Hiring your first, or next, clinician in a group practice is a huge milestone. It means your business is growing, your vision is expanding, and you’re stepping into a new level of leadership. But with growth comes choices, and one of the biggest early decisions group practice owners face is this:
Should I hire clinicians as W-2 employees or 1099 contractors?
This isn’t just a tax form issue. It’s about alignment with your values, your leadership style, and the kind of culture you’re cultivating in your practice.
At The Thriving Practice Academy, we believe in helping you make informed decisions that are both practical and personally aligned. Let’s walk through the pros and cons of each model—gently, clearly, and without judgment.
The 1099 Contractor Model
This is what I'm partial to, personally! Independent contractors (1099s) are considered self-employed. You pay them per session or percentage, and they’re responsible for their own taxes, liability insurance, and scheduling.
Pros:
- Lower overhead: You don’t pay payroll taxes or benefits, which can reduce financial pressure.
- More flexibility: They typically set their own hours and caseloads.
- Simplified HR: Less paperwork and fewer compliance requirements.
Cons:
- Less control: Legally, you can’t dictate their schedule, how they do their work, or even what clients they see.
- Inconsistent culture: Contractors may not integrate into the practice culture as fully as employees.
- Legal risk: Misclassifying an employee as a contractor can lead to serious penalties. The IRS and state labor boards are increasingly cracking down.
Bottom line: The 1099 model works best when you want to offer autonomy, and your clinicians truly operate independently. This means that interviewing clinicians thoroughly is priority 1. But it comes with legal complexity, especially if your practice feels more like an employer than a referral network.
The W-2 Employee Model
W-2 employees are on payroll. You handle taxes, possibly offer benefits, and have more oversight of their work.
Pros:
- More control: You can set schedules, offer training, and establish clinical standards—legally and ethically.
- Stronger culture: Employees tend to feel more invested in the mission of the practice.
- Compliance-friendly: Less risk of misclassification or labor disputes down the line.
Cons:
- Higher cost: You’ll pay payroll taxes and may need to consider benefits, PTO, or admin support.
- More responsibility: Employees rely on you for structure, leadership, and sustainability.
Bottom line: W-2 employment is ideal when you want to build a cohesive, long-term team and have more influence over the clinical experience clients receive. If you're comfortable with managing, or want to be managing, this is the hiring structure for you. It does require more planning, but it can lead to more stability and consistency.
So... Which Should You Choose?
There’s no one-size-fits-all answer. But here are some gentle reflection questions to help you decide:
- Do I want a team that operates independently or collectively?
- Am I prepared to offer training, mentorship, or oversight?
- What kind of support and culture do I want to cultivate?
- Am I thinking short-term or long-term?
- What model feels most aligned with my values, and what kind of leader do I want to be?
You’re Not Just Hiring;You’re Shaping a Practice
Whether you choose 1099 or W-2, your hiring decision is about more than compliance or costs. It’s about the kind of practice you’re building and the kind of experience you want for your team and for yourself.
At The Thriving Practice Academy, we walk alongside you through these pivotal decisions with clarity, compassion, and real-world tools. You don’t have to figure this out alone. You can lead with confidence and build a team that thrives.