Changing therapists from employees to independent contractors for a new flat-rate payment structure

STATE OF NEVADA
JOE LOMBARDO DR. KRISTOPHER SANCHEZ
Governor Director

                                                                                                              BRETT K. HARRIS. ESQ.
                                                                                                                Labor Commissioner




                           DEPARTMENT OF BUSINESS AND INDUSTRY
                     OFFICE OF THE LABOR COMMISSIONER

                                                      April 20, 2026

Via Email and U.S. Mail

John Duerr, MFT
VP Mental Health Support Services US
Harmony Healthcare
1701 West Charleston Blvd., #300
Las Vegas, NV 89102
[email protected]

   Re: Request for Advisory Opinion—Change of Classification to Independent Contractors

for New Payment Structure and Expansion of Business

Dear Mr. Duerr,

   Pursuant to Nevada Administrative Code ("NAC") Section 607.650, an Advisory Opinion

has been requested clarifying if individuals performing work as therapists may be classified as
independent contractors and paid a flat rate instead of being classified as employees as an option
for expanding your business.

    As set forth in NAC 607.650, this Advisory Opinion is limited to the facts and

circumstances set forth in the request. This Advisory Opinion shall not apply to any pending
administrative, civil, or criminal proceeding and shall not be relied upon by any party, whether a
party at issue in the facts or not, in any future proceeding unrelated to the specific and unique facts
and circumstances set forth in the request.

                                               FACTS PRESENTED

   In your Request for Advisory Opinion, you pose the following question and presented the

following facts:

   I am reaching out to request an advisory opinion for the following employment
   question. Harmony Healthcare is a mental health organization that operates in Las Vegas
   for the past 30 years. One of our primary services that we deliver is mental health
   therapy. We currently use full time salaried therapists to deliver that service. Those
   therapists exclusively focus on delivering the service to patients that have insurance

Page 2

   through one of our exclusive contracts. We are looking at options for expanding our
   business into delivering therapy services to patients that hold commercial insurance,
   medicaid, medicare, tricare, and self-pay. In order to build this new business line, we
   would like to use independent contractors (w-9) staff instead of w-4 employees because
   we would be using a different compensation model for this similar but separate business
   line. Instead of being paid a salary rate or hourly rate, they would be paid a flat rate for
   each appointment that they complete. They would use their own computers and their own
   office space. We would provide the electronic medical software, scheduling services, and
   billing services. They would be able to set their own schedule, but they would need to
   provide us with updated availability each month so we could offer appointments to new
   patients through our call center.

                                             LEGAL AUTHORITY

    Employee misclassification describes a type of labor law claim wherein an employer

improperly classifies a person as an Independent Contractor when the employer should have
classified that person as an employee. Employers commonly misclassify employees as
Independent Contractors to lessen tax liability; however, this is prohibited by Nevada law. The
Nevada Office of the Labor Commissioner ("OLC") has jurisdiction over employee
misclassification in the private sector. Nevada Revised Statute ("NRS") 608.010 states an
employee "includes both male and female persons in the service of an employer under any
appointment or contract of hire or apprenticeship, express or implied, oral or written, whether
lawfully or unlawfully employed."

   Nevada law requires employers to "pay to the employee wages for each hour the employee

works." NRS 608.016. Pursuant to NRS 608.012 "wages" includes:

               1. The amount which an employer agrees to pay an employee for the
   time the employee has worked, computed in proportion to time;
               2. Commissions owed the employee; and
               3. Amounts due to a discharged employee or to an employee who
   resigns or quits pursuant to NRS 608.040, but excludes any bonus or arrangement
   to share profits.

    NRS 608.0155 provides a test for the OLC to use when evaluating whether an individual

is properly classified as an Independent Contractor:

    1. Except as otherwise provided in subsection 2, for the purposes of this chapter,
   a person is conclusively presumed to be an Independent Contractor if:
       (a) Unless the person is a foreign national who is legally present in the United
   States, the person possesses or has applied for an employer identification number
   or social security number or has filed an income tax return for a business or earnings
   from self-employment with the Internal Revenue Service in the previous year;
        (b) The person is required by the contract with the principal to hold any
   necessary state business license or local business license and to maintain any
   necessary occupational license, insurance or bonding in order to operate in this
   State; and
       (c) The person satisfies three or more of the following criteria:
   …

Page 3

     (1) Notwithstanding the exercise of any control necessary to comply with

any statutory, regulatory or contractual obligations, the person has control and
discretion over the means and manner of the performance of any work and the result
of the work, rather than the means or manner by which the work is performed, is
the primary element bargained for by the principal in the contract.
(2) Except for an agreement with the principal relating to the completion
schedule, range of work hours or, if the work contracted for is entertainment, the
time such entertainment is to be presented, the person has control over the time the
work is performed.
(3) The person is not required to work exclusively for one principal unless:
(I) A law, regulation or ordinance prohibits the person from providing
services to more than one principal; or
(II) The person has entered into a written contract to provide services
to only one principal for a limited period.
(4) The person is free to hire employees to assist with the work.
(5) The person contributes a substantial investment of capital in the
business of the person, including, without limitation, the:
(I) Purchase or lease of ordinary tools, material and equipment
regardless of source;
(II) Obtaining of a license or other permission from the principal to
access any work space of the principal to perform the work for which the person
was engaged; and
(III) Lease of any work space from the principal required to perform
the work for which the person was engaged.
The determination of whether an investment of capital is substantial for the
purpose of this subparagraph must be made on the basis of the amount of income
the person receives, the equipment commonly used and the expenses commonly
incurred in the trade or profession in which the person engages.
2. A natural person is conclusively presumed to be an Independent Contractor
if the person is a Contractor or Subcontractor licensed pursuant to chapter 624 of
NRS or is directly compensated by a Contractor or Subcontractor licensed pursuant
to chapter 624 of NRS for providing labor for which a license pursuant to chapter
624 of NRS is required to perform and:
(a) The person has been and will continue to be free from control or direction
over the performance of the services, both under his or her contract of service and
in fact;
(b) The service is either outside the usual course of the business for which the
service is performed or that the service is performed outside of all the places of
business of the enterprises for which the service is performed; and
(c) The service is performed in the course of an independently established
trade, occupation, profession or business in which the person is customarily
engaged, of the same nature as that involved in the contract of service.
3. The fact that a person is not conclusively presumed to be an Independent
Contractor for failure to satisfy three or more of the criteria set forth in paragraph
(c) of subsection 1 does not automatically create a presumption that the person is
an employee.
4. As used in this section:
(a) "Foreign national" has the meaning ascribed to it in NRS 294A.325.
(b) "Providing labor" does not include the delivery of supplies.

Page 4

   NRS 608.400 prohibits employee misclassification in Nevada. The law expressly states:

   1.   An employer shall not:
       (a) Through means of coercion, misrepresentation or fraud, require a person to
   be classified as an Independent Contractor or form any business entity in order to
   classify the person as an Independent Contractor; or
       (b) Willfully misclassify or otherwise willfully fail to properly classify a person
   as an Independent Contractor. (Emphasis Added).

                                                       ANALYSIS

    Under the facts presented classifying therapists as independent contractors would represent

a misclassification pursuant to Nevada law. Most notably, your business already has full time
salaried therapists that are classified as employees. When analyzing the presented facts under the
rules set by NRS 608.0155, the therapists would not be Independent Contractors. The individuals
would work for your business, which maintains control and direction over the work performed.
The individuals would utilize your electronic medical software, scheduling services, and billing
services. Second, the work performed by the therapists is not outside of the usual course and scope
of business of the mental health support services offered by your business.

    Finally, the therapists are not performing work in the course of an independently

established trade, occupation, profession or business in which you are customarily engaged. On
the contrary, you currently have individuals employed by you performing the same type of work
and paid on a salary or an hourly basis.

     Furthermore, the change in pay structure does not necessitate a change in employment

status from employee to independent contractor. A flat rate or piece rate may be paid to employees
performing work as therapists based on a unit of production of work. The payment must equal at
least minimum wage for hours worked. To change a worker status from employee to independent
contractor status for purposes of changing the pay structure would clearly demonstrate willful
employee misclassification and is prohibited in Nevada.

    Please be advised that this Advisory Opinion is limited to the specific facts and

circumstances described herein. The Office of the Labor Commissioner may revisit this issue
through the Administrative Rulemaking Process. Please be further advised that subsequent
statutory or administrative rule changes or judicial interpretation of the statutes or rules upon which
any opinion is based may require that this Advisory Opinion be modified or abandoned. Should
you need additional clarification, please do not hesitate to contact our office at (702) 486-2650.

Sincerely,

Brett K. Harris, Esq.
Labor Commissioner