The Contract Temptation: Why Classifying BCBAs as 1099s May Be a Risk for ABA Companies
Introduction: The Rise of Gig Thinking in ABA
Across the ABA field, more organizations are leaning into gig-style hiring—classifying BCBAs as independent contractors rather than employees. It’s pitched as a flexible, efficient model: lower overhead for the company, autonomy for the clinician.
But there’s a serious legal and ethical issue at the core of this approach—one that’s easy to overlook until an audit or investigation forces the conversation.
According to the IRS, if a worker performs a key aspect of your business , they’re probably...
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not a contractor. They’re an employee.
The IRS Rule: Key Aspect of the Business
The IRS uses several factors to determine whether a worker is an employee or an independent contractor. One of the most critical is called the “key aspect of the business” test.
“If the worker provides services that are a key aspect of the regular business of the company, it is more likely that the company will have the right to direct and control their activities.” — IRS.gov – Type of Relationship
If a BCBA writes treatment plans, supervises RBTs, conducts assessments, and bills under your company’s credentials—they are not a peripheral vendor. They are your clinical operation. And that means they should be classified as a W-2 employee.
Why 1099 Classification Often Fails the Test in ABA
Contractors Should Be Truly Independent
According to IRS standards, 1099 workers:
- Set their own scope and deliverables
- Use their own tools and systems
- Work without direct supervision
- Operate under their own tax ID and business license
- Can freely accept or decline work
In reality, most contracted BCBAs in ABA agencies:
- Work within the agency’s policies and procedures
- Use the company’s EMR and documentation standards
- Supervise staff hired by the agency
- Submit plans under the agency’s NPI or tax ID
- Follow payer or Medicaid contracts held by the agency
That level of control and integration aligns with employment , not independent contracting.
The Mixed Model Problem: Contractors Supervising Employees
Some ABA companies try to compromise: they hire technicians as W-2 employees but assign 1099 BCBAs to supervise them. This may seem like a workaround, but it creates even deeper legal and compliance issues.
1. Supervision Is an Employer Responsibility
Supervising another person’s job performance—especially in healthcare—is a core function of management. A contractor who isn't part of the organization shouldn't direct, evaluate, or discipline the company’s employees.
2. Medicaid and Payer Contracts Require Alignment
Most insurance and Medicaid agreements require that all billed services be:
- Delivered by employees of the contracted provider
- Supervised by credentialed employees, not external vendors
- Documented in ways that comply with payer-specific standards
3. Clinical Quality and Team Function Break Down
When a supervisor isn’t embedded in the team culture or accountable to leadership, the quality of feedback, collaboration, and accountability suffers. It becomes unclear who owns outcomes—and who clients or staff should turn to for help.
What You Risk by Misclassifying BCBAs
1. IRS and Department of Labor Audits
- Back taxes for unpaid payroll contributions
- Penalties and interest
- Fines for wage and hour violations
2. Payer and Medicaid Recoupments
- Denied claims if the supervising BCBA was not a valid representative of the billing provider
- Requests for refunds or overpayment audits
- Potential fraud allegations if supervision records are challenged
3. Legal Liability and Litigation
- Wrongful termination claims
- Unpaid benefit lawsuits
- Claims of misrepresentation or coercion if staff were pressured into 1099 roles
What About BCBAs Who Want to Be Contractors?
Some Behavior Analysts actively request 1099 roles. That’s valid—if they are truly running an independent business. That means:
- Credentialed directly with the funder
- Operating under their own NPI, tax ID, and payer contracts
- Managing their own documentation, billing, and client relationships
If they are relying on your company to credential them, submit claims, and assign clients—they are not functioning as an independent provider.
Better Alternatives That Preserve Flexibility and Compliance
ABA companies can still support workforce flexibility without crossing classification lines:
- Part-time W-2 employment for clinicians who want limited hours
- PRN roles with defined expectations and eligibility for oversight
- Project-based short-term employment with clear onboarding and separation
Conclusion: Hire BCBAs the Right Way
The IRS doesn’t look at what you call the relationship. It looks at how it actually functions.
The rule is clear:
“If the worker provides services that are a key aspect of the regular business of the company, it is more likely that the company will have the right to direct and control their activities.” — IRS.gov – Type of Relationship
In ABA, there’s nothing more key than a Behavior Analyst.
And there’s no shortcut around getting this classification right.
