An update from our firm’s payroll manager:

One of our clients is being audited by the Mass Department of Unemployment Assistance. What we have been told is that an associate should be treated as a W2 employee and not a 1099 contractor unless that associate has an LLC or PC set up and works at multiple offices that pay directly to that entity.

All other employees, including front desk staff, assistants, and hygienists, are generally always W2 employees and never 1099 contractors.

Plus, the auditor scanned through the client’s check register and picked up each individual and temporary helper who was paid less than $600 in a year and added those payments to the wages subject to unemployment taxes.

The auditor has discretion to go back up to 6 years for those practice owners who don’t comply with these rules and instead pays multiple individuals as 1099 contractors instead of W2 employees.

Lastly, the auditor let us know that healthcare practices are one of the groups being targeted for audit by the Massachusetts Department of Unemployment Assistance due to a history of spotty compliance with these rules.