Traditional Employed vs. Independent Contractor: The good, the bad and the differences

Traditional Employed vs. Independent Contractor:  The good, the bad and the differences

This article was written by Dr Pamela Blade.

Welcome! You have explored all your options and think corporate optometry is the right fit for you. As you investigate the different practices you are interested in you may notice that some positions appear to be traditional employment with benefits like health insurance and vacation time listed, but other postings note that they are hiring for an independent contractor position.  Most of us did not get any information in school on what an independent contractor is and what the pros and cons of this type of employment are vs. traditional employment.  This article will give you the nuts and bolts on getting started on making a more informed decision.

Traditional or W-2 Employment

The Pros:

As an employed OD you will likely enjoy a good salary, and benefits such as health insurance, retirement funding like a 401K, and other fringe benefits like vacation days, sick days, paid professional liability insurance and even an allowance for CE and membership in your local optometric association and the AOA.  Additional perks might include free eyewear and/or contacts and discounts for your family and friends.  Benefits and a steady, reliable paycheck can relieve budget planning stress and help you feel more secure in making long term financial goals.  

The Cons:

While having paid vacation is definitely a perk, if you want to take a vacation or days off during a time your employer doesn’t want to be short handed or have to find fill in help, you may be out of luck.  Also in corporate optometry we are often open on holidays that private practices are closed since we support the retail business.  This is generally when a lot of people really want time off like when their kids are out of school for the summer or spring break, or the end of year holiday season. If there is a time of year or holiday you need off make sure you specify that during your contract negotiations and make sure you understand how you accrue vacation days and how to request using them.

The other important item to note is the non-compete clause in your contract.  If for some reason you decide that the practice is not where you want to be anymore you need to make sure you aren’t going to have to move to find a new job.  Most contracts have a reasonable non-compete clause of 1-7 miles, but I have heard of contracts with 20 and even 25 miles!  That could make switching jobs very problematic as corporate locations are often located in retail areas close to each other. 

Independent Contractor (IC) or W9 employment

What defines someone as an independent contractor?  In part the IRS definition of an independent contractor reads:

“The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.  The earnings of a person who is working as an independent contractor are subject to the Self-Employment Tax.” What this boils down to is that you are self-employed.  Being self employed gives you a lot of power, but as Uncle Ben said in Spiderman “With great power, comes great responsibility.”

The Pros:

The biggest benefit of being an independent contractor (in most cases) is freedom of schedule.  You may be contracted to cover a certain number of days and hours, but in general you can set the days that you work and request time off as you want it.  Most places that you will contract with will have a request window (usually 30-60 days) to give them time to seek coverage, but you aren’t restricted (unless specified in your contract) to when those days can be and how many you can take.  

If you are an employed doctor with benefits, make no mistake, you are “paying” for your benefits.  Somewhere in your contract it is often noted what the total value of your compensation package is, detailing the dollar cost of each benefit.  As an independent contractor your upfront salary is usually higher than what you would be offered in an employed position because the employer is not spending the difference on your benefits.  Being an independent contractor can be a better choice if you would prefer to get your money upfront and budget out the expenses yourself.  

In general the other prime benefit of being an independent contractor is a very small or no non-compete clause.  This gives you the flexibility to fill in and try other practices if you are looking for something new, or work in a few different locations if being in multiple locations is more interesting to you.  In most larger cities and suburban areas you can piece together full time work by filling in or floating between brands and/or stores.

As a full time independent contractor you may not have a lot of flexibility in negotiating what you get paid, but if you are doing fill in work, or you are a float doctor you may have the ability to leverage better than average pay, thereby possibly working fewer days or hours to make your salary goal.


The biggest drawback to being an independent contractor is that if you don’t work, you don’t get paid.  If you want to take a vacation or have some savings to live on in case you get sick you will need to have a plan and stick to it.  You also need to budget for paying for your healthcare, whether that includes paying for everything out of pocket or a plan on the government healthcare marketplace, if you are not covered under someone else’s plan.  As you plan for your continuing education, you need to budget for the time you may need to take off to attend if your state requires live CE.  

Navigating the tax situation can be a challenge.  You do have options, like forming an LLC to use as a pass through to pay yourself or filing quarterly self employment taxes.  The self employment tax rate is higher than what is taken from your paycheck as a traditional employee because your employer pays half  Either way it can be some work to navigate, but if it’s not your cup of tea you can hire an accountant to handle all or some of the responsibility for you. 

This is the very basic nuts and bolts of the differences between traditional employment and being an independent contractor.  If you have more questions make sure you check with a consultant or accountant for detailed information and advice on your personal situation.  Whether you choose a traditional employed position or becoming an independent contractor there will be perks and challenges.  Either way you will gain valuable experiences and lessons that will help you find the mode of practice that works best for you!

“Independent Contractor Defined.” IRS website 22 May 2020, last updated 23 January 2020.

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