Many physician practices pay for part time labor, especially family members. Here are a few tips on paying part time employees:
1. Withhold FICA on part-timers (and retirees). Even if someone who works for you part-time also has a full-time job where they have had 100% of their FICA withheld for the year, you must withhold the full amount of FICA from their pay. These individuals can obtain a refund of any overpaid FICA on their 1040. Similarly, if a retiree receiving Social Security benefits works for you, say, one day a week, you must withhold FICA.
2. Former employees who return as “independent contractors” are probably employees. If they do the same job they did before they left, especially in the same tax year, they are employees. IRS target: Individuals who receive a W-2 and 1099 from the same employer for the same year.
3. Length of employment does not determine worker status. Even employees who work for only part of one day are still employees, and all employment taxes apply.
4. Giving part-timers benefits is optional. Generally, you do not have to pay part-time or summer help for holidays and need not include temps and part-timers in health, pension and other benefits. But to exclude them, have a written plan stating which benefits are not available to these workers.
5. Defining “part-time” v. “full-time” employees. Federal law requires that you pay the overtime rate for each hour worked over 40 hours in the workweek, and governs the number of hours that children can work. But company policy determines whether you will pay overtime after 30 or 35 hours or any other number of hours fewer than 40.