Should Dental Hygienists be Independent Contractors or Employees?

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At the end of every year, dental hygiene groups and forums are blowing up with questions concerning the 1099 they received from a dentist they worked for at some point that year. Most of these questions are regarding dentists that hired the hygienist on a temporary basis. Many of the responses focus on the legality of being paid with a 1099 and if a hygienist can be considered an independent contractor. This is a hot topic, so I wanted to really do the research to give an answer that was factual, and would give hygienists some valid information to address the issue if or when it arises in the future.

Let’s start with defining and differentiating between an independent contractor and an employee. The definition of an independent contractor is quite simple, “If you are an independent contractor, you are self-employed.1” There are a few states that allow hygienists to have their own practice by obtaining an expanded practice permit and in that case, they would fall into this category. However, for most dental hygienists, this is not the case.

Clearly, if you have a regular job you report to daily, then you are an employee. The confusion seems to come into play when hygienists take temp jobs or temp full-time. If you are a full or part-time temp, you fall into the common-law employee category. “Under common-law rules, anyone who performs a service for you is your employee if you control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.2” 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. Therefore, dental hygienists are employees whether they are permanently employed or a temp.

On the flip side, I happen to be a practicing clinical hygienist, and sometimes I need a temp to cover for me when I am on vacation. I have found many temps want to be paid for services the same day, and in most cases, this isn’t possible if the dentist has the hygienist fill out a w-4. Therefore, it is not only the dentists that seems to be misinformed, but many hygienists seem to be misinformed as well. I’ve heard temp hygienists complain about delayed pay, so it is understandable they would want to be compensated immediately.

However, there are disadvantages to demanding immediate compensation. When you act as an independent contractor, you pay more taxes. For example, the employee tax rate for social security is 6.2%, the self-employment social security tax rate is 12.4%. When you are classified as an employee, your employer matches your contribution to social security and Medicare thereby reducing the percentage that you pay.3

If you have been misclassified and receive a 1099, you have the option to file an SS-8 form; on this form you will describe your job in detail. Be aware that if you decide to go this route, the IRS will contact the employer to get their views on the reason they classified you as an independent contractor and not an employee. This can make for an awkward situation for the employer because it will lead to a limited audit that could turn into a full-blown audit. The employer will, at the minimum, be required to pay their portion of the taxes. Having to go this route could taint your reputation; a better choice would be to avoid this situation altogether by not accepting a position that misclassifies your work status.

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. I’m sure dentists aren’t interested in paying penalties for misclassification and hygienists aren’t interested in paying additional taxes. We need to better educate each other about the benefits and disadvantages of proper worker classification.

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References

  1. https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined
  2. https://www.irs.gov/businesses/small-businesses-self-employed/employee-common-law-employee
  3. https://www.irs.gov/businesses/small-businesses-self-employed/understanding-employment-taxes