Learn how to design an employee compensation structure that is compliant, transparent, and aligned with your practice’s values.
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Episode 16
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Compensation is more than a number on a paycheck, it's a message about how much you value the people who make your practice run. In this episode, Brandon Seigel breaks down the fundamentals of employee compensation in private practice, covering everything from classification compliance to pay structure philosophy.
Brandon starts with a critical compliance point that too many practice owners get wrong: the difference between employees (W-2) and independent contractors (1099). In healthcare, most people who work for a practice on a consistent, controlled basis should be classified as employees. Misclassifying them as contractors to save on payroll taxes isn't a gray area, it's a liability. The IRS, the DOL, and state labor boards are increasingly focused on this issue, and the penalties for misclassification can be severe.
The test for contractor versus employee status comes down to control: who determines how, when, and where the work is performed? Who provides the tools and materials? Is the relationship continuous or project-based? If you're directing someone's daily work inside your practice using your EMR, your rooms, and your schedule, that person is almost certainly an employee, regardless of how the agreement is structured on paper.
On the topic of pay structure, Brandon distinguishes between several models: hourly (non-exempt), salary (exempt and non-exempt), productivity-based, and hybrid approaches. Each has implications for compliance, predictability, and motivation. His overarching philosophy: compensation should create clarity, not confusion. When an employee can't easily understand how their pay is calculated or what they need to do to earn more, motivation suffers.
Brandon is particularly passionate about the total compensation mindset. Wages are just one component. Benefits, paid time off, flexibility, professional development, and career pathway opportunities all have real monetary value , and communicating that full picture changes how employees experience their compensation. A practice that pays $22/hour with robust benefits may be a better offer than one paying $26/hour with nothing else.
His final point on compensation philosophy: you can make someone feel valued or feel like a turd, and the structure of your pay does both of those things. Compensation that feels arbitrary, unpredictable, or disconnected from effort creates resentment. Compensation that feels fair, transparent, and tied to clear expectations creates loyalty. Build your pay structure with that in mind.
Key Takeaways
"The way you pay people tells them whether you see them as assets or expenses." , Brandon Seigel
