Question on an independent contractor with possibly leased employees -

Situation - I have a group of four doctors and each is an independent contractor for a clinic. The clinic has a staff of approximately 10 employees. There is no plan for the clinic staff and only one of the doctors has a plan (MP). Some of the clinic staff members perform services exclusively for the doc with the MP. They take direction and instruction from her. However, she does not hire or fire (but has the discretion to advise of termination or hire.) Any revenue generated by the doc goes 55% to her and 45% to the clinic. She receives W-2 income from her own company as do each of the other doctors. Client was advised several years back that the employees of the clinic are not considered leased employees, however, the CPA and office manager are concerned that there may be a potential problem. There is no leasing agreement between the doctors and the clinic.

Should the employees that work directly 'for' this doc be considered leased employees?::confused:

I'd be concerned too, if I were in their shoes. This is one of those nasty "facts and circumstances" situations. SBJPA was supposed to help clear up some of this, but I think it only made it worse! 414(n) doesn't give a lot of direction, but the conference committee reports to SBJPA are instructive.

Assuming these employees aren't common law employees, I'd have to say it sounds very much like they would qualify as leased employees, based upon the facts you presented. If I were the employer, I'd sure want a legal opinion before I attempted to exclude them from my plan.

Thanks! I was afraid that my interpretation would be correct and hoped somebody would tell me otherwise. I can go forward with this now and see what the client wants to do. Thanks again!