After 25 years of owning a staffing agency, I’ve had many conversations with speech-language pathologists, occupational therapists, and physical therapists weighing a W-2 position against 1099 contract work. It’s understandable to focus on the hourly rate. But the rate is only one part of the decision. Taxes, benefits, insurance, supervision, and the way an assignment is structured all matter too.
What does W-2 employment mean?
As a W-2 employee, you’re on the agency’s payroll, and the agency withholds payroll taxes. Depending on the position and agency policies, benefits might include paid sick leave, health insurance, retirement contributions, and workers’ compensation coverage.
Those benefits aren’t the same at every agency or for every assignment, so ask what’s included. Also find out how the agency and the school, clinic, or other worksite divide responsibilities such as setting your schedule, assigning your caseload, and handling supervision and documentation.
What does 1099 contract work mean?
A 1099 contractor is generally considered to be in business independently and is responsible for handling their own tax payments and business expenses. Contractors may have more flexibility in choosing assignments, but usually don’t receive the same employee benefits.
The hourly rate may be higher, but take a closer look at what you’ll need to cover yourself: taxes, insurance, unpaid time off, travel, cancellations, and administrative work. A higher rate doesn’t always mean higher take-home pay.
The job title alone doesn’t decide your status
I encourage clinicians to look beyond what an agreement calls them. Signing a contract that says “independent contractor,” or receiving a 1099, doesn’t determine worker status on its own. The IRS looks at the actual working relationship, including behavioral control, financial control, and the worker's relationship with the business.[1]
State rules can differ, too. Pennsylvania and California, for example, have their own guidance and standards for distinguishing employees from independent contractors.[2][3] If you’re uncertain about a particular arrangement, it may be helpful to speak with an employment or tax professional familiar with the state where you’ll work.
When you’re evaluating an assignment, ask practical questions: Who sets your hours? Who assigns your caseload? Can you decline assignments or work with other organizations? Are you expected to follow the agency’s or worksite’s procedures? These details help you understand the arrangement, though no single answer determines classification in every case.
What about Clinical Fellows and new graduates?
One point that can get lost in this conversation: your professional status and your employment status are different. Being a new graduate, a Clinical Fellow, or provisionally licensed doesn’t automatically make you either a W-2 employee or a 1099 contractor.
For speech-language pathologists, the ASHA Clinical Fellowship (CF) is a mentored experience required for the CCC-SLP. ASHA requires at least 36 weeks and 1,260 hours. A CF can be completed across multiple employers, settings, or mentors, as long as the experience and mentorship meet ASHA’s requirements. State licensing rules may also apply.[4][5]
For occupational therapists, required education and fieldwork take place before graduation. After graduating, OTs need to meet the licensing requirements where they plan to practice. Some states allow new graduates to work under a temporary license or limited permit with required supervision while waiting for exam results; others don’t.[6]
For physical therapists, education and clinical training also happen before graduation. New graduates then need to meet their state’s licensing requirements, including the required examination. Some jurisdictions allow practice under a temporary license or permit with specified supervision while the graduate completes the licensing process. The details vary by state.[7][8]
If you’re a new graduate, make sure you understand who will arrange and provide any required supervision or mentorship, and confirm that your license or permit is in place before you begin providing services. Ask the agency to explain these responsibilities clearly and in writing.
Questions I’d ask before accepting an assignment
Whether you’re a new graduate or an experienced clinician, take time to get clear answers to these questions:
- Will I be a W-2 employee or a 1099 contractor?
- Who sets my schedule and assigns my caseload?
- What benefits are included, if any?
- Who covers workers’ compensation and professional liability insurance?
- How are cancellations, travel, and indirect time handled?
- If I need supervision or CF mentorship, who will provide it?
- How often will I receive supervision, mentoring, and feedback?
- Who verifies my license or temporary permit before I start?
Look at the whole opportunity
No single arrangement is right for every therapist. A W-2 position may appeal to someone who values payroll withholding and available employee benefits. Contract work may suit someone who operates an independent business and wants more control over taking on assignments.
From my experience, the best starting point is to ask questions and understand the full offer—not just the hourly rate. If you’re just starting out, make sure the role supports your licensing and supervision requirements, as well as your career goals.
This article provides general information, not legal, tax, or licensing advice. Worker-classification and professional licensing requirements vary by state and may change. Check with your state licensing board and a qualified professional about your specific situation.
References
1. IRS: Independent Contractor or Employee
2. Pennsylvania Department of Labor & Industry: Employee or Independent Contractor
3. California Department of Industrial Relations: Independent Contractor Versus Employee
4. ASHA: A Guide to the Clinical Fellowship Experience
5. ASHA: Supervision of Clinical Fellows
6. AOTA: Learn the Steps to Occupational Therapy Licensure
7. FSBPT: Licensure Reference Guide
8. Pennsylvania State Board of Physical Therapy: Practice Act
#SpeechTherapy #OccupationalTherapy #PhysicalTherapy #RehabTherapy #TherapyCareers #HealthcareStaffing #ClinicalFellowship #NewGradTherapist #TherapistResources
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