Independent Contractor
or Employee?
UNDERSTANDING THE LAWS AND EVALUATING THE TRADE-OFFS
By Linda Yaniszewski
WE ALL KNO W the state of the economy. Cutting costs has been
a mantra in healthcare for years, but recent pressures have been
more demanding than ever.
In HIM, the downward pressures in cost conflict with the upward forces in workload. Additional tasks related to recovery audits, ICD- 10, quality data reporting, and clinical documentation
improvement are being assigned to HIM departments every
day. Department directors and outsourced service companies
alike are asked do more with less. One potential area for cost
savings lies in “how” human resources are categorized: independent contractors or employees.
Provider organizations and outsourced service companies
can achieve savings when they use independent contractors
(ICs) rather than full-time employees. This has been particularly common in the areas of transcription and coding. Savings in
taxes, insurance, and other benefits can be substantial.
However, with the returns come risks and trade-offs. HIM directors must be certain they fully understand state and federal
employment laws and explore the trade-offs fully.
New York Experience Sheds Light on Concerns
When medical transcription services operator ExecuScribe
launched in 1989, the New York–based company used a complete IC model, the standard hiring model at the time. Adhering
to published IC rules, the company was careful to explain the
various benefits and limitations to the independent transcriptionists it contracted with:
x The company did not control their time (they could work for
other companies).
x There was no required work schedule (flexible time sched-
ules were permitted).
x The company provided no training or continuing educa-
tion.
x There was no direct deposit of paychecks. ICs submitted in-
voices and the company paid them directly.
In addition, the limitations to the IC and the cost-savings to
the employer were clear:
Categorizing medical transcriptionists as ICs was working
well for ExecuScribe and its staff until the State of New York
Unemployment Commission requested a full audit of the com-
pany and its practices. The audit permanently changed the
company’s IC strategy and served as fair warning for many well-
intentioned HIM directors and medical transcription services
operators.
