 3 items on the ABC Test: (information taken directly from the State of California Franchise Tax Board) 

1.  Is the worker free from the control and direction of the hiring entity in the performance of the work, both under the contract for the performance of the work and in fact?
2. Does the worker perform work outside the usual course of the hiring entity’s business?
3. Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity?

If you can say NO to one or more of these items, the person or group you work for must hire you as a W2 employee (NOT a 1099 independent contractor). 

If you need a more detailed explanation of the ABC Test, please reference #2 and #3 of the FAQ section:

https://www.ftb.ca.gov/file/business/industries/worker-classification-and-ab-5-faq.html

Common Law Rules 

Businesses have to consider common law rules when deciding if they are looking to hire a W2 employee or a 1099 independent contractor. The level of control versus independence of the worker lands into 3 areas:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee-type benefits (i.e., pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Information is taken directly from the IRS website:

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

Here are a few additional things to note:

• Always check with your CPA and business attorney
• Protect yourself with liability insurance
• If you do not reside or work in California, double-check that these rules apply in your state as well.