Ep 274 - Pros and Cons: Employee vs. Self-Employed with Nathan Nordstrom

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0:00:00.1 Kristin Coverly: Are you a massage therapist who loves to problem-solve? Do you see clients with challenging musculoskeletal issues, if so, then studying precision neuromuscular therapy will help to sharpen your decision-making skills and achieve better client outcomes. Our emphasis is on the problem-solving process rather than the teaching of a singular technique or approach, led by founder Douglas Nelson. Each PNMT instructor is a busy clinician with decades of practical experience, visit PNMT.org to explore our offerings of live seminars, online courses, or the video resource library, the PNMT portal, that's PNMT.org.

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0:00:57.8 Darren Buford: I'm Darren Buford.

0:00:58.6 KC: And I'm Kristin Coverly.

0:01:00.2 DB: And welcome to The ABMP podcast. A podcast where we speak with a massage and bodywork profession. Our guest today is Nate Nordstrom. Nate became massage therapist in 2001. He is licensed in several states and he's board certified, he's taught massage therapists since 2004 and he's a nationally recognized continuing education provider. As a massage therapist, he's worked in many settings over the years, he teaches classes in the application of ethics in daily life and advanced anatomy classes for massage therapist, he has served as a leader in many ways in the massage profession, and now he is the director of massage therapy for Hand and Stone Massage and Facial Spa. And he's a repeat guest on this podcast. Welcome Nate. Hello Nate and hello, Kristin.

0:01:42.3 Nate Nordstrom: New, welcome. Thank you for having me.

0:01:45.0 KC: Well, we're so excited to have you back. Now, let's jump right into our topic, one of the things I know you were excited to talk about and ABMP members ask us about frequently, is the difference between being self-employed, an independent contractor or an employee, so talking about the challenges, benefits and comparisons of all of those different avenues that we can take as practitioners, let's start from the basics. Let's start with the definition, so we're all on the same page. What's the difference between being an employee, an independent contractor, and self-employed, where are the lines drawn between each?

0:02:18.8 NN: I love it. So I think many, many years ago, I actually put a class together on this subject, just specifically because I knew that there were defining lines that weren't really published to most people, and so I actually had to go to the IRS guidelines and figure out what the difference between an employee and self-employed was. And when I categorize this, the key aspects were what options are paid for you, it was like the biggest piece, so for an employee, they're going to be providing the location, that you're not gonna be paying rent as an employee, you're not gonna be paying for your Tools of the Trade, you're not gonna be paying for all these extra things, and you're not gonna be doing all this extra work that takes up the majority of your workable space and workable time, so as an employee, you're literally coming in, doing a job and being paid for the time that you work. Now, self-employed, for anyone who's not looked at building their business of... Their dream business, their hopes, their great piece, that is one of those things where the majority of your time is going to be put into things that don't make money.

0:03:29.6 NN: And it's going to be the aspect of building a structure that's going to allow multiple people to make money from the system, but you are the one who is at an end all responsible for all of the expenses and making sure that everything is taken care of. So that's like the two ends of the scale, and somewhere right in the middle is this ATBT little space that the IRS really doesn't like, and that's this independent contractor status, and the independent contractor status actually has you contract with a place to do a certain type of work or a certain amount of work, and some of the expenses that are there may be paid off by the person who you're contracting from, some you're gonna be taking on yourself, but because there's this... Maybe who knows. The really important piece is the contract, what the contract says, and making sure that the contract actually says exactly what you're doing. Too many times I've seen massage therapy contracts that actually are for independent contractors, per se, but they're being treated like an employee. However, they're not getting bid taxes taken out, or they're being paid as an independent contractor, but they're being treated as a self-employed massage therapist where they're getting no benefits from the contract, and now they're not really getting any value of working at a place.

0:04:55.9 NN: So this is that central line, and as a massage therapist, I may just kind of put it out there. I've been massaging for over 20 years, and I've worked in all three of those venues, and all three of them have sucked at times, they've been a bummer to be in, but you really have to know what you're getting into and why, when you're looking at these three separate pieces. The independent contractor status is the big one to be conscious of, because so many employers or contractors actually want to set you up in this venue, but you're not getting the value of it.

0:05:30.9 DB: That's a really good question. Kristin and I, we get a lot of listeners and readers due to publications or just members who reach out to us, and we're guessing that they find themselves in this predicament when they're asking us this question for what materials we've produced over the years. So my guess is they're already in a predicament when they're looking for this information, can you... You've mentioned a little bit, can you... And you've obviously, you said you've done this in your career, can you go in a little bit more detail about the pros and cons of each?

0:06:05.9 NN: Yeah, yeah, actually, so it's funny because I... Way back in 2001, I actually owned a spa in downtown Portland, and at that era, it was free massage, NB pre Hand and Stone, Heights, any of those didn't really exist yet, so I was going at it with my hands tied as much as I possibly could and trying to build a business, and when I really came down to it, I looked at it and I said, you know what, I want to have independent contractors, and so I hired on, we had 17 massage therapists, two aestheticians. We had a great facility. It was really nice at downtown Portland, really gorgeous.

0:06:43.6 NN: And in that process, I sat down with each of the massage therapist and said, "We're gonna read over this contract together, and we are not going to sign it until you have your lawyer look at it. And I have my lawyer look at it." And so many of the massage therapists went, "Wait, I don't have a lawyer." [chuckle] And I said, "Any time you're getting into a contractual relationship, you want to have a lawyer," and that was one of those pieces that just kind of went, for the massage therapist because they hadn't connected this idea that as an independent contractor, you are still self-employed, you're just contracting specific business from a venue.

0:07:24.9 NN: So one of those really big things, when you're self-employed of any independent contractor or full-on self-employed running your own thing, you're gonna be writing your own contracts, and you're going to want to have some sort of legal representation to recognize exactly what the expectation is there for you. If you are truly a self-employed person, you're paying your rent, you're paying for your benefits, you're paying people to do specific things. Now, as a self-employed person, you can have independent contractors as my spa, when I had it, I had independent contractors who are doing the work, but I also had employees, I had the spa associates, the front desk people who are my employees, they were working for me, at Portland Center Spa. And so you're going to have that kind of dynamic. As a general rule, most massage schools do not teach you how to run a business. I'm sorry if you thought that was the case, your massage schools don't have a MBA built into them, that Master's of Business is not there, so there's a lot of challenge that massage therapists usually face when they start getting into that point; if you want to do that, seek for more education, try and get an understanding of what a business structure actually looks like and create a business plan.

0:08:45.4 NN: As an independent contractor, you are still a self-employed individual, so you should still have a business plan, even if your business plan says, I'm in a contract with these types of locations, I'm gonna do the type of work, I'm gonna focus on these types of continuing education because my specialty is this, those are all part of your business plan that will really kind of spur you into the specialty. I know several massage therapists who, their gun whole focus is sports massage, and so they only want to take continue education in sports massage, they wanna do events that will draw them the sports massage, they're gonna work with people who are connected in the sports massage industry and that's great. As independent contractors, they can niche that and really master that skill, but once you start looking at the other aspect where you're like, "You know what, I don't know exactly what I wanna do as a massage therapist," which I have to say, I think 90-something percent of massage therapists come out of massage school go, I need to start using my hands and start changing muscular structure to get people to go, "Oh, okay, now I feel better," and then you go, "Oh, now I feel better that you feel better, and now I can start progressing down my role of success."

0:09:56.4 NN: So when you're truly wanting to see what you want to be, you should either have a vision board, some sort of goals, some sort of dream of what your massage should look like, and that's more of the employee side or a business plan that will give you those steps to really make it to that next stage of wherever you're at.

0:10:18.0 DB: Now, Nate you mentioned that you've worked in all three of those capacities, Kristin, can I ask you a little bit about your own work experience over the years?

0:10:25.6 KC: Absolutely, yes. And same as Nate, I've been in each of those three roles, when I first graduated from massage school, I did many, many things all at the same time trying to piece my practice together like many of my colleagues do. So I worked as an employee at a massage clinic, I worked as an independent contractor at the hospital, and I had my own private practice in two different locations, so... Absolutely, and there are pros and cons to each. And I think it's really about having an awareness of what each of those roles means, what it means for your time, what it means for the skill set you need to do each successfully, and making choices, and it might change as your career path changes, so maybe right now you have a full private practice and life changes, and you need to be able to have a part-time something or a full-time something where you go to an employee or an independent contractor situation and you're able to just show up and do the work and not have all of the marketing and other pieces that go into running a practice, or maybe you start as an employee or independent contractor and you transition to having your private practice, or maybe you'll always have a little bit of each because you like the variety of working with different populations and in different settings.

0:11:39.9 KC: It's really exciting, it was really fun for me to have multiple things going at the same time because especially out of school, as Nate said, so much of what you wanna do is just start doing the work and work with people and bodies.

0:11:52.5 KC: And so I was able to at the clinic, work with a lot of auto-accident victims and work with their recovery at the hospital, I was working with the hospital staff, so nurses who are under so much stress, I was doing chair massage there, and then in my private practice, I was working with people from all different walks of life with different needs, so for me, that was really exciting, and I encourage people to just look around at the different opportunities that are in your community and see if something might be really fun for you to try and investigate that and give it a try to just kinda keep enhancing what massage can be for you as a career.

0:12:29.7 NN: I remember reminding people that when I was just out of massage school and I just bought Portland Center Spa, I was still a student in college. I actually got a Associate's in Small Business Management and Entrepreneurship, and then I got my Bachelor's in General Sciences as I was a massage therapist, and I've always wanted to really connect to these pieces in so many different ways and as a new massage therapist just like you, when I'm talking about fire, you're tossed into the flames to kinda say, "Okay, I'm gonna run a business," and then that first time you're doing your taxes, you're like, "Oh...

0:13:05.6 NN: Okay, I don't know what all I should write off or how to write this off." So you then say, "Maybe I need a CPA or somebody to help me with accounting," and so then you start kind of drawing and building, and I remind people right now, the IRS is doing some really inventive things in creating and building their pool for looking at how the taxes are gonna be reviewed for this next year, and so being conscious of that is very important, so make sure that you have the right people to support you doing the right things, if you don't have the knowledge on how to run a business, find people who can counsel you and support you in doing that, I love a great massage therapist who's decided to build their business and those are really glorious opportunity because they want to have that...

0:13:52.6 NN: Sorry, I get excited simply because you're right. And we all do it, right, Kristin, we're sitting there and we're saying, "Oh, let's do this, let's make everything possible", and then we kind of get into that moment, where we're like, "Okay, what have I dumped myself into for all these great opportunities." And they're all great opportunities, because we know that supply and demand is never going to meet on massage therapy run, there's always gonna be more people who need massage, than massage therapists that are out there, just by simple knowledge, when people know you're a massage therapist, they don't go, Oh, I'm gonna go away from you. They go, "Oh, I got this knot." That's how they speak. Everyone wants to meet a massage therapist. When I get on a plane to fly across the country and I sit down, I put on my headphones, so people don't ask me what I do because I don't wanna say I'm a massage therapist simply because they're gonna go, "Oh, hey, I have this one thing", I'm like, "I'm not your doctor." And I understand, I got that same knot, but I go to my massage therapist to deal with it, I'm not gonna be giving you a massage on this flight, it's just not gonna happen, and so we wanna make sure that we're building the industry of massage therapy, so that it can have the real gusto that it needs to have.

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0:16:23.7 KC: Let's get back to our conversation. Nate, I'm curious. And let's talk about how these worlds and skill sets all kind of blend together, so let's think about your franchise Hand and Stone, you've got an employee there, we talked about the fact that as a sole proprietor, you need to have marketing skills, but doesn't that employee also need to have a certain set of marketing skills to keep their clients coming back and talk to their clients about the benefits of the work, tell us, how do you counsel your employees at Hand and Stone to do that effectively?

0:16:54.4 NN: If you can't see, I'm now balancing. [laughter] Because really, I just recently had a change in my title, so I'm the Senior Director of training and massage therapy in this relations, and the first half of that is the Senior Director of massage therapy training, really is the stuff that excites me because there's two real sides to any type of training, first of all, is training the business to understand what it is, how it meets into their business plan and how it can be successful for their practitioners. The second most important one is actually the practitioner going through and actually touching the tool, feeling the tool, recognizing the tool, and knowing how to appropriately use the tool, and so you ask about really doesn't massage therapists need to know how to market?

0:17:46.3 NN: Yes and no, because in a business, the structure of the business should really support the practitioner in maintaining the business, and so a really good business structure is actually going to hold a higher standard of repeat clientele. If you're not have a great business, then you're gonna have to find new clients every time and that's gonna kill you, that's gonna eat up a lot of costs, that's gonna eat up a lot of time and effort, and it's not really great, actually, I was just pulling up a couple of numbers post-COVID, we actually had a 50% repressed rate for a massage therapist, which means that if someone called in 50% of the time, they're asking for a very specific massage therapists to go see them, and so that actually is a really high number for people who are calling in out of nowhere, and actually post-COVID...

0:18:38.0 NN: So actually, I went back to now we're at 44% request rate. So Hand and Stone is built in a structure where 44% of the phone calls coming in are, "Hey, I wanna get in with Tom," or, "I wanna get in with Suzie," or, "I wanna go get in with Jeff," because they actually have already experienced a massage with them and want to reconnect with them. That's like the business structure, but the secondary piece, which you're alluding to, Kristin, is knowing how to structure your service so that it is the most expectation and positive experience for that client to wanna come back and see you. And some of those quick things are... We've talked about this in years gone past so many times, and you probably heard it in the massage school, you have to use their names multiple times. People like hearing their name. It's a silly little added piece, but it is one thing that I know Darren loves to hear is his name. And so simply by saying it and repeating it, "Darren, how is that massage? How are you feeling today? Okay, how is that pressure, Darren?"

0:19:43.4 NN: Yes, and that secondary piece of checking in regularly, because if you start a massage and the pressure sucks and you don't check in until the last five minutes of the massage, and you say, "How is that pressure?" And they said, "Well, it was way too heavy," you can't fix it. And so usually in that first five minutes checking in with pressure, and then usually a couple of minutes after, about 10 minutes after, you wanna check in multiple times to make sure that they are having the experience that they want because if you can change the pressure at the first five minutes, and then give them the best pressure that they're looking for throughout the rest of the session, they're going to say, "Hey, you know what, not only do they care about me as a massage therapist, but they're actually also documenting and they're really wanting to improve their session so it's specific to me."

0:20:34.5 NN: Really, signature and changes are so important, being able to have the right service for the right massage client is so important. So knowing those extra tools that you have available to you, opening up those possibilities are so important for the massage therapist to have those skill set. Instead of just saying, "Well, I do a great massage, so I don't need to market anything, I'm just gonna massage the people who come in to me." Yes, I hate to say it, the spa will probably be able to fill your books, because more massages are needed, but you're not going to have the best clients and you're gonna be seeing the majority of new clients instead of 40-50% or 60% or 80% of repeat clientele who are coming back to see you.

0:21:17.8 DB: You've mentioned it at the beginning of our conversation, but can you tell us a little bit, what's the state right now of franchises and of employment out there?

0:21:26.6 NN: Well, I'm gonna go big picture and then go small picture. So actually, we can look at the massage therapy industry as a whole, we can look at the number of massage therapists who are coming in to school, we can look at the number of massage therapists who are practicing, and see that all of those numbers are down. And it took some research a little bit longer than the boots on the ground to recognize it, and I know some other research, they were actually, "Hey, this is coming in the future, we're gonna see less massage therapist coming out," but in that same venue, the franchises are having that same challenge, where we're seeing demand for massage, memberships that have gone up. Actually, it's funny, I was looking at our numbers for the number of members for 2021 went up significantly. A lot of that is because for 2020, they went down significantly because people cancelled their memberships for 2020 because they were like... "They weren't quite comfortable with going in during COVID eras," and then 2021, they said, "Hey, you know what? I wanna come back."

0:22:30.6 NN: And so Hand and Stone worked very hard to make sure that the structure, the policies, protocols and procedures were all in order, all in structure, so that people could come back to a safe environment. And so in that same process, we've seen 2022, the number of massage therapists that either got burned out in the profession or they just don't wanna do it anymore, because they're missing their passion because either they're working too hard, they're not doing the right type of work for their passion. Yeah, so the number of massage therapists across the industry, absolutely also represents in the franchise world. As Hand and Stone, I actually have pulled out some of the numbers, and last month we had about 5500 massage therapists who practiced in a Hand and Stone spa. And that's 500 spas across the US, and about 600 across the US and Canada altogether. And so when we really look at those numbers, those are down from pre-COVID, and we have to be looking at the number of massages per massage therapist, because massage therapists have been more willing, the ones who are working are more willing to work. And so we averaged 64 hours per massage therapist, so that's 64 for the entire month.

0:23:53.6 NN: So that's about 16 massages per month, give of take, and that's a solid part-time massage therapist. Now, obviously remember that means that we hired a massage therapist the last day, and they maybe did one massage for that month. But in the month, we're actually seeing massage therapists being respected, the owners are wanting to connect with the massage therapist more. They're wanting to really engage with the massage therapist to make sure that their practice is what they want, let it be... They wanna be 30 sessions a week. Owners are willing to work with them on that, if they're wanting to do 10 sessions a week or be part-time with this and teaching or part-time with this and going to massage in a school, or going to school to become a nurse, or going to school to become something else.

0:24:43.0 NN: All the franchises are willing to connect with the massage therapists wherever they're at. Even those who went back to school post-COVID and have now entered at their new profession, the franchisees are saying, "Hey, if you wanna give three massages a week or three massages a month, we'd be willing to work with you as an employee so that you don't have all the extra business yuck that can come from it by simply being able to come in, do your work and leave and enjoy your professional career. Let that be your new professional career or your old professional career, we're always here to connect with the massage therapist to make them have the best experience as a massage therapist, no matter where they end up going.

0:25:25.8 DB: No, because the demand is so high, are you guys doing anything differently with your approach? Are you speaking to students in school or directly out of school? Are you reaching out to former employees? What's your strategy right now?

0:25:40.3 NN: Good question. There's several strategies going on at the same time, because you kind of have to. In the state of affairs where we're at, if we're reaching out to the schools and the schools don't have students coming in, we're actually working with them on creating a business and marketing plan to make them successful to actually get them more students in the door. We have franchisees who actually are reaching out to the schools and saying, "You know what, I'll fund this many students to come through massage school, so that they can actually have a grant at the end that will pay for this much of their education." And those types of creative options are really becoming successful. There are several other options out there where, in some states, a hybrid education system works, and so that's an option where they're trying to connect with, making sure that business practices are being done at the school, where they just wanna help the school be successful, because if the schools aren't successful, the spas aren't gonna be successful.

0:26:43.6 NN: One of those other great tools that I always remind people is, you know what, if we could reach out to the National Certification Board and ask them, "Can we get all of your expired people and say, 'Hey, we wanna help you get back to the profession,' and maybe even do some funding for them to get their license back, if they are following all the laws of the land and being successful, we wanna make sure that everyone who can will be able to come back." So those are some of the creative marketing pieces, also opening up, we were just at a conference, and it was really fun because one of the things that we started doing is opening up continued education, all of our continued education has been internal for Hand and Stone employees and we actually created a Hot Stones Essentials course that is now public for anyone to take, and it's an opportunity, yes, for us to get your information. I'll be honest with it, that's exactly what we're trying to do.

0:27:41.2 NN: But we're also teaching safety protocol skills, so that you, actually, as a massage therapist, no matter what hot stones you're touching, you'll make sure that your client is safe, that you are making sure that you're meeting core standards so that we have a reduced injury rate from hot stones, because the industry really does need to show that massage therapists can do what they're licensed to do in a safe professional way, and that's why we wanted to push this course out so easily to say, "Hey, massage therapists can definitely do this hot stones," because that's, Hand and Stone, that's what we're known for, "Hot stones in a safe professional way." And the industry is starting to show that there are interests in, that of massage therapists to get more into the added enhancement techniques instead of repeating the same massage protocol again and again and again, which causes things like carpal tunnel syndrome, causes back pain, hip pain, shoulder pain. And we wanna make sure that you have the right tools for the right client, because that's going to change up and vary the wear and tear on your body as a massage therapist.

0:28:48.2 NN: It is a different world, and the success of massage therapists really is denoted by each of the massage therapists. As each massage therapist steps ups and does what they love doing, every client feels it. You're gonna be the ones who they're gonna come back to because they appreciate you. And I'm just grateful that I get an opportunity to connect with massage therapists on a daily basis. Massage therapists are truly the happiest people in the country, in my mind. When they leave work, they generally are smiling because they got to do their passion, and they got paid to do it. Not very many other people in this world right now get that blessing. Most people are doing a job to get done so that they can go get their massage by the end of the month, and I'm just so grateful for our profession.

0:29:39.0 DB: I want to thank our guest today, Nate Nordstrom. To find out more information about Nate and the good work he's doing with Hand and Stone, visit handandstone.com. Thanks, Nate, and thanks, Kristin.

0:29:49.6 NN: Thanks, guys.

0:29:51.4 KC: Thanks so much for being with us, Nate, and for that great conversation.

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