Employee: A massage therapist who works under an employer’s control
Independent Contractor: A massage therapist who runs their own business
Wondering which massage therapy work classification you fall into? It’s a common confusion, but an important one to clarify, as there are different rules for each.
Let’s undo the knot of understanding employee vs. independent contractor in massage therapy so you can feel confident your practice is in order before your next session.
The Key Differences: Employee vs. Independent Contractor in Massage Therapy
Here’s the main word to focus on: independence. As in, are you in control of your massage therapy business, or is someone else?
Employee Massage Therapist
An employee is a massage therapist who is hired by an employer, like a spa owner, to perform massage therapy at their business.
- Works set hours, under the direction and control of another
- Employer provides supplies, sets pricing, and handles scheduling
- Employer is responsible for withholding taxes
In other words, a massage therapist who works as an employee is not independent. The business brings them on to offer massage services and oversees their practice.
Independent Contractor Massage Therapist
An independent contractor is a massage therapist who is fully in charge of their practice. As defined by M-W: a person hired to do work who controls how the work is done.
- Sets own hours and may work for multiple clients/locations
- Provides own tools and supplies and controls how they work
- Responsible for own taxes, liability insurance, and expenses
Simply put, an independent contractor works independently — they perform massage therapy how, where, and when they want.
Did you know? Incorrect misclassification costs workers thousands of dollars a year! In 2023, some workers lost annual amounts up to $26K because they were not classified as employees.
Massage Therapist Classification Self-Check Chart
| Question | Mostly “Yes” → You may be an Employee | Mostly “Yes” → You may be an Independent Contractor |
|---|---|---|
|
Who sets your work schedule?
|
My employer sets my hours. |
I decide my own schedule.
|
|
Who decides how much clients are charged?
|
The spa/clinic sets the prices.
|
I set my own rates.
|
|
Who provides your massage table, sheets, and oils?
|
My employer supplies them.
|
I purchase and maintain my own supplies.
|
|
Who controls how you perform services?
|
I must follow the employer’s method or routine.
|
I choose my own massage techniques and approach.
|
|
Who handles payment from clients?
|
The business collects payment and pays me wages.
|
I collect payment directly or invoice clients.
|
|
Do you work for multiple businesses/locations?
|
No, just one employer.
|
Yes, I work at multiple places or with multiple clients. |
|
Who pays your taxes?
|
Taxes are withheld from my paycheck.
|
I file and pay my own self-employment taxes.
|
Who sets your work schedule?
Mostly “Yes” → You may be an Employee
My employer sets my hours.
Mostly “Yes” → You may be an Independent Contractor
I decide my own schedule.
Who decides how much clients are charged?
Mostly “Yes” → You may be an Employee
The spa/clinic sets the prices.
Mostly “Yes” → You may be an Independent Contractor
I set my own rates.
Who provides your massage table, sheets, and oils?
Mostly “Yes” → You may be an Employee
My employer supplies them.
Mostly “Yes” → You may be an Independent Contractor
I purchase and maintain my own supplies.
Who controls how you perform services?
Mostly “Yes” → You may be an Employee
I must follow the employer’s method or routine.
Mostly “Yes” → You may be an Independent Contractor
I choose my own massage techniques and approach.
Who handles payment from clients?
Mostly “Yes” → You may be an Employee
The business collects payment and pays me wages.
Mostly “Yes” → You may be an Independent Contractor
I collect payment directly or invoice clients.
Do you work for multiple businesses/locations?
Mostly “Yes” → You may be an Employee
No, just one employer.
Mostly “Yes” → You may be an Independent Contractor
Yes, I work at multiple places or with multiple clients.
Who pays your taxes?
Mostly “Yes” → You may be an Employee
Taxes are withheld from my paycheck.
Mostly “Yes” → You may be an Independent Contractor
I file and pay my own self-employment taxes.
Pro Tip: These are the key differences between employee and independent contractor massage therapists in general. But there are exceptions, of course — we’ll go over this next.
Legal Considerations for Working Massage Therapists
Imagine the shock of hearing you owe back taxes because you thought you were an employee, not an independent contractor. Not a very zen feeling! That’s why confirming your work classification is essential before clients hop onto your table.
Here are the most important legal factors to consider.
Taxes
Employees: Your employer withholds income taxes, Social Security, and Medicare from your paycheck and sends them to the IRS and state on your behalf. When tax time rolls around, you receive a W-2 to file your personal taxes.
Independent Contractors: You’re responsible for calculating and paying self-employment tax (Social Security and Medicare), plus federal and state income taxes. Payments are typically due quarterly using Form 1040-ES.
When it comes to paying taxes, your work classification is based on two things: the IRS (Internal Revenue Service) and any state-specific laws that may apply. Regardless of your classification, it’s best to seek help from a tax professional to ensure you’re filing correctly.
IRS Classification Guidelines: Common Law
The IRS offers these guidelines for determining your classification, but they also say these are not hard-and-fast rules — no “set” number of factors that classify you as one or the other!
- Behavioral: Does the company control how you do your job?
- Financial: Does the company control the money side of your job?
- Relationship Type: Is there a written contract or benefits offered? Is your work a key aspect of the business?
State-Specific Rules: ABC Test
Some states use an ABC Test, which is often stricter than the IRS’ guidelines. To classify as an independent contract under this test, you need to meet all three of these conditions:
A. Autonomy: You control how you work as a massage therapist
B. Business Difference: Your work is different from the company’s business
C. Independent Trade: You have your own massage business, separate from the company
In ABC Test states, if you work at a massage clinic or spa (whose core business is massage), you often don’t qualify for part B. This means you’re likely considered an employee, even if you’ve signed a contract agreement.
Confusing, right? While the details can get a little hairy, know that these rules are designed to protect your rights and benefits when classification lines are blurred! Always check your local jurisdiction for the most accurate info.
Some states that follow the ABC Test include:
Some states, like Colorado and Idaho, also have their own set of criteria that include only parts of the ABC Test.
Contracts
If you are a massage therapist independent contractor, you must have a written agreement — ahem, a contract! — in place with the spa, salon, suite, or business you work at.
A contract protects both of you and clarifies expectations. It should clearly lay out:
- The scope of your work
- How you get paid (i.e., what percent of sales go to you vs. them)
- Who’s responsible for the workspace and tools
- Any conditions for terminating the contract
- How you will resolve disputes that come up
- Liability and insurance requirements
A well-written contract shows you’re in business for yourself, which can support your status as an independent contractor if it’s ever questioned.
Labor Laws
If you’re an employee, you’re protected by federal and state labor laws on things like:
- Minimum wage
- Overtime pay
- Required breaks
- Paid sick leave
Your employer must comply with workplace safety standards (OSHA) — it’s all part of running a business with employees. They’re responsible for keeping you safe while you work.
If you’re an independent contractor, labor laws generally don’t apply to you. You negotiate your rates, hours, and breaks directly with the hiring business.
The good news? More flexibility to run your practice how you like. The downside? You have to be able to advocate for yourself to get the most out of your contract.
Misclassification Penalties
Misclassification isn’t always the intentional fault of an employer. It can be as simple as someone misunderstanding the rules. No matter the cause, it can come with serious consequences.
If you’re an employee but thought you were a contractor, you might be:
- Paying more in taxes than necessary
- Missing out on paid sick days or unemployment benefits
- Not covered for workers’ compensation
Vice versa, if you’re actually an independent contractor, you might:
- Owe more taxes than you thought
- Have to repay certain benefits you weren’t entitled to
- Be liable for any professional mistakes you make
Pro Tip: Dig deeper with our guide on Massage Therapy License Requirements, which includes easy links to every U.S. massage state board.
What to Know About Insurance for Massage Therapists
Insurance for Massage Therapist Employees
Liability Coverage: You’re typically covered under your employer’s liability insurance policy for work you do on-site
Workers’ Compensation: Your employer is generally required to provide you with this coverage — your medical costs and lost wages are covered if you get hurt while working
You might still need individual liability coverage if you also do side work, like mobile massage services or other events, on your own. Check with your employer to see how comprehensively their insurance covers you.
Insurance for Independent Contractor Massage Therapists
Independent contractors, you guessed it. You need your own insurance coverage because you run your own massage therapy business.
In fact, many spas, resorts, or salon suites will require you to show proof you’re covered with a Certificate of Insurance before they consider working with you. And some states require liability insurance for massage therapy licensure.
The most common types of massage therapy insurance you need are:
- General liability insurance: Covers accidents or property damage caused by your business (even if it’s not directly your fault)
- Professional liability insurance: Protects you in case you accidentally hurt a client during service or make a real or perceived mistake
- Tools and supplies coverage: Pays to repair your massage supplies (like your expensive table or tech) in case of theft or damage
BBI: Insurance Tailored for Massage Therapy
Whether you’re a side-gigging employee or an independent contractor just starting a massage business, getting properly covered is an unskippable step. No matter how careful you are, there’s always a risk of accidentally injuring a client, causing an allergic reaction, or even failing to meet client expectations!
Liability insurance gives you peace of mind to focus on your work — not on expensive claims that can cost you big or shut down your practice for good.
Getting covered is easier and more affordable than you think. Beauty & Bodywork Insurance (BBI) offers top-rated massage liability insurance tailored for the bodywork industry from just $9.99 a month. Peace of mind for about the cost of a bottle of massage oil? Yep!
Our massage therapy insurance policy includes general and professional liability coverage in one simple policy, with optional add-ons. See coverage details.
Ready to protect all the hard work you’ve put into your practice, whether as a solo therapist or employee? BBI’s got you covered.
FAQs on Employee vs Independent Contractor Massage Therapists
What Makes a Massage Therapist an Employee vs. an Independent Contractor?
An employee works under an employer’s control, following their schedule, rules, and using their equipment. An independent contractor runs their own business, sets their own terms, and supplies their own tools. Check your state’s rules for any exceptions.
Do Independent Contractor Massage Therapists Need Different Insurance?
Yes, independent contractors must carry their own professional and general liability insurance, since they’re not covered under an employer’s policy.
Can I Switch Between Employee and Independent Contractor as an LMT?
Yes, you can switch work classifications, but each role has different tax, legal, and insurance responsibilities, so you’ll need to update contracts, taxes, and coverage accordingly.
What Are Some Common Pitfalls to Avoid as a Working Massage Therapist?
- Avoid these common mistakes massage therapists make.
- Do not assume your work status — always clarify with the business you work at
- Do not overlook tax obligations
- Do not skip getting insurance
- Make sure you thoroughly review all contracts and employment policies
