Worker classification is one of the costliest mistakes a growing therapy or ABA practice can make, and one of the most common. Calling a clinician a 1099 contractor when they function like an employee can trigger back payroll taxes, penalties, and interest. Here is how to think about it.
1099s feel simpler and cheaper: no payroll taxes, no benefits, less paperwork. But the label is not your choice. It is determined by how the working relationship actually functions, and in behavioral health and ABA, most clinicians and RBTs look a lot like employees.
Regulators look at control and independence: who sets the schedule, who provides tools and space, who directs how the work is done, whether the worker serves other clients, and how integral they are to your core service. Many states apply an even stricter standard (California’s ABC test presumes W-2 unless you can prove otherwise).
An audit that reclassifies workers can reach back years and stack payroll taxes, penalties, and interest, sometimes enough to threaten the practice. It is far cheaper to classify correctly from the start and run clean payroll.
We classify your clinicians and RBTs defensibly, document the reasoning, and run compliant payroll so you are audit-ready before anyone asks. See how we support ABA practices and payroll and compliance.
Book a free, no-pressure practice assessment. We will review your books, entity structure, and tax posture and show you exactly where we would add value.
Educational information only, not tax or legal advice. Every practice is different. Talk to a CPA before acting.