In 2014 alone, the Wage and Hour Division of the Department of Labor found that more than $79 million in back wages was owed to more than 109,000 workers across varying industries. In many cases, they trace issues back to misclassification of employees. 

As reported by the United States Department of Labor, misclassifying dental employees as independent contractors (ICs) is a common problem — one that affects dental practice owners, employees, and the economy. 

If you own a dental practice, it is imperative that you understand the difference between employees and independent contractors. Classifying workers correctly will help you protect your practice for years to come. 

Table of Contents 

• Associate Dentist and Dental Hygienist: Employee or Independent Contractor?
• Why Would a Dental Practice Want to Treat an Associate Dentist as an Independent Contractor?
• What Does an Employee Look Like?
• What Does an Independent Contractor Look Like?
• Why Are Hygienists and Associate Dentists Employees? 

Associate Dentists and Dental Hygienists: Employees or Independent Contractors?

Unraveling the complexities of worker classification, particularly in the specialized dental industry, is no light task. Missteps often occur due to misunderstood or misapplied regulations, leading to confusion about classifying associate dentists and dental hygienists as employees or independent contractors.

A typical illustration of this classification dilemma arises in instances when dental professionals are employed as temporary workers. This could be to fill in for employees taking leave or to augment staff during periods of high patient volume.

A common misconception among dental practice owners is equating temporary workers with independent contractors. While this may seem like a simplified solution, the reality is far more nuanced. Notably, qualifying a dental hygienist as an independent contractor is hardly ever the case and similarly, associate dentists often do not meet the criteria to be considered independent contractors.

When employees are misclassified as independent contractors, it significantly affects their rights and benefits, such as access to minimum wage, overtime compensation, family medical leave, and unemployment insurance. Furthermore, it can leave employers vulnerable to legal penalties and back taxes.

When discerning whether an associate dentist or a dental hygienist is an employee or an independent contractor, the primary consideration should be the degree of control the practice exercises over how these individuals accomplish their work. Additionally, factors regarding financial relationship, nature of work, and type of relationship practices directly influence the classification.

In operations controlled by the practice, where the workforce utilizes the practice’s resources and follows its set parameters, the employees are more likely to be representatives of the practice, regardless of temporary or permanent status.

Hence, in the majority of instances, associate dentists and dental hygienists are more appropriately classified as employees rather than independent contractors. Doing so ensures adherence to both federal and state regulations, promoting fair working conditions and protecting the organization from potential litigation.

Why Would a Dental Practice Want to Treat an Associate Dentist as an Independent Contractor?

A common misconception in the dental industry is that temporary employees can be hired as independent contractors so that they don’t need to be paid as employees. However, misclassifying your employees is illegal, and if the IRS catches you, your practice could be in serious trouble. 

By classifying an associate dentist or dental hygienist as an independent contractor, the tax burden of that previously classified employee now shifts to the worker. This reduces costs for the employer. For example, employers do not need to pay into the Federal Insurance Contribution Act (FICA) for Independent Contractors. 

However, if an employer begins to classify an employee as an Independent Contractor and there is no wage increase, that worker will take a significant pay cut. They will also no longer be eligible for benefits such as unemployment insurance or overtime pay.

Overall, a dental practice may choose to take this route because it requires less paperwork, results in fewer taxes, and has fewer rules (e.g., rules surrounding rest breaks, employment protection, overtime, etc.). Although this may seem like an ideal route in the short term, the long-term consequences could be immense.

If you’re someone who struggles to stay on top of overtime pay, payroll, compliant timekeeping, and overall team management, software such as HR for Health could not only help you save time and boost productivity but also help you avoid potential legal issues.

Check out HR for Health software features here. 

How Do I Classify Employees?

When you hire dental hygienists and associate dentists, you will have control over the work they do and how they carry out that work. Since you own the practice and they work for you, they will perform dental work on your patients. This is how you know these workers should be classified and paid as employees.

What Does an Independent Contractor Look Like?

Several factors come into play in terms of independent contractor determinations. Both the IRS and the Department of Labor (DOL) have their own set of requirements. If an Independent Contractor meets the requirements of one set of rules but not the other, it’s safest to classify that individual as an employee.

IRS rules encompass three categories:

• Behavioral — Does your practice have control or the right to control what a worker does and how they do their job?
• Financial — Do you have control of aspects of an individual’s job in terms of financial variables (e.g., how a worker is paid, whether expenses are reimbursed, who provides supplies and tools, etc.)? 
• Type of Relationship — The relationship a worker has with your practice is important. Are there any written contracts or benefits such as insurance vacation pay or a pension plan?

On January 6, 2021, the DOL finalized its independent contractor rule. After considering more than 1,800 comments, the final rule is based on what the DOL originally proposed. However, they did make a few clarifications. Until now, the DOL and most court systems looked at seven economic reality factors to analyze a work relationship. Two core factors have now replaced these seven factors:

1. The nature and degree of control over the work.
2. The worker’s opportunity for profit or loss.

Why Are Hygienists and Associate Dentists Employees? 

There are various reasons both hygienists and associate dentists are considered employees.

First, as an employer, you control the work they do. You lead in terms of what works needs to be done and when, as well as how they complete that work. Since they work within your practice, performing dentistry services on your patients, and use your equipment, this means you employ them.

However, the main reason is that the work they perform is the same as your practice’s business. When a dentist comes to work in your dental practice, they are performing the same line of work, unlike a contractor who comes to fix your floors or a plumber who tends to a leak. These types of Independent Contractors perform tasks that are not related to your practice. Hygienists and associate dentists perform services that are. 

Consequences for Employment Misrepresentation

Some dentist employers misclassify associate dentists and dental hygienists as independent contractors, and while this has been going on for decades, this misrepresentation can have significant consequences. 

Penalties include:

• Back pay for:
• Taxes.
• Workers’ compensation.
• Wages owed, including overtime.

In addition to fines and penalties from the IRS, some states have their own employment determination guides, which are often stricter than IRS rules. For example, the California Dental Association published the factors that allow workers to be considered independent contractors.

These include:

1. The worker is free from control and direction over the performance of the work.
2. The work performed is outside the typical course of the business.
3. The worker is customarily engaged in an independently established trade, occupation, or business.

This issue is catching the attention of states across the nation, and action is being taken by state labor boards, state attorney generals, and professional organizations, as well as task forces in states such as Massachusetts, New Jersey, North Carolina, and Virginia. 

How HR for Health Can Help 

If you require support to classify your employees and independent contractors accurately, we can help. We will also ensure that everything is signed and tracked correctly in your HR for Health account so that you remain compliant.