Can dental offices classify dental hygienists as independent contractors, instead of as employees? There’s no shortage of people willing to offer opinions on the matter—practice owners, hygienists, teachers, and consultants. Often, they all fall into one of two camps.
Some will tell you that a dental office is completely within its rights to treat you as an independent contractor, if that’s what you agreed to. Others will tell you that it’s illegal for a dental office to classify you as an independent contractor.
So, which is it? In truth, it depends. Anyone who tells you differently doesn’t have all the information. Let’s start with the basics.
What Makes Someone an Independent Contractor?
Depending on the situation, there are a number of different tests that can apply to this question. To give you a glimpse of the complexity—and why there’s so much confusion around this issue—the IRS, the Department of Labor (DOL), and your state and local authorities all apply different tests.
If the question arises in the context of federal tax withholdings, the IRS’s Control Test might apply. If the question arises in the context of a Fair Labor Standards Act violation, then the DOL’s Economic Realities Test could apply. And if a Title VII, ADA or ERISA violation is at issue, then the Darden Common Law Test (the 20-Factor Test) could apply.
Finally, some courts use a hybrid test, blending elements of the Darden test with the Economic Realities Test. See Alexander v. Avera St. Luke’s Hosp., 768 F.3d 756, 764 (8th Cir. 2014) and Deal v. State Farm County Mut. Ins. Co. of Texas, 5 F.3d 117, 118-19 (5th Cir. 1993). In fact, each state has its own local laws that can add even more variance. A simple summary of these tests across all 50 states comes in at around 150 pages!
Is your head spinning yet? The good news is that, despite the complexity, the 20-Factor Test—currently incorporated by the IRS in its analysis and, also, frequently cited by state agencies—offers a fairly reliable benchmark for most circumstances. If you’re an independent contractor under the 20-Factor Test, the same result is likely true under the other tests.
The 20-Factor Test
Here's a handy table that breaks down the 20 factors and summarizes when each can favor or disfavor classification as an independent contractor.
|
|
Employee |
Independent Contractor |
|
Instruction |
Receives instruction and direct supervision from employer, regarding details of work |
Is free to exercise own judgment concerning the details of work |
|
Training |
Is trained by the employer |
Does not need training, but rather comes to the job with the requisite skill set |
|
Integration |
Performs a function that is part of the employer’s regular business |
Performs a function that is separate from the contractor’s regular business |
|
Personal services |
Does not have the right to hire or delegate work to others |
Has the right to hire and delegate work to others |
|
Payment of helpers |
Does not pay for his/her own assistants (if applicable) |
Pays for his/her own assistants (if applicable) |
|
Continuing relationship |
Performs ongoing work for the employer |
Works for a day or for a project, but does not have a regular working relationship with the contractor |
|
Set working hours |
Is required to work the times and days specified by the employer |
Sets his/her own schedule |
|
Full-time or exclusive work |
Works full-time and/or exclusively for the employer |
Is free to work for many companies simultaneously |
|
Location of services |
Is required to perform the work at the employer’s premises |
Is free to work where he/she chooses |
|
Specifying the sequence of work |
Is required to follow a specific order or sequence of work |
Is free to set own sequence or order of work |
|
Reports |
Receive oral or written reports on a regular basis from the employer, concerning job performance |
Does not receive regular evaluations from the contractor |
|
Payments |
Is paid regularly through employer’s payroll |
Is paid upon completion of an assignment, after invoicing |
|
Business/travel expense |
Receives reimbursement of expenses through the employer |
Pays for own travel costs, licensing fees, continuing education, insurance, etc. |
|
Tools and materials |
Is supplied with tools by the employer |
Brings his/her own tools to the job |
|
Investment |
Receives reimbursement of expense through the employer |
Pays for own licensing fees, continuing education, insurance, etc. |
|
Profits/Loss |
Does not receive a share of profits and/or losses |
May sustain losses as a result of market forces or business downturns; responsible for growing own market presence, brand, etc. |
|
Number of companies |
Is dependent on a single company for income |
Can choose to work for multiple companies and select amongst competing assignments |
|
Advertisement |
Does not advertise to the public |
Advertises to the public (e.g., business cards, online profiles, networking) |
|
Termination |
Can be terminated “at-will” without further pay |
Termination still requires full or partial payment for purchased services. |
|
Quitting |
Can quit “at-will” without incurring any liability to employer |
Is contractual bound to complete assignment or may be liable to contractor for failure to render services |
It’s important to understand that no one factor is controlling. Rather, adjudicators take a comprehensive view of the entire relationship in an effort to ascertain the degree of the worker’s independence. Also relevant, though not determinative, is the office and the hygienist’s own written characterization of their relationship. Make sure to have a written agreement in place.
The 20 Factors Applied
Let’s see what the 20-Factor Test says for two common scenarios.
Example 1: You are a full-time hygienist working Monday through Friday at a single dental office. You’ve been working there for more than a month. Employee or independent contractor? Here’s how things look on our 20-Factor table. Green boxes mean the row favors independent contractor status. Blue boxes mean the row favors employee status. Yellow means the factor in question could go either way, depending on the circumstances.
|
|
Employee |
Independent Contractor |
|
Instruction |
Receives instruction and direct supervision from employer, regarding details of work |
Is free to exercise own judgment concerning the details of work |
|
Training |
Is trained by the employer |
Does not need training, but rather comes to the job with the requisite skill set |
|
Integration |
Performs a function that is part of the employer’s regular business |
Performs a function that is separate from the contractor’s regular business |
|
Personal services |
Does not have the right to hire or delegate work to others |
Has the right to hire and delegate work to others |
|
Payment of helpers |
Does not pay for his/her own assistants (if applicable) |
Pays for his/her own assistants (if applicable) |
|
Continuing relationship |
Performs ongoing work for the employer |
Works for a day or for a project, but does not have a regular working relationship with the contractor |
|
Set working hours |
Is required to work the times and days specified by the employer |
Sets his/her own schedule |
|
Full-time or exclusive work |
Works full-time and/or exclusively for the employer |
Is free to work for many companies simultaneously |
|
Location of services |
Is required to perform the work at the employer’s premises |
Is free to work where he/she chooses |
|
Specifying the sequence of work |
Is required to follow a specific order or sequence of work |
Is free to set own sequence or order of work |
|
Reports |
Receive oral or written reports on a regular basis from the employer, concerning job performance |
Does not receive regular evaluations from the contractor |
|
Payments |
Is paid regularly through employer’s payroll |
Is paid upon completion of an assignment, after invoicing |
|
Business/travel expense |
Receives reimbursement of expenses through the employer |
Pays for own travel costs, licensing fees, continuing education, insurance, etc. |
|
Tools and materials |
Is supplied with tools by the employer |
Brings his/her own tools to the job |
|
Investment |
Receives reimbursement of expense through the employer |
Pays for own licensing fees, continuing education, insurance, etc. |
|
Profits/Loss |
Does not receive a share of profits and/or losses |
May sustain losses as a result of market forces or business downturns; responsible for growing own market presence, brand, etc. |
|
Number of companies |
Is dependent on a single company for income |
Can choose to work for multiple companies and select amongst competing assignments |
|
Advertisement |
Does not advertise to the public |
Advertises to the public (e.g., business cards, online profiles, networking) |
|
Termination |
Can be terminated “at-will” without further pay |
Termination still requires full or partial payment for purchased services. |
|
Quitting |
Can quit “at-will” without incurring any liability to employer |
Is contractual bound to complete assignment or may be liable to contractor for failure to render services |
As you can see, pretty much every single factor favors your treatment as an employee. It would be difficult for a dental office to legally support an alternative position. In this situation, you should insist that the office treat you as an employee.
Example 2: You are a dental hygienist that works Monday through Wednesday for one office, and you pick up additional work through Cloud Dentistry on your days off. You control when you work, where you work, and how much you make. For your Thursday and Friday offices, are you an employee or an independent contractor? Though individual circumstances may vary, here’s how it generally looks on our handy table:
|
|
Employee |
Independent Contractor |
|
Instruction |
Receives instruction and direct supervision from employer, regarding details of work |
Is free to exercise own judgment concerning the details of work |
|
Training |
Is trained by the employer |
Does not need training, but rather comes to the job with the requisite skill set |
|
Integration |
Performs a function that is part of the employer’s regular business |
Performs a function that is separate from the contractor’s regular business |
|
Personal services |
Does not have the right to hire or delegate work to others |
Has the right to hire and delegate work to others |
|
Payment of helpers |
Does not pay for his/her own assistants (if applicable) |
Pays for his/her own assistants (if applicable) |
|
Continuing relationship |
Performs ongoing work for the employer |
Works for a day or for a project, but does not have a regular working relationship with the contractor |
|
Set working hours |
Is required to work the times and days specified by the employer |
Sets his/her own schedule |
|
Full-time or exclusive work |
Works full-time and/or exclusively for the employer |
Is free to work for many companies simultaneously |
|
Location of services |
Is required to perform the work at the employer’s premises |
Is free to work where he/she chooses |
|
Specifying the sequence of work |
Is required to follow a specific order or sequence of work |
Is free to set own sequence or order of work |
|
Reports |
Receive oral or written reports on a regular basis from the employer, concerning job performance |
Does not receive regular evaluations from the contractor |
|
Payments |
Is paid regularly through employer’s payroll |
Is paid upon completion of an assignment, after invoicing |
|
Business/travel expense |
Receives reimbursement of expenses through the employer |
Pays for own travel costs, licensing fees, continuing education, insurance, etc. |
|
Tools and materials |
Is supplied with tools by the employer |
Brings his/her own tools to the job |
|
Investment |
Receives reimbursement of expense through the employer |
Pays for own licensing fees, continuing education, insurance, etc. |
|
Profits/Loss |
Does not receive a share of profits and/or losses |
May sustain losses as a result of market forces or business downturns; responsible for growing own market presence, brand, etc. |
|
Number of companies |
Is dependent on a single company for income |
Can choose to work for multiple companies and select amongst competing assignments |
|
Advertisement |
Does not advertise to the public |
Advertises to the public (e.g., business cards, online profiles, networking) |
|
Termination |
Can be terminated “at-will” without further pay |
Termination still requires full or partial payment for purchased services. |
|
Quitting |
Can quit “at-will” without incurring any liability to employer |
Is contractual bound to complete assignment or may be liable to contractor for failure to render services |
As you can see, most factors favor your treatment as an independent contractor, a few are ambiguous and only four fall in the “employee” category. Add to this that your agreement with the dental office states that you are an independent contractor, and this strongly supports a determination that you are, in fact, one. Of course, this can change if you start working repeatedly for the same office, day after day. The details of the relationship continue to matter.
Where Does That Leave Dental Hygienists
Classification as an independent contractor is a viable option for hygienists and can be hugely empowering. You are your own boss. You set your own working hours. You have your own online brand and professional reputation. You set your own pay, and can get paid the same day rather than waiting two weeks for payroll to run. You can try out offices before committing. And, you can reduce your chances of any prolonged period of unemployment.
Concerned about paying more taxes as an independent contractor? Just boost your usual hourly rate by 10 percent to more than cover the tax differential vis-à-vis the scenario where you are treated as an employee. Here’s a short guide to paying your taxes as an independent contractor. Done correctly, independent contractor status can be a powerful tool to your career advancement.
The next time someone tells you that dental professionals are always employees—now you know the full story. Armed with this new knowledge, you can confidently insist on employee classification when required, while also being comfortable as an independent contractor where appropriate.
Disclaimer: Nothing herein should be construed as legal advice. No attorney-client relationship is created through this article. We encourage you to consult an attorney if you have any legal questions.