Employee or independent contractor? Why it matters to your dental practice

From Dentistry iQ, Christopher Boman, Esquire and Boris Sorsher, Esquire discuss the challenges of worker classification in the medical field.  They report that many employers do not expect serious consequences from misclassifying workers and while common, this belief is inaccurate.  The discuss the various tests used to classify a worker as an employee or independent contractor.  They write:

“While the tests are all slightly different they contain three key similarities. First, all of the tests use a number of factors to determine if someone is an employee or genuine independent contractor. Second, the tests agree that having an independent contractor agreement will not on its own establish that someone is an independent contractor.

Third, all of the tests focus on the level of control that the employer has over the employee/independent contractor. If the employer has a significant level of control over the individual and how he or she performs the services, and treats that individual as an employee, then that individual is most likely an employee. However, if the independent contractor has a great deal of autonomy and is not subject to the control of the employer, then the individual likely qualifies as an independent contractor.

While conducting their tests, the courts and government agencies ask a number of key questions. None of these questions on their own decide the issue, but the answers tilt the scale toward either independent contractor or employee. These questions include:

1. Does the employer control how, where, and when the person performs the job?

The more control the employer has over someone’s job, the more likely the person is an employee. For example, if the employer develops strict guidelines, and extensive training is provided on those guidelines, the person doing the job is more likely to be an employee. Also, if the employer sets the work schedule and work hours, this will weigh in favor of the employer-employee relationship. Likewise, if the employer controls the location where the work is performed, this will weigh in favor of an employee-employer relationship.  Specifically, if the service can be provided offsite, but the service provider is required to work from the employer’s, facility this is evidence of an employer-employee relationship.

2. Who provides the tools and materials?

If the employer provides all of the tools and materials or pays for all of the tools and materials, then the person performing the service is more likely to be an employee. This includes reimbursement obligations by the employer.

3. What is the length of the job?

If the person performing the service is hired for one short project, he or she is likely an independent contractor. However, if the person remains on staff for a long period of time, he or she is more likely to be an employee.

4. How are the individuals paid?

If a person is paid by the job, that person is more likely to be an independent contractor. However, if the employee is paid by the hour or paid a regular salary, he or she is more likely to be an employee.

5. Is the service provided a service normally provided by the employer?

If the employer is a dentist and the person the dentist wants to classify as an independent contractor is asked to upgrade the computer systems, it is likely that the individual is an independent contractor. On the other hand, if the dentist brings in another person to be the receptionist, that person is probably going to be found to be an employee.

6. Is the contractor working elsewhere?

If the person providing the service works full time or close to full time for the employer and does not work for other employers, the worker is more likely to be found to be an employee. However, if the person works for several companies at the same time, that person is far more likely to be found to be an independent contractor.

7. Did the parties create a written Independent contractor agreement?

If there is a written agreement between the parties stating that an independent contractor relationship exists, this will help establish the existence of an independent contractor relationship. However, as explained above, the fact that the agreement exists, on its own, is not enough to show that the service provider is an independent contractor.

8. Is training mandatory?

Required training sessions will be evidence of an employer-employee relationship.

9. Can the independent contractor terminate the job at any time?

An employee is free to quit and walk off a job at any time, and can be fired by the employer at any time. However, a contractor cannot be terminated at any time without violating the terms of a contract.

10. Is it possible for the contractor to lose money on the project?

If the project runs longer than anticipated or involves higher material costs than anticipated, a contractor can lose money on a project. An employee never has to encounter this problem since employees are paid the same regardless of the material or labor costs. Therefore, if the service provider takes on a financial risk by taking the job, he or she is more likely to be an independent contractor.

This list of questions is not exhaustive and cannot substitute for the guidance of a skilled employment law attorney…”

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