Employees vs. Independent Contractors – The Great Dental Debate

In the dental industry, it is very common to use “staffing agencies” to fill openings for a short time. Really what this amounts to for most dental offices is a referral service where the “staffing agency” sends a person to help and incurs none of the risks involved – no taxes, no insurance, no nothin’. In the contracts for dealing with these agencies, they often push all of the burden onto the office thus the dentist is legally supposed to make these one day workers full-time employees… Just full-time for a very short period of time.

The big problem with full-time employees, for any period of time, is that they require benefits, taxes, and more. Nobody wants to take care of all of the extra paperwork incurred by bringing these employees on and so many have perpetuated the myth that they can actually be hired as “independent contractors.”

According to federal tax law, employers are responsible for very different options between employees and independent contractors.

Employers have no fiduciary responsibility for the following for independent contractors –

  • Mandatory lunch or work breaks
  • FICA (Federal Insurance Contribution Act) Tax vs.
  • Unemployment insurance
  • Worker’s Compensation Injury Insurance
  • Vacation time
  • Sick leave
  • Insurance
  • Retirement

With all of this cost avoidance, why wouldn’t dental offices, nay, ANY office not choose to use independent contractors?

The reason is very simple. It’s illegal. Any practice can claim they are just using independent contractors, but the federal laws are pretty clear about who actually classifies under this.

This is a simple test from the California Dental Association –

“Before classifying an employee, employers should consider the following factors:

  • The individual takes instructions from you or a manager regarding when, where and how work is completed.
  • The individual receives training from your practice, is required to attend meetings and is expected to abide by practice policies.
  • The practice is somewhat dependent on the type of service provided by the individual.
  • The individual must personally perform the contracted services.
  • The practice supplies support staff (DA, RDA) to assist the individual.
  • The individual provides ongoing services to the practice.
  • The practice determines the individual’s work hours.
  • The expected duration of the relationship is long term.
  • The individual performs the work on practice premises.
  • The practice provides equipment, tools or other supplies to the individual.
  • The practice has the right to discharge the individual.
  • The individual may terminate his or her services at any time without penalty.

If the employer marked several boxes above, it’s likely that the person is an employee and not an independent contractor.”

It is highly likely that the hygienist that you brought in for two days to cover a sick employee, or that assistant that helped out for a several month maternity leave, would both technically be classified as employees and not independent contractors. Not only should you have the humane reason that you want to compensate your employees what they deserve but should your practice fall into the sights of the IRS, it is likely there would be issues.

What can we do to avoid breaking the law while simultaneously treating our employees with the respect they deserve? 

Use a staffing company that takes care of all the potential liability while also compensating the staff well.

Make sure to ask the staffing companies these two questions. We recommend you find a company before you have a need so you can know what risks you would be incorporating if you were working with them.

– Will the staffing company be covering the employee’s insurance, taxes, and benefits, or are you?

– Will the staff be hired as an employee or an independent contractor?

Depending on how the company responds, you will have to ask yourself how you would like your company to be viewed and what risks you are willing to take.

Hopefully you have a better idea about the differences between employees and independent contractors and can now make a more educated decision about how you want to run your business.

If you have any questions or would like more information, feel free to reach out and we can help!

 

Have a great day!

 

Shannon

 

References:

https://www.dentistrytoday.com/news/todays-dental-news/item/3825-employees-vs-independent-contractors-in-dentistry?fbclid=IwAR170W_e1OlvHrdmNzq4rag1Zk9UsFTwEXCrd5ESU1qNfKr4ew5M97rPYhg

https://www.cda.org/news-events/employee-or-independent-contractor

 

 


 

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