A colleague recently asked me how to go about bringing on an LMSW who wants to be supervised by her. I referred her to the page I had written previously on 1099s vs. W-2s, but the conversation reminded me that the “mechanical” questions of hiring are often just the surface of deeper questions about risk, responsibility, hunger, desire, and greed. I’m not really going to tangle with most of those here; I’m just focusing on practicalities. But all those deeper questions certainly lurk beneath (and probably not too far beneath) the surface.
The overview with which I would start is this: as far as New York State is concerned, what an LMSW needs is not just supervision, but a venue in which they can practice, to which their patients can pay their fees, from which they can receive their share of whatever it is their patients pay, and from which they can receive supervision for which they cannot explicitly pay.
Let me say that differently: in a normal universe:
- a patient would see a clinician,
- the patient would pay the clinician, and
- the clinician would pay for supervision.
That all happens when an LCSW or some other professional hires an LMSW—but there has to be some kabuki, because New York State is not a normal universe, and the State insists on being able to pretend that this is not what’s happening.
In New York, instead of the patient paying the clinician:
- the patient pays the venue;
- the venue pays the clinician;
- the clinician is supervised;
- the employer pays the supervisor;
- the LMSW implicitly bears this cost, with (part or all of) the difference between what they’re bringing in and what they’re being paid; and
- the State tells itself that this structure somehow transforms the economic realities into something different.
The standard way this happens is that patients pay the employer, the employer pays 30-60% of what they receive from the patients (or, in more institutional settings, a flat fee) to the LMSW, and the employer provides space and equipment and supervision—the costs of which are, the employer hopes, exceeded by what they retain of the fees generated by their LMSW employees.
Legal Status: 1099 vs. W-2
This brings us to the first major mechanical hurdle: Do you retain your LMSWs as 1099 independent contractors, or do you retain them as W-2 employees?
The regulatory and legal answer is that they must be W2 employees in New York State – although many (most?) people don’t do that. I’m not a lawyer, and I’m not offering legal advice, except to say that as far as I know, a) most people don’t get caught employing LMSWs as 1099 independent contractors, and those that have gotten caught have suffered a bit of a pain in the ass, and some financial consequences, but that at the end of the day, they weren’t in a materially different spot than they would have been had they done the “right” thing from the outset.
How one proceeds is really a function of one’s relationship to risk and authority and money and effort.
I employed my first couple of employees as 1099s, but ultimately switched to W-2—not because it was the “right” thing to do, but because I found the operational complexity of payroll increasingly challenging. I wanted to outsource it – and once it was outsourced, it was very straightforward to switch from 1099 to W-2.
While my tolerance for risk is relatively high for this field, it felt like the only benefit of not doing the right thing once I was using a payroll service was the economic benefit (about 10% of their gross wages) of not paying my employees payroll tax, and that wasn’t enough for me. So I switched.
If I were starting out again with just one LMSW, and had no intention of growing larger than that, I think I would go the 1099 route. I just don’t see a strong argument – other than the legal, regulatory argument – for doing otherwise.
Operational Questions: The Money Flow
Once you decide on the employment status, there are things to think about regarding how you want to manage the operations of receiving payments and dispersing payments. Your LMSW’s patients are going to have to pay you.
So do you want them to write checks or send Zelle or use credit cards to an account that belongs to the name of someone other than the clinician with whom they’re working? Or do you want to have them write checks or disperse money to something that’s a little bit more neutral and transference-protective? That’s a question to consider.
Where is your supervisee/employee going to get their patients? Are you going to be referring to them or are they going to be bringing them on their own? That has a variety of implications both for economics and responsibility and for operations.
Payment Timing
You also will want to think about how you’re paying your employees. When I first started, the way I did it was kind of compulsive, but it also worked: when my employees’ patients paid, I would pay my employee.
So a check would come in for $200, I would Zelle my employee $100. A Zelle payment would come in for $150, I’d Zelle them $75. I would do all of that just in real time as it happened. No backlog, and it wasn’t a big deal.
As my practice grew, that became untenable. I first switched to a weekly disbursement, then bi-weekly, and finally moved to monthly, which is operationally much more straightforward. When I was being reactive, I was sending my employees as many payments as we received payments. Weekly was 52 disbursements per year. Bi-weekly, 26. Monthly, 12. As I moved to a periodic system, there was a bit of work to do – each week, every two weeks, every month, and this work isn’t nothing. But it’s far less complex than it was sending hundreds of payments. And, ultimately, I ended up hiring someone to do some of this work.
If I had to do it over again, I think I would have started at monthly. It’s what I would counsel.
Economic Rationale: It’s Not Found Money
Another question is the economics: what are your goals and rationales for bringing someone on? Is it to make more money? In any case, you need to think about the economic split and how you’re going to compensate your employee.
The market is: for flat fees, people get about $40-$50 per session, maybe less. Percentage splits range from 35% to 60% retained by the LMSW, generally skewing lower.
If you’re employing someone as a W-2, you need to account for payroll services (not negligible), and payroll tax—about 10% of gross pay. So if someone brings in $5,000 per month and they’re keeping $2,500, you have to pay $250 of your $2,500 share in payroll tax. Plus expenses for accounting software, bookkeeping, insurance, EHR systems, and so on. So you’re not really keeping $2,500—more like $2,000 or even less.
Risk and Documentation
Finally, there’s the question of electronic health records and risk tolerance. When you employ someone, you’re responsible for them—their practice and the documentation of it. So you need to have in place a system that allows you to feel comfortable with the records they retain and your familiarity with and supervision of that.
AI postscript:
I wrote this post by:
- Dictating a first draft into my voice recorder
- Transcribing that draft
- Feeding it into Gemini, Claude, and ChatGPT, in each of which I uploaded every post previously posted on this site, and asked them to edit my first draft with knowledge of my voice from my previous posts
- Combining the best of the Claude and Gemini versions (the ChatGPT one was awful, and un-useable – lately, I often find that with ChatGPT)
- And then editing.
- I think it would have been better had I simply left AI out of this, other than in the transcription of my voice memo. I think what’s here is worse than it would have been had I simply edited my own damned draft. But. This took much less time than that, and I’m ok with a little slippage in the quality of my words; the ideas are all here, the content is all here, and that’s my goal. So. Apologies to readers: this would’ve been better had I written every word, but I leaned a little too hard on AI. I’m sorry.
