The difference between independent contractor and employee worker status in the dental industry

Worker Classification for Dental Temps: Why the Right Choice Matters

As dental practices work to overcome staffing challenges, many dental professionals are unaware of the rules, liabilities, and risks related to worker classification. “Independent contractor” versus “employee” or “1099” vs “W-2”—there are many opinions on the subject so it’s important to be familiar with the facts and how federal and state regulations impact you.

Should a temporary dental professional be classified as an independent contractor or an employee? 

The U.S. Department of Labor has strict guidelines for who qualifies as an independent contractor (receiving a 1099 tax form) and who is an employee (receiving a W-2). These rules protect workers from mistreatment and ensure they have access to fair benefits and compensation (See the Fair Labor Standards Act). The Department of Labor’s criteria relate to six areas:

  • This image is used to show Independent contractor vs employee worker status Opportunity for profit or loss depending on managerial skill;
  • Investments by the worker and the potential employer;
  • Degree of permanence of the work relationship;
  • Nature and degree of control;
  • Extent to which the work performed is an integral part of the potential employer’s business; an
  • Skill and initiative.

Dental professionals such as hygienists, assistants, and front desk employees fall into the employee category. The IRS also has their own rules for worker classification. Under the IRS rules for worker classification, a worker is an employee if:

  • The worker is under the direct supervision of the dentist, 
  • The worker follows established office procedures and use provided equipment, 
  • Their control over their work is limited

Again, the majority of dental professionals fall under the employee classification. If a dental professional believes that they have been improperly classified as an independent contractor, they can file a Form 8919 with the IRS to request that the employer portion of Medicare and Social Security taxes be withheld from the employer.

What is the best practice for classifying dental hygienists?

There is much debate about how dental hygienists and assistants should be classified but most reputable sources recommend classifying dental professionals as employees.

“Dental hygienists must be classified as employees, not independent contractors or what is also termed a contract worker. Working as a contractor puts our license and that of the dentist in jeopardy. – Anne Nugent Guignon, MPH, RDH, CSP, RDHMag.com

“In most states, dental hygienists work under the supervision of a dentist, see the dentist’s patients, and use the dentist’s equipment, whether it be a temp position or permanent position. Accordingly, dental hygienists are employees − period.” — Kim Kaiser, RDH, todaysrdh.com

“There are penalties for misclassifying an employee. I would like to believe dentists that hand out 1099’s are just misinformed about how to classify a temp hygienist properly. It would benefit both dentists and hygienist to be on the same page about worker classification.”— Spring Hatfield, RDH, BSPH, todaysrdh.com

“Clinical hygienists almost never meet the criteria to be paid as an independent contractor. Because labor laws are based on the traditional employee-employer relationship, misclassification can leave the worker vulnerable should he or she experience discrimination or injury on the job.” — Amanda M. Richardson, MS, BSDH, RDH, Dentistryiq.com

“Simply put, most dental hygienists work under some sort of supervision of a dentist, see the dentist’s patients, and use the dentist’s equipment. For these reasons, most dental hygienists, whether employed full-time or part-time are employees and should be issued W-2 forms, not 1099 forms. — Dori Eggett, C.P.A., Journal of the Colorado Dental Association

What happens if a dental practice misclassifies a dental professional? 

Misclassifying dental hygienists and assistants as independent contractors can lead to an audit by state and federal agencies and result in back payments of employee benefits, wages, and taxes. At first glance, classifying temporary hygienists and assistants as independent contractors might seem practical.  In some cases, a dental professional might ask the office manager to hire them as an independent contractor. However, misclassifying dental professionals can have significant consequences on the dental practice such as:

  • Owed Medicare and Social Security taxes for misclassified workers
  • Back payments of benefits, overtime, and paid time off
  • Additional audits by state and federal agencies
  • Private lawsuits
  • Negative reputation among industry professionals  

How does contractor misclassification impact dental hygienists and assistants?

The burden for proper worker classification falls on the practice, however worker misclassification negatively impacts dental hygienists and assistants as well. 

  • Greater tax burden for the worker: Independent contractors are responsible for the full 15.3% self-employment tax, compared to 7.65% for employees.
  • Lack of employee benefits: Dental professionals miss out on potential benefits like unemployment and paid time off when they work as independent contractors.
  • Compliance headaches for practices: Dental practices who want to remain compliant with tax and labor laws will avoid working with independent contractors. 

As an independent contractor, the dental professional must negotiate their fee, collect payment, and cover themselves in the event of a workplace injury or accidental needle stick. All of these responsibilities increase the risk and effort for the professional. If you contract through a “marketplace” or platform for dental temps, be sure you are covered in the event of an accident or missed payment from the office.

For temporary dental professionals, classification as an employee makes life easier. For example, Kwikly classifies workers as employees and provides protections like guaranteed pay and liability insurance. 

As a part of a larger organization like Kwikly, employees can access  support if there is an issue or question. It can be tempting to make a higher hourly rate as an independent contractor but that benefit can disappear when considering the additional cost of taxes, risk, and time.

Which dental staffing companies use compliant employee classification?

Choosing the right dental staffing solution can greatly reduce the worker classification risk for your practice. Many staffing platforms and “marketplaces” claim to make staffing easy for practices, but in reality, they expose the organization to labor law and tax liability.

Dental staffing companies (like Kwikly) that classify dental workers as employees, provide the best protection and value for practices and professionals. 

At the end of the day, employee classification isn’t just about checking legal boxes. At Kwikly, our goal is to build more ethical and sustainable staffing practices for the good of the dental industry. Thousands of dental practices across the country are working with us to attract new professionals and make dental careers more rewarding with all the security and protection of employee classification. 

What can you do about employee classification in the dental industry?

By making employee classification the norm, we can create equitable and sustainable staffing practices in the dental field. This benefits everyone, from full-time professionals and temporary staff, to dental practice owners and managers. It’s time to establish best-practices in employee classification and embrace a compliant approach to staffing in dentistry.

Takeaways:

  • Dental offices: Choose agencies that prioritize employee classification and understand the implications of misclassification.
  • Staffing agencies: Implement classification procedures and educate both offices and temps about the proper classification.
  • Dental professionals: Understand your rights and responsibilities as an employee, even in a temporary role, and choose agencies that offer employee classification.
  • Dental community: Advocate for industry-wide adoption of employee classification for temping through agencies, ensuring consistency and fair treatment for all.