If you’re looking to get a school-based OT job, you may be wondering if you’re better off working directly for a district or as a contractor. Unfortunately, the answer to this isn’t cut and dry. There are multiple variables that you need to consider when comparing school-based OT roles, and the best position is highly dependent on your personal situation. So, which is right for you? Read on.
School-Based OT Employee vs Independent Contractor
The first thing to know about working directly for a school district vs contracting is that there are actually more than two options. OTs can work for schools in the following ways:
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- Hired directly by a school or district
- Typically an employee who receives a W2
- Most likely paid a salary
- Most of the time hired at the district level, but sometimes at the school level, especially if working for a non-public school
- Hired directly by other public educational agency
- Could be a co-op, SELPA, county office of education, ESD, etc.
- Typically an employee who receives a W2
- Most likely paid a salary
- Very similar to a district-level position, but may be covering multiple districts in a certain geographic area
- Hired directly by private contracting/travel agency
- Often an employee who receives a W2, but has the potential to be an independent contractor who receives a 1099
- Most likely paid hourly
- Contracting directly with school/district
- Typically an independent contractor who receives a 1099
- Most likely paid hourly or by the billable hour
So here’s where it gets confusing: only some of these positions are truly independent contractors in the eyes of the IRS. Instead, you may be an employee of a contracting agency that contracts your services.However, you’ll still hear OTs working under this set-up referred to as “contractors” in their schools, regardless of the IRS definitions. This is a small but important distinction as your actual employment type affects your benefits, rights, and taxes.
But more on that later – for now, let’s compare some of the pros/cons of each of these employment types.
School-Based OT Pay
If making the most money right now is your main priority, you’re almost assuredly better off as a contractor. These types of positions usually result in a higher rate of pay compared to working directly for a school district. This is especially true if you’re looking into travel therapy positions in the schools that result in tax-free stipends for housing and meals.
However, your decision-making process shouldn’t stop at pay rates, as the actual position that may be the best for you may not be the one that looks the highest-paying at first glance.
Hourly vs Salary
Beyond pay rates, you should consider whether a position is paid hourly or via salary. Typically, direct hire positions are paid via salary, and contract/agency positions are paid hourly, but there are always exceptions to the rule.
A benefit of being paid via salary includes consistent, stable income regardless of what happens in the day-to-day. But on the flip side of this, you may be asked or expected to work unpaid overtime – sometimes a significant amount. Well-written school district employee contracts will still have expected hours/days to prevent this, but this is not the case everywhere. Many school-based OTs are working way too many hours and are burning out.
On the other hand, if you’re an hourly employee, you are legally required to be paid for all of the hours that you work. And overtime must be paid at a rate of at least 1.5 times your regular rate! So don’t work off the clock – you are entitled to this pay regardless of internal pressures by unethical employers/districts.
One other scenario to consider in this category is contractor positions that pay via billable hour only. I highly recommend against these positions in general, but especially in school-based OT. This type of position entails only getting paid for the time you’re spending directly assessing or treating students. But being a school-based OT has many other responsibilities, such as documentation, teacher training, travel, and IEP meetings. This puts OTs in a situation where they either have to choose between getting paid for their work or skipping out on certain parts of the role, which ultimately leads to worse outcomes for students. If you have to accept a position like this, make sure the billable hourly rate is much higher than a salary rate or even an hourly rate that includes other responsibilities.
Curious how to compare these different types of rates? Take a potential salary and divide it by how many days/hours are in a contract to come to a ballpark hourly rate. So if a school-based OT position was listed at $75,000 annually, based on working 180 seven-hour days out of a year, you would see that the hourly rate equivalent is about $59 an hour.
But, that’s still not the full picture. So let’s move on to another important aspect of jobs: benefits.
School-Based OT Benefits
For many people, benefits can be the deciding factor of what kind of employment set-up is best for them. And school districts notoriously have strong benefits – things like great health insurance, good retirement options, sick time, personal days, paid holidays, continuing education reimbursement, worker’s comp, etc.
But strong benefits are also notoriously expensive to provide, so this is why you’ll often see a huge difference in pay rates for direct-hire vs contractor positions.
If you’re working for a contract agency as an employee, you’ll likely still be eligible for some benefits, but they might not be as strong as the ones provided when working directly for a school district.
This is where the financials get harder to compare. Some districts make it easy on you and assign a monetary value to their benefits. But for others, you may have to reverse engineer this to figure out which type of position is actually the better financial option for you.
Say you’re comparing two positions, one directly working for the district and one as an independent contractor. Let’s say the independent contractor position comes with an hourly rate of $75 per hour, and it includes all relevant tasks, not just treatment time. And let’s say the salary position is $75,000 annually and comes with 20,000 worth of benefits. The days are 7 hours long and there are 180 work days in the school year. Even though the contractor position has you making $15 more an hour than the effective hourly rate of the salary position ($59), you’re actually coming out slightly ahead by taking the salary position. With the contractor position, you’d end up making $94,500 a year (if you never miss an hour of work!) compared to $95,000 at the direct hire job when including the value of the benefits.
But that only makes a difference if the benefits actually matter to you. If you’re in a position to go without job-provided benefits, a higher hourly rate may be more appealing. So if you can get things like health insurance or retirement plans privately or through a spouse, you may be better off working as a contractor.
Raises
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One other thing to consider in regards to pay as a school-based OT is the potential for raises. When you’re working directly for a district, you’ll likely be placed on a salary schedule. What this means is that every year that you continue working for the district, you’ll be paid a little more based on your increased experience. These salary schedules typically also have increased pay for higher degrees, so there’s also the potential to get paid more if you go back and get your doctorate, unlike in most OT settings. School districts also have contracts that are re-negotiated every so often which usually means you’ll be receiving cost-of-living raises as well.
Whether you’re working for a contract agency as an employee or a true independent contractor in business for yourself, raises often aren’t as clear-cut. There may not be a regular schedule for raises and you may have to advocate for this on your own. You may get told “no” or that it just “isn’t in the budget right now.” This can be so frustrating because at the very least, you should be getting raises that keep up with cost-of-living – otherwise, it’s actually like you’re making less money year after year as inflation increases. Plus, you really deserve to be compensated for increased experience as you will likely get more effective and efficient at your job over time.
Again, there are exceptions to every rule. Some contractors raise their rates every year without issue. But if you’re looking for guaranteed raises, a district position may be a better bet.
School-Based OT Materials
And of course, there are other costs to consider besides your labor. School-based OT requires materials like testing kits, intervention activities, adaptive equipment, paper, etc. The cost of all of these things can easily add up to thousands of dollars a year. And if you’re an independent contractor, you may be on the hook for paying for all of it.
But if you’re an employee, whether of a district or of a contracting agency, they should be providing you with all the tools necessary to do your job. You shouldn’t be paying for anything out of pocket (and that includes other tools you use for work, like a laptop or a cell phone). There is a rampant and toxic culture in public education that you have to use your own money to buy stuff for your students, but this is not acceptable. If something is required for your student to access their education, your district has a legal obligation to provide (and pay!) for it.
As an independent contractor, any materials you buy can be written off on your taxes as a business expense. Note that “writing off” doesn’t mean this item will be free as many people think, but it will reduce your tax burden and cause you to pay less at tax time. It’s also possible to draw up a contract that states that the district will be responsible for providing any needed materials. This can be especially helpful if you don’t need your own personal copy of assessment kits that cost $500+.
Occupational Therapy Student Loans
If you have student loans, Public Service Loan Forgiveness (PSLF) should absolutely be on your radar. While this program has been fraught with issues, (in the program’s first year, only 0.032% of applicants were approved) it does have the potential to get your federal student loans wiped entirely clean. And since 2021, the program has been overhauled to ensure that people who qualify are actually getting their loans forgiven.
To qualify for PSLF, you must work at a non-profit or governmental organization, which schools fall under. Be sure to read up on the details of this program to see if it makes sense for your personal situation. I have also heard of school-based OTs qualifying for teacher loan forgiveness programs.
Unfortunately, many school-based OTs don’t qualify for PSLF because they don’t work directly for a school. If you’re working through a contract agency, you’re likely out of luck unless your agency happens to be a non-profit (very rare). So if PSLF is a good fit for you, it may be worth seeking out a position directly with a school or district.
On the other hand, you may be better off getting a higher-paying job that would allow you to make higher payments on your student loans. Be sure to look at your actual balance and your expected payments. Because the PSLF program requires you to work full-time for 10 years in a qualifying organization, you may end up paying off your loans before you’d be eligible for forgiveness.
Student loans and forgiveness programs are hot topics that are likely to continue to change, so be sure to keep up-to-date on them if this is a factor in your employment.
Taxes
Let’s come back to that awesome, super-high hourly rate that’s been offered to you as an independent contractor. While you now know that it may not be as high as it seems due to the value of benefits and materials, there’s one more piece of the pie: taxes.
When you’re an employee who receives a W2, a portion of your federal taxes are actually paid by your employer. But when you’re self-employed, both the employee and employer portion of taxes like Social Security and Medicare are your responsibility. To put it plainly, you will likely owe more taxes as an independent contractor than you would as an employee.
And our tax system is often convoluted and unclear, so many school-based contractors don’t even realize this until tax time and then find they owe thousands of dollars that they no longer have. Or, even worse, they owe that + the penalties for not paying estimated taxes quarterly (yes, self-employed people are actually supposed to make 4+ tax payments a year, not just 1).
So, if you take on an independent contractor role, make sure you’re abreast of these tax implications so you don’t get a nasty surprise in April.
On the plus side, as a self-employed person, you can deduct business expenses, which is no longer available to people who only need to fill out a personal tax return. So you can write off things like your license renewal fees, continuing education, and any materials you purchased for your job. Just remember: writing off doesn’t mean those things are free. It just reduces the amount of revenue your business did for the year, which means you are taxed on a smaller amount.
And, if you’re diving deep into self-employment, there are business structures that may further reduce your tax burden, such as S-Corps. You can even start providing yourself benefits through your business, which is again going to reduce your taxable income for the year. For some individuals, this set-up may have them coming out financially ahead compared to working directly for a district. But, this is a lot more complicated to initiate and maintain vs just being an employee of someone else.
Other Legal Considerations
Beyond basic taxes and business structure, there are other legal considerations you need to think about if you’re considering a direct-hire vs contractor role. One is that if you work through a contracting agency, your contract may include a non-compete. While these are not legally sound in every state, they can prevent you from working for the same school or district in the future. So if you’re considering contracting with a district and then taking a direct-hire position with them the following year, be sure your contract doesn’t include anything that would preclude this.
My last legal warning with contractors in the school system is this: you may not be one! There are definitely school districts out there that provide all of their OT services through independent contractors. But legally, in the eyes of the IRS, many of these therapists are actually employees. If your school district tells you when and where to work, requires you to complete specific training, and is employing you indefinitely, it’s quite likely that you are their employee. The good news is that you would not personally be “in trouble” with the IRS if you were misclassified as an independent contractor. The bad news is that your district may be trying to save money on taxes and benefits and may be required to pay back certain employment taxes if they’re found to be in the wrong. This is why you’ll see many districts beginning to have their contract OTs form their own LLCs and other corporations in order to better justify their independent contractor status.
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So, we’ve talked a lot about financial considerations in regards to these types of roles. Let’s move beyond that into some of the less tangible differences between direct hire and contracting.
Stability vs Flexibility
The biggest non-monetary consideration when it comes to choosing which type of position is right for you is how much you value stability over flexibility, or vice versa. Obviously, district positions are much more stable. Your employment is more or less indefinite. You’ll likely be able to work at the same schools, with the same students, year after year. Your schedule is set and predictable which makes scheduling other parts of your life easy.
On the other hand, contract jobs offer a ton of flexibility. You’re not chained down to one place. If you decide you don’t like working with a district, you don’t have to work there next year, or maybe even next month. You can move around. You can do travel therapy. Your daily schedule is flexible if you need to do things during the day, like pick up your sick kid or attend a doctor’s appointment. You have the peace of mind of knowing that if you get sick of the district’s particular brand of BS and internal politics, you can leave. It’s also much easier to find part-time positions, though these can be found sometimes with direct-hire work as well.
Ultimately, the flexibility is the biggest factor in what keeps me contracting vs working directly for a district. But if you’re ready to settle down, work full-time, and prepare for retirement, you might draw the opposite conclusion.
Union Protections
School districts have some of the strongest unions in the country, and being a member of one can offer a lot of benefits, like fair pay, time off, job protections, contract negotiations, and other rules that protect you as an employee. Joining the union is a protection that is only available to direct hires of the district, and it doesn’t come for free: union dues will be deducted from your paycheck. But, membership can be incredibly valuable in protecting your work-life balance and other worker rights.
That being said, not every state has strong teacher’s unions. Many states outlaw or significantly reduce the power of unions. In these states, working conditions are usually a lot worse, and this is where you’ll most often see out-of-control caseloads and other ridiculous expectations from employers.
Another thing to consider is where OTs actually fall in union placement. Most school districts will have the OTs just join the teacher’s union. But others may have a separate union for related service providers. I even worked in one district where direct-hire OTs weren’t currently in a union but had been offered membership in the paraprofessional union, for some reason. And while some unions do a good job of representing the interests of all of their members, the duties and roles of classroom teachers are obviously much different than school-based OTs. So, it can be difficult to get your specific needs understood and met if you’re in a union that is meant for teachers or paras.
One last consideration with unions: you may still be able to reap some of the benefits even if you’re not a school district employee. For example, I worked as a travel therapist in a district that had a caseload cap for OTs that had been negotiated by their union. Even though I wasn’t in the union and thus technically not protected by that cap, it was still respected as a general rule for the OT department, regardless of employment status. So, it can still be a good idea to work for a district with strong union protections even if you can’t get directly hired on.
Culture & Belonging
It is much easier to feel part of a school’s culture if you are working directly for them. This can get complicated if you are covering multiple schools as a direct-hire, but in general, you’re still much more included than you are as a contractor.
As a contractor, I’ve been denied access to a school email address, printing, computers, and even the IEP system. I’ve been left off email lists, forgotten about when sending meeting invites, and just generally haven’t been able to participate in as many things as a district employee.
But for every experience I’ve had being treated differently as a contractor, I’ve had many more where I still felt like I belonged. I’ve contracted with a lot of districts now, and the vast majority have treated me no differently than a direct-hire employee, most of the time. I’ve been appreciated and leadership has taken special consideration to make sure I don’t feel less-than. I’ve been included at staff meetings and provided with free continuing education. I’ve been given gifts and written cards.
Ultimately, how included you are is highly dependent on the specific school and district. Employment status can make a difference, but it doesn’t have to.
Mentorship
If you’re new to the school setting, the importance of mentorship can’t be understated. And if you’re working directly for the district, this is sometimes easier to find, especially if the alternative is a position that only pays by the billable hour.
But, there are also direct-hire positions where you’ll be the only OT for the district, or, even if there are other OTs, you’ll never actually see them. Alternatively, there are contract agencies that actually include mentorship as a benefit and will pair you with an experienced OT to go to with questions. So if on-the-job mentorship is important to you, be sure to inquire about what this looks like.
And if you can’t get mentorship on the job, it’s not the end of the world. Just make sure you find mentorship in other ways.
Role and Scope
One last thing to consider is the impact that employment type can have on your role and scope. School-based OT should be so much more than just carrying a caseload, but some districts see their contractors as only valuable in delivering direct services. In reality, school-based OTs should be delivering RtI, providing inservices, and moving towards a workload model that positions them as a global support in their schools. While this shift is fraught with challenges whether you’re a direct-hire or not, there can be way fewer roadblocks as a district employee.
Again, your mileage may vary – I’ve definitely done all of the things listed above as a contract employee who was only with a district for a year or less. But if you’re looking to make big changes in specific school district culture over time, you’re better off working directly for them.
Shew! Alright, I realize that was a lot to take in, and if your head is spinning, you’re not alone. I hope this has shed some light on the types of ways occupational therapists find themselves employed with the school system. Figuring out the best job is a highly personal calculus, and I hope you now feel more empowered to make an informed decision on whether being a contract or direct hire school-based OT is right for you.
If you’re looking for even more support with school-based OT, come join us in The Dynamic School OT Course. This is a super-comprehensive CEU course that goes beyond intervention into all of the aspects of our role, including work-life balance, time management, and navigating challenging situations.
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Category: WHICH
