Independent Contractors Versus Employees: Proper Classifications for Med Spas

As med spas continue to grow in popularity and profitability, business owners must pay careful attention to how they classify their workers. One of the most common—and costly—mistakes in the med spa industry is the misclassification of employees as independent contractors. Misclassification can lead to significant legal, financial, and reputational risks.

This article outlines independent contractor versus employee classifications for med spas. Specifically, it touches on the key differences between independent contractors and employees, how these apply uniquely to med spas, and what spa owners should consider when classifying their staff.

Why Classification Matters

Misclassifying an employee as an independent contractor can result in:

• Back pay for overtime or minimum wage violations

• Unpaid payroll taxes, penalties, and interest

• Workers’ compensation claims

• Unemployment insurance liabilities

• Legal action from the IRS, Department of Labor (DOL), or state agencies

Key Differences Between Employees and Independent Contractors

Behavioral Control:

• Employees are subject to the spa’s control regarding how, when, and where they perform their work. This includes detailed supervision, set schedules, and mandatory use of company equipment.

• Independent contractors operate autonomously, typically setting their own schedules and using their own tools.

Financial Control:

• Employees are paid a regular wage or salary and may receive benefits such as health insurance or retirement contributions.

• Independent contractors typically invoice for services and are responsible for their own business expenses and taxes.

Relationship Nature:

• Employees usually have a continuous, long-term relationship with the spa, with expectations of ongoing work.

• Independent contractors often have project-based or limited-term contracts and are free to work with multiple clients.

Challenges in Med Spa Settings

Many med spas hire licensed professionals such as nurse practitioners, physician assistants, estheticians, and RNs. While some spa owners attempt to classify these workers as independent contractors to avoid payroll taxes and other obligations, doing so can be risky.

Red Flags Include:

• Setting fixed hours and dress codes

• Mandating the use of the spa’s equipment and supplies

• Providing extensive training or oversight

• Preventing the professional from working elsewhere

These factors strongly indicate an employer-employee relationship under IRS and DOL standards.

Best Practices for Med Spas

• Conduct a Classification Audit: Review all staff roles and responsibilities to determine whether they meet independent contractor criteria under IRS guidelines (e.g., the “common law test”) and applicable state laws.

• Use Proper Contracts: If hiring independent contractors, use a well-drafted agreement that clearly outlines the nature of the relationship, the scope of services, and the professional's independence.

• Allow True Independence: Contractors should control their own schedules, methods, and tools. If you want full control over how someone performs their work, they should likely be an employee.

Conclusion on Independent Contractors Versus Employees: Proper Classifications for Med Spas

Proper classification is more than an HR technicality—it is a legal necessity. Med spas must take a proactive approach to ensure compliance with labor and tax laws. When in doubt, lean toward employee classification or consult with legal professionals to avoid fines, lawsuits, and reputational damage.

Feel free to reach out if you need more specific information or further clarification.

Weitz Morgan is a leading law firm in Texas in providing comprehensive advice and guidance to med spas. With a deep understanding of the unique challenges and complexities faced by this rapidly growing industry, our team of experienced attorneys is dedicated to helping med spas navigate the legal landscape successfully.

We recognize that med spas operate at the intersection of healthcare and beauty, which necessitates a multifaceted approach to representation. Our firm offers a range of services, including a flat-fee med spa formation package and an outside general counsel subscription, tailored to meet the specific needs of med spas, ensuring compliance, mitigating risks, protecting licenses, and fostering a legally sound business environment.